IFC Advisory Services in Africa PEP Africa, CASA, AMSCO NTF – PSI Reference Group Meeting...

IFC Advisory Services in Africa PEP Africa, CASA, AMSCO

NTF – PSI Reference Group Meeting

Washington, November 2008

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Background

The economic performance of Africa is stronger during the last few years

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2

4

6

8

10

12

2003 2004 2005 2006 2007

Average Annual Real GDP Growth

SSA Oil Importers Oil Exporters

• Since 2004, average real GDP growth exceeded 6%

• Growth is greatest in oil producers (8.4%), but is still dispersed with 26 countries showing accelerated growth

• Inflation, a barometer of overall macroeconomic management, has declined

• Regional average inflation is below 10% since 2002 (excluding Zimbabwe)

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5

10

15

20

25

2003 2004 2005 2006 2007 2008

Average Annual Inflation

SSA Oil Importers Oil Exporters

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Background (cont)

However, significant effort will still be required for many years to unleash the power of the private sector as the engine for economic growth

Africa is one of the most difficult business environments.

The most recent World Bank “Doing Business” report

classifies only four countries as “easy”

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IFC in Africa - Investments

IFC’s investments in Africa have been growing significantly

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200

400

600

800

1,000

1,200

1,400

1,600

FY03 FY04 FY05 FY06 FY07 FY08 est

$M

illi

on

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5

10

15

20

25

30

Commitments

# of countries

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IFC African country office presence

IFC significantly expanded its local presence in Africa over the last few years

1 Johannesburg Hub

8 Regional Offices

4 Post Conflict Country Offices

5 Advisory Svcs Program Offices

4 Proposed Program Offices

1 Proposed IFC Rep/Prgm Office

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IFC in Africa - Advisory services

The development impact of IFC investments in Africa is enhanced by its advisory services which are delivered through five “business lines” Environmental and social sustainability programs (ESS)

Business Enabling

EnvironmentInfrastructure Access to

Finance

Business Line

Public-private dialogue

Implementation of BEE reform programs based on “Doing Business”

Value Addition to

Firms

Environment and Social

Sustainability

Privatization advice Public-private

partnerships Private health and

education Rural water and

electrification Rural ITC

SME banking Microfinance Trade finance Leasing Housing financing Credit bureaus Securities markets

SME supply chain linkages

SME Toolkit Business Edge Gender mainstreaming and

access to finance HIV/AIDS business

risk mitigation

Energy Efficiency Cleaner production Community

Development

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IFC in Africa - Advisory services (cont)

PEP Africa is the main vehicle for delivering AS in Africa, it complements other global and regional WBG initiatives

World BankPSD

PEP AfricaCASA

FIAS

MIGA

SSCMSI

Micro-level interventions

Macro-level interventions

Diagnostic focus

Implementationfocus

AMSCO

SME Ventures

Sector -level

IFC PEP Africa Strategy FY09-FY15

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Background (cont)

To help unleash the power of the private sector PEP Africa focuses on improving the investment climate, stimulating sector growth and strengthening SMEs

PEP Africa visionTo be the sub-continent’s leading multi-donor AS facility that helps reduce poverty by

measurably improving the business environment, mobilizing investment in growth sectors, and strengthening SME competitiveness

Strategic objectives: Business environment: To improve the investment climate by helping to

implement changes in laws, regulations policies and procedures

Sector growth: To contribute to a measurable and attributable increase in investments (by the private sector at large and by IFC)

SME development: To enhance SME competitiveness as measured through SME creation, growth, employment, and access to finance

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Results

In the first three years PEP Africa has exceeded expectations in staffing, programming, countries covered, and establishing partnerships

Indicator First five-year target (to FY10)

Actual to June 08

% of FY10 target achieved to date

Number of programs 35 85 243%

Country coverage 28 36 129%

Number of staff 148 152 103%

Funds from partners $112.5 million $76 million 62%

Time elapsed: 60%

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Results (cont)

PEP Africa is also beginning to show development impact results against its five-year targets

PEP Africa Development Impact Targets

STRATEGIC OBJECTIVE: Improve the Business Environment

# of recommended laws, regulations, amendments or codes enacted 26 15 58%

# of recommended procedures, policies or practices that are improved or eliminated 52 5 10%

# of countries with multi-year Investment Climate Reform programs 13 6 46%

STRATEGIC OBJECTIVE: Proactively mobilize investment

Value of IFC investment commitments resulting from IFC PEP Africa AS 300,000,000$ 98,000,000$ 33%

STRATEGIC OBJECTIVE: Enhance SME competitiveness

$ increase in SME revenues as a results of IFC PEP Africa programs 200,000,000$ 115,245,000$ 58%

$ increase financing accessed by SMEs as a result of IFC PEP Africa programs 320,000,000$ 219,009,000$ 68%

OVERALL DEVELOPMENT IMPACT

# of jobs of created as result of IFC PEP Africa programs 70,000 45,027 64%

Increased # of people with access to improved water sources 3,500,000 2,270,000 65%

Increased enrolment in schools 8,000 581 7%Time elapsed: 65%

Total (FY06-10)First 5-year cycle

Actual to Sep 30, 2008

Percent achieved

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Strategic challenges

To meet long-term demand for its services, PEP Africa needs to adapt to external and internal changes that have occurred since it was launched

Greater focus on PSD in Africa, especially since Gleneagles (and WBG focus in IDA)

Growing willingness by governments to make investment climate reform a priority

Windows of opportunity created in new post-conflict countries (Liberia, Sierra Leone, DRC)

Need to increase awareness of climate change and food prices as issues to be addressed in Africa

More demand than expected for PEP Africa’s services

External changes

Realization that TA is an IFC core business and re-naming of TA as broader “Advisory Services (AS)”

Creation of global and regional Business Lines as the structure for managing AS

Integration of AS into IFC mainstream operations, governance structures, and Global/Local strategy

New Africa Department Structure

PEP Africa is more integrated into IFC’s AS services

Internal changes

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Strategic challenges (cont)

However, the rapid growth experienced and the greater than anticipated demand for PEP Africa’s services creates new challenges in managing growth

Risk of losing strategic focus

Overstretching of management and increase in “management-from-a-distance”

Long recruitment process compounded high growth/dispersion

Uneven program management, process compliance, financial controls, and reporting

Risk of insufficient service delivery supervision and quality control

Implications of rapid growth and increasing geographic dispersion of staff

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Strategy FY09-FY10

The final two years of PEP Africa’s first five-year cycle will therefore be a phase of consolidation to ensure focus and improve program supervision

Continue to review pipeline and consider cutting number of new programs planned

Focus on replications/roll outs Rapidly close out programs coming to an end, and

be tougher on non-performing programs

Action plan for more focus

Move senior management/technical expertise closer to the programs in countries

Gradually deploy senior Country AS Team Leaders (CASTLs) to supervise program teams in-country

Deploy rapid response teams to facilitate replications/roll-outs similar to the SWAT Team, e.g., an SME Advisory Services (SAS) Unit

Action plan for better supervision

Is the program in an extreme frontier/post conflict country where we have no or very limited presence (including frontier regions of more developed countries)?

Develop Africa’s high-priority sectors (agribusiness, health, education, infrastructure) Focus on replication (i.e., a proven AS activity that will be easier to launch and supervise) Enhance the development impact of a potential Private Sector/IFC investment that would not happen without the AS

Criteria for approving new programs for remainder of first five-year cycle

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The second five-year cycle will be a period of renewed growth with the emphasis on better integration across AS business lines

Strategy FY11-FY15 (cont)

Enhanced development

impact through integrated solutions

Improve the investment climate

• Public private dialogue• ‘Doing Business’

reform implementation

Unlock the growth of priority sectors

• Financial markets

• Health & education

• Infrastructure

• Agribusiness

• Oil, gas & mining

Add value to investment projects• SME supplier linkages

• Gender entrepreneurship

• HIV/AIDS risk mitigation

• Corporate governance

• Community development

• Energy efficiency

• Cleaner technologies

• SME capacity building

PEP Africa Integrated Programming Framework FY11-FY15

Strengthen SME competitiveness through access to finance and AS

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The second five-year cycle will also be characterized by a focus on replicating proven AS products, leaving innovation to HQ


1. Public private dialogue

2. Doing Business Reform

3. Registration Simplification

4. Investment Generation

5. Rapid Response

6. OHADA

BEE Products

1. Microfinance

2. SME Banking

3. Leasing

4. Housing

5. Trade Finance

6. Credit Bureau

7. Corporate Governance (financial sector)

A2F Products

1. Infrastructure Advisory (CIA)

2. Rural ICT

3. Small-Scale Infrastructure

4. Private Provision of Health

5. Private Provision of Education

IBL Products

1. Sector Development

2. SME Linkages

3. Business Edge

4. SME Toolkit

5. IFC Against Aids

CA Products

1. Community Development

2. Cleaner Production

3. Energy Efficiency (includes Lighting Africa)

4. Gender (cross business line)

ESS Products

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AS and investment have been linked for the benefit of all Private sector investors, including IFC


Value of IFC investments

linked with AS

Value of partner funding


impact


Add value to investment projects


The IFC PEP Africa Programming Framework

$

Level of AS/investment integration High Low

HighStrengthen SME competitiveness through access to finance and AS

Sweet spot = investment climate/sector growth programs that create investment opportunities for all, including IFC

Sweet spot = programs linked to an IFC investment that are expanded to include other companies in the sector, region or

cluster creating opportunities for non-IFC investment in the sector

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Partnerships and Funding

For the Replication Phase (FY11-FY15), PEP Africa will be seeking $64m from IFC that will be leveraged with $150m from donors

November 2008

IFC Conflict Affected States in Africa (CASA) Initiative

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IFC in Conflict Affected Countries

• 80% of the world’s 20 poorest countries have suffered from a major civil war in the last 15 years

• Private sector can help reduce poverty and promote economic stability but

private sector development traditionally has been 2nd or 3rd generation

reform

• Increasing consensus that earlier engagement on PSD is necessary

• Conflict Affected Countries are different and as such require different

approaches, instruments, skill-sets, etc.

IFC has experience delivering advisory services to conflict affected countries

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IFC in Conflict Affected Africa

IFC is significantly expanding its impact in conflict affected countries and started new initiatives globally, focusing on Africa: CASA and IFC SME Ventures

Engagement in both investment and AS

Initial focus on Central African Republic, DRC, Liberia, Sierra Leone

Country-specific approach, coordinating across business lines

Conflict analyses support program design

Close collaboration with WB, other donors and other IFIs

In-country Advisory Services coordinators

CASA is a multidonor, rapid-response approach to improve the business environment, strengthen SMEs, rebuild financial markets, expand private participation in infrastructure

CASA donor partners: Ireland, the Netherlands, Norway, …

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IFC SME Ventures

IFC SME Ventures will:

• Create a favorable and better business environment for SME investments

• Build risk capital investment capacity in high risk IDA and post conflict

countries

• Invest in small firms across 8 IDA countries and also provide advisory

support to these & many more small businesses

• Develop a replicable model for risk capital and advisory delivery that, if

successful, would be expanded.

IFC’s new $100m risk capital initiative

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CASA in DRC




• Business simplification• Trade logistics• DRC Better Business

Forum• Investment promotion,

Special Economic Zone



• Infrastructure

• Oil, gas & mining

• SME Development

CASA Integrates Programs in DRC


•Agribusiness (Poultry study)

•Matanga

Add value to investment projects• Microfinance

• Privatization/Cement plant

• Mining Linkages Katanga

• SME Finance

Conflict analysis: expand PSD to other regions than Kinshasa/Bas Congo and Katanga. But regions are isolated and fighting continues in the eastern provinces

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CASA in DRC (cont)

CASA/Ventures DRC program

Program Development:

1. Regional AS Coordinator appointed (based in Douala)2. In-country AS team expanded to include: SME Program Manager

and Program Coordinator 3. IC team is on board4. Microfinance and ASME Team based in Nairobi5. Recruitment of in-country CASA coordinator is in final stage6. CASA ready to provide funding to the various DRC AS programs.

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CASA in Liberia, SL, CAR

CASA/Ventures Liberia, SL, CAR programs

Program Development:

1. Country assessments in September, October2. Country Strategies in November, December3. CASA coordinators recruitment started4. CASA ready to provide funding to various AS programs

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CASA in Liberia




• Doing Business Reforms

• Special Economic Zones



• Infrastructure

• Energy

• SME Development

CASA Integrates Programs in Liberia


•Agribusiness ( Tree crop sector

•Matanga

Add value to investment projects• Microfinance (Access)

Rubber, Oil palm, Cocoa

• Africa Schools

Advising the GoL

• Incubator

Leasing

Conflict analysis: focus economic development on rural areas, but also need job creation for ex-combatants in urban

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CASA in Sierra Leone




• Public private dialogue,

• Tax simplification • Investment promotion

programs.



• Infrastructure

• SME Development

CASA Integrates Programs in Sierra Leone


•Agribusiness ( ??)

•Matanga

Add value to investment projects• Microfinance

• Africa Schools

• Incubator (youth)

• Leasing

Conflict analysis: Unemployed youths/former child soldiers do not wish, or cannot, return to their villages. CASA should focus on both agribusiness in rural areas and employment creation in the capital.

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CASA in CAR

Support to the Public Private Dialogue

Support to the one stop shop for business registry

Investment Climate program to be implemented

Working in the CAR is particularly challenging:

The government has little capacity and no funds

Payment of civil servant salaries is in arrears

Very limited private sector

Security issues

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CASA in CAR (cont)

The CASA/Ventures program in the CAR will initially be modest

Continue investment climate program

Chamber of Commerce - capacity building, possibly introduce an enterprise center

Chamber building renovation could allow co-location of the PPD and the one stop shop for business registration at the Chamber, thereby creating an integrated SME development center to support new and growing dynamic businesses

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CASA - Next steps

CASA program and team have been set up, initial funds have been secured and preliminary scoping missions to the priority countries have been conducted.

Next steps are to finalize program designs, hire in-country coordinators and focus on actual implementation.

Collaboration with the World Bank and other donors will be intensified. Follow-up PSD donor meetings in pilot countries.

A January meeting to update IFC’s donor partners on progress and plans

For the second half of 2009, CASA looks forward to expanding the program to two additional countries.

To realize these ambitious goals, USD 5 million is required per year

CASA focus will be on country program design and implementation

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AFRICAN TRAINING & MANAGEMENT SERVICES

(ATMS PROJECT)

November 2008

Background

The Future – ATMS IV

The Impact – Case Studies

Overview of AMSCO

VISION To assist African companies in becoming globally competitive, profitable and sustainable

MISSION To build management capacity within the African private sector by providing management and training support, primarily to African SMEs

SERVICES Senior management placement and assistance Capacity building and management development

ATMS Organization and Partners

ATMS ProjectATMS Project

IFCIFC

AMSCO BVAMSCO BV STICHTING ATMS FOUNDATION

A Regional Project of UNDP

Executing Agency

Project FundingProject Implementation

SHAREHOLDERS

IFUIFCAFDAfDBFMO

DONOR AGENCIES

Regional Coordinating Agency

AfDB

Banco BPISwedfundNorfundFinnfund

UNDP UKIFC IrelandAfDB World BankNetherlands SwedenDenmark Switzerland

Host Govt.National

Coordinating Agencies

ATMS Services

MANAGEMENT CAPACITY

Recruitment and secondment of managers Local management succession

TRAINING Training programs that improve local management capacity and the skills of staff

SUBSIDIES (for needy companies)

for management for training

We aim to grow client companies – their bottom line and competitiveness – and to leave them with local successors

Countries of Operation

Regional Offices• Accra• Nairobi• JohannesburgCountry Offices• Lagos• Douala (proposed)• Dakar (proposed)Operational Head Office• JohannesburgHead Office• Amsterdam

We are currently in 24 countries split between 3 regions.

Our Projects and Managers

Total = 169 Total = 323

Client Breakout Manager Nationalities

Data as of Dec. 2007

Southern Africa45%

West Africa28%

East Africa27%

African38%

European34%

Indian14%

Other10%

American4%

Current Portfolio Statistics

Clients: SMEs and Large

(as of July 31)

As of 31 July 2008 69 % of client Portfolio is SMEs.

Capacity Building – Renewed Focus

PROGRAMS Corporate Governance Leadership, Strategy and Planning Diversity Management Quality Management

HIV/AIDS Health and Safety Environmental Standards (Company specific)

Defined through training needs analysis

OBJECTIVE: To enhance AMSCO’s development impact and improve management capacity within client companies.

Measuring Impact

PERFORMANCE INDICATORS 1. Growth in revenue2. Growth in profits3. % successful companies assisted4. # of managers placed5. # of local managers promoted6. Employment generation7. Female participation8. Improved corporate governance

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100

150

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250

300

350

1997 1999 2001 2003 2005 2007

Managers Clients

History and Current Growth

Managers:323

Client companies:169

AMSCO became financially sustainable

(in US$ ‘000)

13,320

17,191

22,950

29,001

2,132 2,964 3,9305,898

290 446 738

-1,4552004 2005 2006 2007 P

Revenues Gross Profit Operating Income

Previous cycle’s Donors

Donor (US$ 000) Donor (US$ 000)

AfDB 2,260 MOFA (Norway) 750

MOFA (Denmark) 432 SIDA (Sweden) 1,587

Irish Aid (Ireland) 2,279 SECO (Switzerland) 1,137

DFID (UK) 1,200 UNDP 500

IFC 2,850 World Bank 1,200

MOFA (Netherlands) 2,207

Total = $16,402 k

ATMS IV Objective: Expand the Reach and Impact

789

394

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Managers Clients

Case Study: Nile Commercial Bank, Sudan• In 2006, NCB was one of a number of banks operating

in the south of Sudan, Juba• Became an AMSCO Client in June 2006 • 4 AM’s seconded• Training grant provided and training conducted• Employment levels up by 144%• Good geographic distribution of jobs created • Only bank in southern Sudan with female managers

June 2006 January 2008 Change

Staff 152 370 144%

Branches 15 25 67%

Female Managers 0 5 n/a

Employment Creation

Case Study: Magana Flowers, Kenya• Agribusiness• Exports flowers to Europe• Employs 435 staff• Recognized threat posed by HIV/AIDS• Partnered with AMSCO to establish an

HIV/AIDS In The Workplace programme• 11 committee members benefited from ATMS-

sponsored training• 4 members of staff were sponsored by ATMS

to attend an HIV/AIDS forum• Outcomes

Development of an HIV/AIDS policySetting up of a Peer Education ProgrammeEnhanced awareness by Management and Staff of

HIV/AIDSIncrease in voluntary testing (25/250 HIV+)20 of 25 HIV+ staff on ARV or maintenance treatment

Capacity-Building: HIV/AIDS Education

Thank you for your support!

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THANK YOU

IFC Advisory Services in Africa PEP Africa, CASA, AMSCO NTF – PSI Reference Group Meeting...

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