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This project is funded by

The European Union

A project implemented by

ACE International Consultants

DRAFT

Feasibility Study of an ACP Investment Bank Project 2012/290369/1

M a r c h , 2 0 1 3

DRAFT Feasibility Study of an ACP Investment Bank Project

2012/290369/1

Prepared by:

OUMAR SECK Team Leader

Don Jacobson (Expert for the Pacific region), Agnes Cishek (Expert for the Caribbean region),

Bernard Spinoit (Legal Expert)

March 2013

Presented by: ACE, International Consultants In Consortium with: HCL Consultants Limited

2 LIST OF ACRONYMS AND ABBREVIATIONS AACCSA Addis Ababa Chamber of Commerce & Sectoral Associations

AADFI Association of African Development Finance Institutions ACP African, Caribbean and Pacific

ACPIF ACP Investment Facility ADB Asian Development Bank

ADFIAP Association of Development Financing Institutions in Asia and the Pacific ADIA Abu Dhabi Investment Authority

ADPME AFC Africa Finance Corporation (Nigeria)

AfDB African Development Bank AFP African Financing Partnership

AFREXIM African Export-Import Bank AfT Aid for Trade

AGF African Guarantee Fund for SMEs AGOA African Growth and Opportunity Act

AIC African Infrastructure Consortium AICD Africa Infrastructure Country Diagnostic AITF Africa Infrastructure Trust Fund

ALADI Asociacion Latino Americana de Integraci AMC Asset Management Company (of IFC)

AMSCO African Management Service Company ANGT Agence Nationale des Grands Travaux (Gabon)

ANU Australian National University APBEF Association des Professionnels de Banque et Etablissements Financiers (Senegal)

API Agence de Promotion des Investissements (Cameroon) APIL Association of Pacific Island Legislatures

APIEX Agence de Promotion des Investissements et des Exportations (Gabon) APIX Agence de Promotion des Investissements et des Grands Travaux (Senegal)

ASEAN Association of South East Asian Nations ASEPEX

ATI Africa Trade Insurance Agency ATMS African Training & Management Services

AU African Union AusAID Australian Agency for International Development BCEAO Central Bank of West African States

BDF Business Development Fund BDC Botswana Development Corporation

BDEAC Development Bank of Central African States BDG

BEAC BEDIA Botswana Export Development and Investment Authority BEMA Botswana Exporters & Manufacturers Association

BIH Botswana Innovation Hub BITI Bank for International Trade and Investment BIO Belgian Investment Company for Developing Countries

BMN BNDES Development Bank of Brazil BOAD Development Bank of West Africa

BOCCIM Botswana Confederation of Commerce, Industry & Mines BOI Board of Investment (Mauritius)

BRICS Brazil, Russia, India, China, South Africa BSP Bank South Pacific

BSTP Bourse de Sous-Traitance et de Partenariat (Subcontracting Development Project) CAAD Comprehensive African Agriculture Action Programme

CAE CAF Latin American Development Bank

CARICOM Caribbean Community and Common Market CARIBCAN Caribbean-Canada Free Trade Agreement

CARIFORUM CARICOM and the Dominican Republic CARIFTA The Caribbean Free Trade Association

CARPA - CB Central Bank

CBA Central Bank of Angola CBK Central Bank of Kenya CBT Central Bank of Tanzania CBI Caribbean Basin Initiative

CCAA The Caribbean Central American Action CCAIM

CCI Chamber of Commerce and Industry (Senegal) CCIA Chamber of Commerce, Industry and Agriculture

CCIMA CEMAC (EMCCA in English)

CENSAD Community of Sahel-Saharan States CEPLG

CEPOD C-EXIM China EXIM Bank (C-EXIM) CBERA Caribbean Basin Economic Recovery Act 2000 CBTPA US Caribbean Basin Trade partnership Act

CDB Caribbean Development Bank CBC Commercial Bank of Cameroun CDE Centre for Development of Enterprise (EU)

CDE - Gabon -stop-shop SME Agency) China DB China Development Bank

CDC Commonwealth Development Corporation (UK) CEDA Citizen Entrepreneurial Development Agency (Botswana) CIDA Canadian International Development Agency CGA

CIF Caribbean Investment Fund CNP Conseil National du Patronat (Senegal)

CNES CoC Chamber of Commerce

COFIDES Spanish Development Finance Institution COMESA Common Market for Eastern & Southern Africa COS-SCA

CPI Consumer Price Index CPG

CREDP Caribbean Renewable Energy Development Program CSME Caricom Single Market Economy

CZI Confederation of Zimbabwe Industries in Harare DBB Development Bank of Botswana DBC Development Bank of China DBE Development Bank of Ethiopia DBR Doing Business Report

DBSA Development Bank of South Africa DEG Deutsche Investitions und Entwicklungsgeselleschaft(German DFI)

DevCo Directorate-General Development of the European Commission DFC Development Finance Cooperation Committee DFI Development Finance Institution

DfID Department for International Development (UK) DUA Single Customs Declaration for the Dominican Republic DUE

DR-CAFTA Dominican Republic Central American Free Trade Agreement with the USA EAC East African Community EBA Ethiopian Bankers Association

EBID ECOWAS Bank for Investment & Development EBRD European Bank for Reconstruction and Development

EC European Commission ECA Export Credit Agency

e-CAM Entreprise Cameroun (SME Association) ECCAS (CEEAC in French) Economic Community of Central African States

ECCB Eastern Caribbean Central Bank ECLAC Economic Commission for Latin American and the Caribbean

ECOWAS Economic Community of West African States EDF European Development Fund EIB European Investment Bank EIA Ethiopian Investment Agency

EMPRETEC ZIMBABWE Zimbabwe SME Development Agency EPA Economic Partnership Agreement

EU European Union Exp Ass Association Exp PA Export Promotion Agency

FEFISOL European Solidarity Financing Fund for Africa FemSEDA Federal Micro & Small Enterprise Development Agency (Ethiopia)

FFA Forum Fisheries Agency FFM Federated States of Micronesia

Finnfund Finnish Fund for Industrial Cooperation (Finnfund) FMO Entrepreneurial Development Bank of the Netherlands

FTA Free Trade Area GCC Gulf Cooperation Council GEX GEF Global Environment Facility

GICAM Groupement Inter-patronal du Cameroun GIF Global Infrastructure Fund

GTLP Global Trade Liquidity Program (IFC, AfDB and other) HDI Human Development Index

HDR Human Development Report IDB or IADB Inter-American Development Bank

ICA Infrastructure Consortium for Africa ICBC Industrial and Commercial Bank of China (ICBC)

ICD Islamic Corporation for Development of the Private Sector ICD South Africa Industrial Development Corporation (South Africa)

ICF Investment Climate Facility IDB Industrial Development Bank (South Africa)

IDBZ Infrastructures Development Bank of Zimbabwe IGAD Intergovernmental Authority on Development (East Africa) IsDB Islamic development Bank

IFC International Finance Corporation IFP Investment Facility for the Pacific IFU Danish Industrialization Fund for Developing Countries IIC Inter-American Investment Corporation

I-EXIM India EXIM Bank (I-EXIM) Infr DA Infrastructure Development Agency

IOC Idian Ocean Commission IPA Investment Promotion Agency

JBIC Japan Bank for International Cooperation JICA Japan International Cooperation Agency

KF Kuwait Fund LCCI Lagos Chamber of Commerce and Industry

LDCs Least Developed Countries LEA Local Enterprise Authority (SMME Development Agency of Botswana) LPI Logistics Performance Index

MCBP Microfinance Capacity Building Program MAN Manufacturers Association of Nigeria MCC Millennium Challenge Corporation (USA)

MDGs Millennium Development Goals MEBF MEDS

MIF Multilateral Investment Fund Min Ind & Inf Ministry of Industry and Infrastructure

MINPESA (Cameroon) MOF Ministry of Finance MRU

NOAEP National Organic Agriculture Enhancement Project NEPAD New Partnership for African Development

NIB Nordic Investment Bank Norfund Norwegian Investment Fund for Developing Countries (Norfund)

NPSO National Private Sector Organisations NZ AID New Zealand Agency for International Development

ODA Overseas Development Assistance OECD Organization for Economic Cooperation and Development OECS Organization of Eastern Caribbean States OeEB Development Bank of Austria (OeEB) OFID OPEC Fund for International Development

ONZFI Office National des Zones Franches Industrielles (Cameroun) OTN Office of Trade Negotiations PFIP Pacific Financial Inclusion Programme

PFTA Pacific Forum Technical Assistance PFTAC Pacific Financial Technical Assistance Centre

PICs Pacific Island Countries PIF Pacific Island Forum

PIFS Pacific Islands Forum Secretariat PIPP Pacific Institute of Public Policy

PIPSO Pacific Islands Private Sector Organisation PNG Papua New Guinea

PPIAF Public-Private Infrastructure Advisory Facility PRIF Pacific Regional Infrastructure Facility PSF Private Sector Federation (Rwanda) PSD Private Sector Development PSO Private Sector Operation PRIF Pacific Regional Infrastructure Facility

PROPARCO French Investment and Promotion Company for Economic Cooperation PTA Bank Eastern & Southern Africa Development Bank (initiated by COMESA)

QIA Qatar Investment Authority RBSA Reserve Bank of South Africa RDB Rwanda Development Board REC Regional Inegration Community

SADC Southern Africa Development Community SBI-BMI Belgian Corporation for International Investment

SECO Small Enterprises Development Corporation - Swiss State Secretariat for Economic Affairs SICA Sistema de Integraci Centro Americana SIDA Swedish Agency for International Development Cooperation

SIFEM Swiss Investment Fund for Emerging Markets SISs Small Island States

SME Small and Medium Enterprise SIMTEST SIMEST (Italian Development Finance Institution)

SOFID Portuguese Development Finance Institution SPC South Pacific Community SSA Sub-Saharan Africa

Swedfund Sweddish Investment Fund for Emerging Market SYNDUSTRICAM Syndicat des Industriels du Cameroun

ToR Terms of Reference TFFP Trade Finance Facilitation Program TFRP Trade Finance Reactivation Program UAE United Arab Emirates

UMA Union du Maghreb Arabe (Arab Maghreb Union) UN United Nations

UNCDF United Nations Capital Development Fund UNCTAD United Nations Conference on Trade and Development

UNDP United Nations Development Programme UNECA UN Economic Commission for Africa

VC Value Chain VIPA Vanuatu Investment Promotion Agency

WAEMU (UEMOA in French)

West African Economic and Monetary Union

WBG World Bank Group WTO World Trade Organization

ZIA Zimbabwe Investment Authority ZNCC ZNCC Zimbabwe National Chamber of Commerce

Feasibility Study of an ACP Investment Bank Project | 2012/290369/1 10

3 EXECUTIVE SUMMARY The ACP group is a grouping of 79 developing countries that span three continents: Africa, the Americas (for the Caribbean), Asia/Pacific (for the Pacific). With a population of 932 million people in 2011 (14% of world population), the ACP group of states stands as the largest concentration of low-income countries and small island states in the world. However, the region contributes only 1.9% to global GDP and some 4.7% to global trade. With their rich natural resources endowment, the ACP countries have the potential to become significant players in the world economy; they are increasingly becoming a highly attractive market and investment destination.

The list and typology of ACP countries are presented in Annex 1.

The relative socio-economic importance of the three regions that compose the ACP group is presented in Table 1 below.

Table 1 Relative Socio-economic Weight of the three ACP Regions 2010/2011

Population 2011 GDP 2010

Constant 2005 Price FDI 2010 Total (000)

Share of ACP %

Value (US$ million)

Share of ACP %

Value (US $ million)

Share of ACP %

Africa (SSA) 883 309 94.78 831 962 83.23 39 714 87.94

Caribbean 38 282 4.10 155 159 15.52 4 690 10.38

Pacific 11 068 1.12 12 498 1.25 760 1.68

Total 932 659 100.00 999 619 100.00 45 164 100.00

Source: ACP Secretariat. 2012. Concept Note on the Establishment of the ACP Bank for International Trade and Investment (BITI). Brussels, May 2012.

The ACP group of countries has had a long-standing partnership with the European Union covering trade, development cooperation, and political dialogue. As an intergovernmental body, the ACP stands for South-South solidarity and the pursuit of international social justice through North-South cooperation and the dialogue of civilisations.

Standing as they are today at the crossroads of history, the ACP are embarking on a project to create a knowledge-based and efficiency-driven Financing Vehicle that will help rejuvenate growth through trade and investment and ensure their full integration into the global economy. This Financing Vehicle is being considered in the context of increased challenges brought about by: the intensification of global competition, the rise of regional trading blocks and the so-called BRICS, and the end of asymmetric trade privileges, namely the EPA-generated ones with their major trading partners e.g., the EU.

ACP countries suffer from both limited and inconsistent access to trade finance, SMME finance, large project finance and infrastructure finance; due to a combination of their higher country risk profile, weak financial infrastructure, and high dependency on volatile external public and private financial flows.

To address these multi-level challenges, a feasibility study for the structuring and implementation of an ACP Financing Vehicle is being prepared to assess the project demand, ascertain its financial viability and validate the extent to which Trade Finance, SME Finance, Large Industrial Project Finance and Infrastructure Finance and relevant Advisory and Technical Assistance services should be part of the services portfolio of the proposed vehicle.


In addition, the feasibility study will determine the most relevant structure and business model for the new Financing Vehicle and propose its innovation areas, value addition and synergy areas with regard to the existing financial infrastructure.

Project Summary 3.1

This Feasibility study establishes the viability of an ACP Investment Bank. The study also articulates an implementation plan for the proposed ACP Bank along with the key success factors in its planning and its operations. Furthermore, the feasibility study and implementation framework defines the key value proposition of the planned ACP Bank in relation to existing financial infrastructure and the private sector of the ACP countries in the targeted service areas.

However, the study also proposes which are for the consideration of the project sponsors.

Demand and Supply Gaps in Trade Finance, SMME Finance, Large 3.2Industrial Project Finance & Infrastructure Finance in ACP Countries

A combination of desk research, expert opinion, field missions across the six geographic regions of the ACP (Caribbean, Pacific, West Africa, Central Africa, East Africa, Southern Africa) and feedback received from private and public sector stakeholders through direct interviews and questionnaires have constituted the basis for a quantitative and qualitative assessment of demand, supply and related gaps in the four areas the feasibility study will investigate, these are: (i) infrastructure finance, (ii) trade finance, (iii) SMME finance, and (iv) large industrial projects finance in oil, gas, mining, manufacturing, agribusiness and services.

Despite the apparent diversity of players in the development finance space of ACP countries, significant financing gaps exist. These are in the areas of SMME finance, infrastructure finance, long-term industrial and specialized financial services such as specialized investment banking/corporate finance services and technical advisory services; though on different scales depending on the region concerned as well as the windows of finance considered.

Over the last decades following independence of most ACP countries, the supply of financial services in the four proposed areas the study intends to investigate have been largely ensured by three groups of financial institutions with varying degrees of financial capacity, local market and industry knowledge, procedural efficiency, and relevance of business/program model. These include: (i) Multilateral development finance institutions, investment banks of OECD countries, and bilateral cooperation agencies of G8 countries (ii) DFI of BDICS countries and regional Development banks of ACP countries; (iii) locally-based financial institutions (commercial banks, specialized banks and development banks) of ACP countries.

Successes have been recorded over the years by some of the financial institutions; and the volume of financing supplied has been considerable. However, the variations on the key drivers of success in investment and development financing have not enabled them to originate, develop and finance programs and projects that resulted decisively in meaningful industry development, firm start-up and growth, and export performance targets across the ACP region. Indeed, transactional approaches and services gap in terms of availability and adaptability to local challenges have prevailed over a relationship approach, a customized product offering, and a sustained focus on long-term results and impact.

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From a demand for financing services point of view, the large majority of ACP countries suffer from availability together with cost and access problems both for infrastructure finance, trade finance, SMME finance and large industrial project finance.

A summary of the quantitative and qualitative demand and supply gap assessment for the proposed 4 areas of focus of the planned ACP Bank is presented in Table 3 below respectively for SSA, the Caribbean and the Pacific. For further details on demand/supply/gap assessment, please refer to Annex 4.

Table 3 Summary Financial Services Gaps in ACP Countries

Level of Quantitative

Gap

Level of Qualitative

Gap Comments

(qualification of gaps or key factors affecting gaps)

AFRICA

Infrastructure Large Large Gaps significant across all sub-sectors Capacity building of local governments needed

Trade Large Large Availability/cost/tenors of facilities a problem in crisis time Strong external dependency, vulnerability to crisis, high costs Capacity of local players a constraint

SMME Large Large Availability, cost, access issues Equity and alternative financial services gaps SME readiness challenges

Large Projects Large Large

Local availability, and access issues Access to international capital market Equity and project development issues

CARIBBEAN

Infrastructure Fair Fair Variable; fair ODA/DFI support (US, CDB, IADB, EIB, IFC) Needs for regional projects in ICT namely

Trade Small Fair Strong IADB support; Access problems for SMEs

SMME Large Large Availability, access and cost issues SME access to finance readiness issues


Potential yet to be realized in key sectors: tourism / hospitality, mining, agriculture, fishing.

capacity issues Availability, cost, equity, project development challenges

PACIFIC

Infrastructure Fair Fair

Strong ODA support + regional facilities (ADB, EIB, IFC); yet weak Government financial/technical capacity. Gaps in energy & roads. Demand for renewable energy investments

Trade Small Small Upcoming Global/IFC SME Initiative & on-going ones fill gap considerably; some BEE & demand side support needed

SMME Small Fair

Gap was significant but there is an upcoming massive Global/IFC SMME Initiative & on-going ones (AsDB, AusAID, etc.) that fills gaps considerably; some BEE & demand side support needed (i.e. capacity building)


Potential yet to be realized in key sectors: tourism, hospitality, mining, fishing;

Availability, cost, equity, project development challenges


Infrastructure finance gap assessment in the ACP

Africa: SSA yearly infrastructure finance needs are immense. Current level of infrastructure spending stands at US$ 45 billion a year while yearly demand for infrastructure finance is estimated at a staggering US$ 93.4 billion per year over the next 10 years if the sub-Continent is to meet international standards in this field. This excess demand which stand at around US$ 40 billion per year stems from: (i) growth-induced demand in basic and social infrastructure (water, sanitation, roads, health infrastructure, education and training infrastructure, social housing) and economic infrastructure (energy, telecommunications, roads, industrial zones and business parks, ports, airports, etc.), (ii) unmet demand in modern economic infrastructure imposed by globalization and international competition and standards, and (iii) maintenance and upgrading requirements of existing infrastructure.

If the inefficiencies in infrastructure project planning, execution and maintenance are properly managed, the yearly infrastructure finance need would be reduced to around US$ 20 billion per year. If those inefficiencies remain, the yearly financing requirements will stand at US$ 40 billion per

US $ 20 billion to 40 billion per year based on estimates from the World Bank and the Economic Commission for Africa (ECA) and confirmed through a detailed study by the multi-stakeholder mechanism, the Africa Infrastructure Country Diagnosis (AICD).

Table 4 Infrastructure Finance in SSA Demand/Supply/Gap Analysis

Quantitative Gap Assessment Qualitative Gap Assessment, Additional Demand, Innovation

Demand: US$ 93.4 billion/year (till 2022)

Supply: US$ 45 billion/year

Financing gaps (rounded): 40 billion (US $)

Reallocate spending across categories: -8

Raise capital budget execution: -3

Reduce operating inefficiencies: -3

Improve cost recovery: -4

---------------------------------------------------------

Remaining gaps: 22 billion (US $) per year till 2012

1/. Enhanced PPP-based Funding Mobilization Project Development:

Early stage risk capital Project co-ordination: Conception to operations Engineering and technical advisory services

Financial Advisory: Project structuring/planning Consulting/policy advisory Corporate finance Syndications (Debt/Equity)

Principal Investing: Co-investment with sponsors, private equity Project finance: debt, equity, mezzanine Structured products, trade & equipment finance

Advisory & Technical Assistance: Legal and regulatory reform for PPP in infrastructure Industry-specific technical expertise development

Knowledge resources sharing in PPP projects (financing opportunities, partnership opportunities, technical expertise, expert database)

2/. Promotion of investment in green technology and energy-efficient solutions 3/. Promotion of integrated regional projects to lower unit costs and pool scarce resources in some of the poorest developing regions 4/. Promotion of smaller, more modular technologies to decrease the capital cost of power plants and the time needed to plan and build them. 5/. Attracting IPP (Independent Power Producers)


The quantitative gap assessment is complemented by a qualitative one that specifies the types of services the SSA private sector and potential project sponsors are expecting from a potential partner financial institutions. These include: (i) enhancing and scaling-up the PPP model in infrastructure project finance and operations, (ii) further promoting IPP (independent power production), (iii) taking advantage of sustainable and resource-efficient technology, including small and modular solutions that can serve remote areas, (iv) considering regional solutions that result in meagre resources pooling while allowing economies of scale that are critical to the viability of many capital intensive infrastructure projects especially for poor small countries. Yet, the overriding priority remains developing the capacity of policy-makers as well as the private sector with the view to maximizing their regulatory capacity, their capacity to articulate and package their PPP needs in

, and ultimately to derive value for money from their portfolio of PPP and IPP projects in infrastructure

Caribbean: There is little quantitative information on the classification of funding gaps affecting the Caribbean. Access to funding sources for infrastructure projects are restricted to international cooperation agencies such as World Bank, IADB, IFC and the European Union, although some private funds with knowledge and experience in project finance have started to show interest in the region but with a low exposure.

The Caribbean is currently improving its business-friendly environment by strengthening its legal institutions and raising the standards on regulatory process and cost efficiency. Globally the region ranks 95 out of 183 countries and though improvements in trade processes are evident, the same does not apply to infrastructure where, costs, time and uncertainty drive away private sector enthusiasm. Excessive bureaucracy and regulations are drivers for promoting informal markets hence lack of transparency and information are constant gaps on access to funding. Other gaps are the long standing monopolies of utilities, poor oversight of bodies and standards in some countries.

In general terms, over the last decade there have been improvements in the coverage and quality of many infrastructure services, but gaps remain. The Caribbean lags in electricity, roads and technology while access to safe water and sanitation facilities performing relatively well compared to other middle income countries. Coverage is even lower in rural areas with large gaps between urban and rural still remaining.

In terms of renewable energy sources CARICOM has been driving the GEF 13-country CREDP, an educational program on how usage of renewable energy sources can reduce the dependence on fossil-fuel oil and greenhouse gas emission. Among the infrastructure projects areas of infrastructure were financial vehicles are needed are:

Expansion of investments into bio-fuels, hydropower, wind farms, geothermal and photovoltaic systems.

Solar energy equipment for the health centers and hotel sector; particular focus on rural areas

Energy efficiency in the public sector Energy projects targeting the transportation sector. Energy projects with environmental protection strategies to mitigate the effects of climate

change. Pacific: Feedback received from most stakeholders in the area of infrastructure finance concerned the need to provide support (capacity building) to governments to allow them to better plan and manage infrastructure projects. The ability of governments to manage and service loans for large infrastructure projects severely restricts the ability of external agencies to bridge any funding gap that might exist.


China has become a significant lender. This has led in some cases to projects being undertaken that would not have been considered viable by commercial or development banks and would have resulted in high levels of public debt.

A country like Papua New Guinea (PNG) is undergoing a period of substantial economic growth based largely on mineral and petroleum resource development with real GDP growth above 6% for the last five years. This has created both the need for new and improved infrastructure and the ability of the government to pay for it.

Overall, persistent demand and therefore gaps in terms of infrastructure finance present as follows:

In general: Most Pacific island countries are infrastructure-poor, particularly in remote regions and outlying islands, resulting in reduced delivery of development outcomes and a severe impediment to private sector development.

Energy: Some of the larger countries such as PNG have a significant proportion of their populations without a reliable source of electricity. A similar situation exists in remote regions and outlying islands of other countries. Fuel storage and distribution also requires further infrastructure development in most countries.

Telecommunications: Internet connectivity is an issue where the major international fibre optic cables are not available.

Land transport: Land transport is less of an issue in the smaller island countries than it is in the larger countries such as PNG where there is a massive need for improved road (and possibly rail) infrastructure.

Sea transport: All Pacific countries rely on international and inter-island sea transportation to a high degree. Inter-island trade and passenger transport is provided by government and/or private sector owned ships. These are often unreliable and expensive. The main ports and harbours are generally adequate, albeit often inefficient and costly. A considerable demand exists for funding to improve these services. This includes access for tourist ships, redevelopment of existing facilities, e.g. relocation of Port Moresby port, and improvements to facilities.

Air transport: With tourism being one of the main business sectors in most Pacific island countries air transport needs to be efficient and reliable. Despite considerable past efforts, there is still a demand for funding to improve existing facilities and to extend the reach of air transport to locations other than the capital cities to increase tourism.

Waste management, water and sanitation: Waste management, water and sanitation have been the focus of development agencies for a long time and, although there is room for improvement, would not be considered a priority for the proposed ACP bank.

Trade finance gap assessment in ACP countries

Africa: The existence of trade finance gaps, in the case of SSA, has been confirmed by G20 leaders, the AfDB, and commercial banks consulted during the field mission, namely, the network bank Ecobank and by some African importers met in the course of the field mission.

The gap for Trade Finance in SSA has been quantitatively estimated at US$ 225 billion per year, based on reports from various sources (ICC International Chamber of Commerce; AfDB African Development Bank; and UN-ECA Economic Commission for Africa). Qualitatively the gap is articulated in terms of the need for the regional DFI (the AfDB) to enhance its capacity in the management of trade facilitation facilities like IFC and its sister regional DFI such as AsDB and IADB; the availability of specific financial facilities for SSA to meet normal demand and reduce constraints


in time of crisis; technical assistance and advisory services in favour of partner financial institutions and SMEs. Capacity building in complex and large value Structured Commodity Finance and Structured Trade Finance; as well as in Islamic Finance that offers competitive solutions has already been identified as a gap. Last, increased financial and technical capacity in export credit risk insurance/guarantee and political risk insurance is also required to support FDI and trade finance transaction across the region. In that respect the need to enhance the financial and technical capacity of ATI (African Trade Insurance Corporation) has been recognized by many stakeholders including ATI itself.

Table 5 below summarises the profile of trade finance related gaps in SSA.

Table 5 Trade Finance in SSA Demand/Supply/Gap Analysis


Demand Assessment for 2012 going forward: US$ 475 billion approximately/year

Supply Assessment: US$ 44 billion

Gap Assessment: US$ 225 billion

NB: The 2009 London G20 Summit identified the withdrawal of trade credit as one of the factors that triggered the Great Recession.

nations committed themselves to providing at least US$250 billion over the next years to redress the situation prevailing then (we assume 20% for SSA; i.e. $50 billion potentially for SSA)

Finance:

Additional trade finance supply capacity (risk sharing, liquidity)

Trade finance supply capacity maintenance in crisis time

Additional capacity in political risk insurance/reinsurance ( additional capitalization of ATI is strongly suggested)

Export development and diversification funds

Advisory & Technical Assistance for Financial institutions:

Capacity building of FI in Trade Finance Capacity building of FI in Structured Trade Finance Capacity building of FI in Structured Commodity Finance Capacity building of FI in Commodity Finance using Islamic Finance Capacity building in generic export credit risk insurance (ECI ) and political risk

insurance (PRI) Capacity building of insurance/reinsurance companies in insurance and

reinsurance for new risks - oil, gas, mining, infrastructure, political risk Best practice sharing in trade finance in favour of ACP FIs

Advisory & Technical Assistance for Large Firms and SMEs

Leveraging of Islamic Finance in major agriculture projects Capacity building of SME in trade finance readiness Export capacity building and export readiness support to SME

Caribbean: The Caribbean region lacks adequate trade financing vehicles that can provide the resources needed to complement the work already in progress through international cooperation agencies and other institutions. Financial gaps are not in the volume of available resources but in accessibility of those resources for some activities.

An even greater gap is comprehensible information from these financial sources on access procedures for submission of proposals. Most countries lack adequate institutional mechanisms as well as the knowledge and experience to submit successful applications to international donors. For decades, trade in the Caribbean region has been constricted to traditional markets and based only preferential trade agreements. This dependency has crippled not only new market awareness but innovation and development in general.

The Caribbean region needs to move beyond decades of reliance on traditional markets and trade preferences to swiftly adapt to diversify into new sources of growth, exploiting its natural advantages of location, environment, political stability and democratic traditions.


Finally, there might be a gap/demand for integrated export development support (i.e. advisory and export) for the Caribbean:

1/. For the Caribbean, trade growth is not only tied to access to financial resources, but improvements in logistic and value chain management for small and medium-size enterprises must be geared up for the integration of axis-based regional infrastructure development criteria.

2/. The geographical location of the Caribbean presents a unique opportunity for supplying hub facilities and logistic services for the recurrent trade flow between the North and South hemispheres. Out of the 16 CARIFORUM states only the Dominican Republic, Trinidad and Tobago and Jamaica already have basic solutions and are focusing on improving port and airport facilities and logistics services to take advantage of their location and increase their offer of trade logistics services.

3/. A particular feature in Caribbean trade patterns have been the level of concentration on specific markets. Trade structure is still based in low-priced commodities while new market players are demanding value added products, an opportunity that the Caribbean has not taking advantage of.

Pacific: Quality of trade finance varies from an excellent rating by some for large businesses and for international payment services, to fair or poor for the remainder. Most said that it was expensive. Comment was made about the need for regulatory reform and for improved customer education.

guarantees and loans to banks to support trade.

One of the major banks supplied the below data. Considering the source of these data (a bank) the figures are probably reasonably accurate.

Papua New Guinea (PNG) (Figures in million of US$)

Demand for Trade Finance (see note below) Large businesses USD1,500+

SMEs USD250+

Supply of Trade Finance Large businesses USD500

SMEs USD125

Gap in Trade Finance All businesses USD1,125+

Note: gap in ability to provide Trade Finance in PNG by the domestic banks. Client education will increase Trade Finance usage.

Pacific Region (Figures in million of US$)

Demand for Trade Finance

Large businesses 1,875

SMEs 312

Supply of Trade Finance Large businesses 625

SMEs 156

Gap in Trade Finance All businesses 1,406

Note: As PNG is the largest economy in the Pacific 25% has been added to PNG figures to account for rest of Pacific

Areas where an ACP bank might potentially add value include:


reducing the cost of trade finance; improving the availability of trade finance to the smaller, less experienced businesses that

currently improving access to trade finance for women in business and for businesses operating in

outlying regions; providing further education for businesses to help them access trade finance; advising and assisting in improving the regulatory environment.

SMME Finance Gap Assessment:

Africa: The gap in SMME finance in SSA is very significant. Indeed, IFC reported that there are 30 million to 37 million of underserved or un-served SME and around 398 million adults that do not have access to financial services in SSA. This results in an estimated SMME finance gap of around US$ 199 billion for the entire SSA region.

From that perspective, it is worth mentioning that of all the 60 private sector intermediaries (including business associations mainly, but also SMME development agencies and public administration bodies in charge of SMME promotion) consulted during the field mission in 7 countries in West, Central, East and Southern Africa; all but two in Botswana confirmed that SMME finance is the major issue they are facing. Indeed, only in Botswana did we have a feedback that SMME have a fair chance of getting funding if they approach the national SMME support agencies (Botswana LEA and Botswana CEDA).

The qualitative assessment points to the need for filling the gap in financial services for SMME life cycle capital (seed/venture capital, equity capital, working capital, growth capital, export development funds where applicable) and sector-specific financing (export, manufacturing, agribusiness, etc.). The assessment also suggests the need to address the challenges of SMME access to finance at policy-through relevant advisory and technical assistance support. Last, the qualitative assessment stresses the need to develop alternative SME financing solutions (e.g. leasing, private and public equity, franchising, SME sale & acquisition, factoring & forfaiting, etc.) while shari

finance/SME banking and sustainable MFI Growth Model.

Table 6 summarizes the qualitative and quantitative assessment of SMME finance gaps in SSA.


Table 6 SMME Finance Demand/Supply/Gap Analysis

Quantitative Gap Assessment Qualitative Gap Assessment or Additional Demand

SME:30 to 37 million SMEs are underserved or un-served (mid-number: 33.5 million SMEs) (McKinsey/IFC, 2010) Assumptions: Average SME loan size: $ 50 000 per SME; 10% of the SMEs are looking for financing Total demand for additional SME funding: $50 000/SME x 33.5 million SMEs x 0.10 = $167.5 billion Micro-enterprises:398 million adults that do not have access to financial services (McKinsey/IFC, 2010) Across SSA, the actual ratio of borrowing clients to total population is at less than 2% except in few countries such as Malawi and Togo. Assumptions: For the purpose of our gap assessment, we assume that 8% of the unbanked adults are looking to access microfinance credit facilities; average microfinance loan size: $1000 per adult. Total demand for additional microfinance loan: $ 1000/adult x 398 million adults x 8% = $31.8 billion. Gap for SMME Finance = $167.5 billion + $ 31.8 billion = 199.3 billion1

Finance:

Additional credit capacity Credit supply capacity maintenance in crisis time Local currency loans/lines of credit to local FI Local currency risk sharing facilities with local FI Equity/Venture Capital Fund of Funds Public and private equity funding to SME SME sale & acquisition intermediation services Leasing services Factoring & forfaiting services Trade finance and working capital finance

Advisory & Technical Assistance: Enabling environment reforms for SME access to finance Capacity building of FI in SME Banking, SME Investment Direct finance market development for SMEs (i.e. SMEs as issuers) Market for SME sale & acquisition Promotion of stock exchange listing for SMEs Leasing development Franchising market development Private & public equity market development for SME Consultant capacity building and knowledge upgrading Best practice sharing in SME Finance/SME Banking in favour of ACP FIs Best practice sharing in MFI Growth Model in favour of ACP MFIs

Caribbean: Hardly, any bank, local or foreign, is addressing the financial needs of SMEs, thus financing for local projects, market expansion and exports are dependent on programs for private sector initiatives from international cooperation agencies whose resources are geared mostly to capacity building, market research and other areas.

A major deficiency of SMEs is their inability to comply with accounting standards such as book- keeping, product costing, management of personnel etc. IFC is one of the agencies supporting financial markets development by helping micro, small and medium enterprise (MSME) owners gain better access to finance, and advising banks to help them reach these underserved segments.

Other challenges constraining SMEs access to funds are:

Absence of national policies on SME development Lack of access to adequate sources of financing High cost of SME financing Length of onerous loan application process Lack of funding to carry out training programs

1 This assessment is close to the 2010 assessment in the McKinsey/IFC report that estimated this gap to be in the range $140 billion to 170 billion for Sub-Saharan Africa


Capacity building programs have not been effective enough in addressing operations management for most SMEs, thus financing of technical assistance on making SMEs creditworthy is a regional cross border gap. SMEs have difficulties with financial management in general and marketing, taxation, book keeping and administration in general.

Pacific: Anecdotal evidence and the considerable feedback received suggest that there is a significant funding gap for the SMME sector of the Pacific island countries. But the gap mostly lies in the provision of advisory services which is an area that most commercial banks and even development banks would consider to hold too much risk and to be costly for them. Overall, the challenges for SMEs include:

collateral for a loan; -developed business plan to demonstrate the

viability of the business; businesses that lack sufficient capital of their own;

field; Businesses based on flawed concepts.

The total lending portfolio of the banks in three large countries of the region as estimated by one IMF study was put at USD973 million of which the SME lending portfolio was estimated at USD200-300 million. A broader SME facility rather than a sector-focused one for tourism connected businesses is expected to enable better scalability. Based on the survey of SMEs and discussions with banks, the total additional demand for SME finance was estimated at USD25-40M (Samoa USD14M, Tonga USD6M, Vanuatu USD20M).

Based on these findings, key components to improve access to finance for SMEs include:

a) Advisory Services: Capacity building programs for SMEs in business planning, accounting and other necessary management services to improve their bankability and parallel programs to support banks/FIs where relevant in accessing market information, product development, improvements to internal processes (credit scoring, reporting, monitoring) and staff skills.

b) Risk Sharing Facility: A potential facility through which WBG and other donors could share a portion of losses (up to 50%) on newly booked SME lending portfolio with the originating partner banks thus encouraging banks to lend to this sector. Based on the survey, the potential funding gap across the three countries is estimated at US$25-40 million. On this basis, a risk share facility could cover up to USD12.5-20M.

NB: Islands multi-donor initiative that intends to deal with the entire service spectrum needs (finance debt, equity, risk sharing facilities; business development services; policy and business environment reforms, sector development, SME & micro-enterprise, etc.) of the sector. This large program is expected to fill substantially the large SMME finance gaps identified for the region.

Large Project Finance Gap Assessment

Africa: In the absence of any comprehensive assessment, the financing gap assessment for large industrial projects has been evaluated at US $67 billion for every 3-year period (i.e. US$ 22 billion per year on average) based on a databank of 240 projects from four investment promotion agencies


The qualitative assessment of the gap leads to a comprehensive offer of both wholesale and retail financing services (direct equity participation, mezzanine finance, credit risk guarantee, co-financing, local currency financing, proactive partnership with ATI, MIGA and other political risk insurance agencies); but also specialised advisory services namely in the area of complex project development, and technical and financial resources mobilization/brokerage namely from the three growth poles with which ACP countries transact mostly; i.e. Asia/Pacific, Americas/Caribbean, Africa/Europe through well-targeted investment forums.

Table 7 below summarizes the nature of the gaps identified in large industrial project financing across SSA.

Table 7 Large Industrial Project Finance Gap Assessment in SSA DEMAND/SUPPLY/GAP ANALYSIS


Demand: $ 81 billion

Supply: $ 14 billion

Financing Gap:

Financing gap over a 3-year period is: $ 81 billion $ 14 billion = $ 67 billion for every 3-year

period (or on average 22 billion per year) over the planning horizon of the ACP bank project of 10 years.

Finance:

Equity finance Mezzanine finance Debt finance and co-financing Credit risk guarantee Local currency financing Political risk insurance(PRI) agencies

Advisory & Technical Assistance: Knowledge resources sharing Project planning & development support for complex projects Technical resources mobilization from Asia/Pacific,

Americas/Caribbean, Africa/Europe in favor of ACP countries Facilitation of investment through an ACP B2B

Caribbean: There exist large project financing gaps across the Caribbean, namely in sectors such as tourism, logistics, infrastructure, agriculture, fishery, food processing, etc. Large project financing requires not only funding access, but also affordable costs of funds, capital adequacy issues and the ability to arrange and structure complex financial instruments. Local sources such as indigenous financial institutions do not have the structure to compete with international institutions that can process and approve financing at more competitive rates.

The structure of project financing requirements in the Caribbean is limited to:

Projects requiring less than US$300 million. Non-investment grade project sponsors. Payback period of less than 10 years. Ability to sell the facilities to institutional investors. Basic infrastructure financing (Toll Roads, Airports, Ports, etc.) Greenfield projects.


Pacific: There are two categories of large project investment/financing gaps across the Pacific region:

1/. Unrealized potential in large industrial projects

The region has a number of existing and large projects which potential is not yet fully realized. These can be classified in three main groups with different internal dynamics and patterns:

Mining and petroleum resource projects Tourism Others, including agriculture, fishing and food processing

Tourism is the largest and most pervasive industry across the whole region. For many countries with few if any natural resources, it is their only significant industry and second only to remittances as a source of foreign exchange. The larger tourism projects resorts and large hotels usually involve foreign companies with their own sources of finance. At the next level down there is significant local involvement with a strong demand for both funding and technical services. The base of this pyramid is in the multitude of small tourism businesses, often family-owned and operated, that fall into the SME category.

Fishing is a major economic activity across the Pacific, from long line tuna fishing to local reef fishing, and including live coral exports to the USA and sea cucumbers to Asia. The top end of the industry involves large enterprises investing in boats and processing facilities including canneries. These are large projects that usually involve foreign companies with their own sources of finance. The Forum Fisheries Agency in their questionnaire identified the funding needs of the smaller fishing enterprises (SMEs) who find it difficult to borrow from conventional lenders because of their perceived risk.

2/. Emerging New Industries

Under-sea resources of the region are increasingly attracting interest from international investors and foreign countries such as China. Canadian miner Nautilus Minerals is negotiating to establish the world's first deep sea gold and copper mine 1.5 kilometres under the Bismarck Sea, off Papua New Guinea. Talks have also been held with Tonga and possibly other Pacific island countries.

potential for these countries along with potentially significant environmental, economic and social risks. New industries like this offer opportunities for participation by an ACP bank.

China has already shown interest in the resource and the tourism sectors, with investments already in a nickel mine and a fish cannery in PNG and the tourism sector in Fiji amongst others.

Structuring 3.3

The structuring of the ACP Bank is based on: (i) the conclusions of the market study, (ii) the capital

commitment/support level secured from regional sponsors objectives in terms of strategic positioning; operational effectiveness, outreach and meaningful impact.


Strategic Intent of the ACP Bank

Distinctive human resource competence: ACP Bank will endeavour to build/develop distinctive capacity/expertise

Strategic and technical partnership:: Partnership with industry-specific technical expertise/knowledge Concrete technology transfers projects and transactions Partnership with targeted sovereign funds, private equity funds, FDI investors and

portfolio investors Investment grade credit rating

ACP Bank will adopt a regional approach in its business focus due to the fact that the infrastructural, industrial and SMME development challenges of the ACP countries are quite similar from a regional perspective. The Bank will therefore support projects of regional nature while strongly supporting regional economic integration.

Mission Statement

leading international investment bank in ACP region to be defined by the following:

Achieving international investment grade risk rating which would facilitate successful fundraising for projects and operations

Delivering a track record of profitability and providing attractive returns to shareholders Being recognized as the most innovative private sector development/financing vehicle for

infrastructure, complex/large industrial projects and SMME across the developing world.

Additionally and Value Addition of the ACP BANK

ACP Bank value addition will involve the following:

To Existing DFI: ACP Bank will offer a complementary focus to their own mandate, with ACP Bank specialising on: (i) proactive Infrastructure project development with the aim of making the targeted

- -investment and project development support for complex/large -ready, (iii) equity

support to large infrastructure and industrial projects to enhance their creditworthiness/risk profile, (iv) risk-sharing support to large infrastructure and industrial projects, (v) equity support to the SME sector, (vi) value-adding technical assistance support to clusters of SMEs in targeted sectors to make them investment-ready, export-ready or sub-contracting ready, hence, ready for financing; (a) Leveraging financial resources and knowledge resources from Asia, North America, selected emerging economies and the ACP states themselves and make them available to ACP financial and private sector.

To the ACP Group of States and their Private Sector: (i) project development, co-investing, advisory services for complex infrastructure projects and credit risk guarantee related to large infrastructure projects; (ii) promotion of viable SMME finance systems through the promotion of viable institutions, funding availability for credit, equity and risk sharing facilities, and

models, strategies, programs and products; (iii) complex/large industrial project development support, direct equity participation for large industrial projects, risk sharing support for large industrial projects, and co-financing for large industrial projects; (iv) availability of competitive trade finance


line of credit, structured commodity finance solutions; structured trade finance programs for large firms as well as SMEs.

To Existing Private Financial Institutions: Refinancing / direct loan schemes for SMME finance; partial risk sharing schemes, trade finance line of credit for SMEs, funding of private equity/venture

SME Banking and SME access to Finance strategies, programs and products.

The operating model of ACP Bank is diagrammatically depicted below:

Front Office Back Office Target Market Start-up capital Mobilization and Investors : number of institutions (among the BRIC, GCC, OECD Member countries, African countries and DFI Group) have expressed interest in partnering with the ACP Trade & Investment Bank subject to the realization of certain preconditions such as a high-level and more structured contact with local authorities, preparation of a comprehensive information memorandum, identification of the founding members from the ACP Group of States and the proof/evidence of a fairly substantial financial commitment in relation to the anticipated capital base from a core group of ACP countries :

Furthermore, the following preliminary list of potential technical partners in FDI Promotion, PPP in Infrastructure & OGM Sector Optimization have also been identified:

Business & Operating Strategies

Corporate Governance

Organizational Structure

Investment Banking Lending & Guarantee Operations

Private Equity/Venture Capital Treasury & Funding

Risk Management Quality Management

Performance Management

Business Planning & Corporate Strategy

Human Resources Corporate Services

Legal & General Secretariat Internal Audit

Trade Finance SMME Finance

Large Industrial Project Finance Infrastructure Finance

Advisory Services & Technical Assistance


FDI Promotion Partners identified and met:

Corporate Council on Africa: leading FDI and Business promotion organization between USA and Africa. Washington DC-based

Pacific Islands Trade & Invest: The region's lead export facilitation, investment and tourism promotion agency. An arm of the Pacific Islands Forum Secretariat

Association of African Investment Promotion Agencies

Potential Technical Partners met:

Swiss-based Waste to Energy Company SATAREM Brazil-based Infrastructure/Construction Company STADIA Brazil-based Development Bank for PPP/Infrastructure project structuring BNDES South Africa-based Boxcut Mining Deals Platform for OGM sector BOXCUT London-based International Finance Faculty on PPP and Project Finance - IFF

Basic Financial Modeling Assumptions and Financial Projections: Based on the outreach and impact ambitions of the project sponsors, a minimum start-up or paid-in capital of US $ 2 billion is required to launch the proposed Financial Vehicles. Under very low interest rate environment, the project displays solid profitability, liquidity position and financial structure with favorable scenario analysis.

Summary of ACP Bank option together with two further options.

Option 1: Realizing the ACP Trade & Investment Bank

The implementation of the ACP Trade and Investment implies the realization of number of critical preconditions:

Sufficient capital base: To be able to offer a fairly acceptable level of services in terms of scope, outreach and impact, the ACP Bank should start operations with a minimum paid-in-capital level of US$ 2 billion that compares favourably -based AFC and South Africa- -

such as the AfDB, the IADB and the ADB as illustrated in the below table.

: Potential shareholders to the ACP Bank include: ACP countries, ACP financial institutions, BRIC sovereign funds and DFIs, GCC sovereign funds and DFIs, G8 countries and DFIs, EC Development Funds to name the most prominent ones.

However, the unlocking of this level of funding requires a high-level of diplomatic, lobbying and roadshow activities with the backing and active/personal involvement of key Heads of State of the ACP space.

Highly qualified personnel: The recuitment of highly qualified personnel and the adoption of the highest level of professional standard in the management of the ACP Bank is the second most important requirement for a successful operation and management of the institution. Hence, recruiting the management of the ACP Bank through international/competitive recruitment and attractive salary and benefits package will be key in ensuring such a result.

Rating of the ACP Bank: Ultimately, the credibility of the ACP Bank, hence, its ability to raise the needed funds from the international financial market at favorable terms for on-lending and investment in favor of the ACP private sector is dependent on its ability to secure a solid credit rating, namely, an investment grade rating. In turn, this will be possible only if the bank is able to attract highly qualified personnel capable of implementing the relevant management and operating


standards; and ultimately, capable of achieving the operational performance expected from highly-rated DFIs.

As an alternative to setting-up a fully-fledged DFI, the ACP Group of countries could consider setting- the following structures:

ACP Infrastructure Facility: The infrastructure facility will be a facility that includes debt and equity components and provides short- to medium-term financing for infrastructure projects. It will also include advisory services to help governments design public-private-partnership projects.

ACP Financial Institution Capitalization (Equity) Fund: to help strengthen systemically important banks and Financial institutions across the ACP market, namely those serving the SMME market.

ACP Capitalization and Growth Fund: to capitalize systematically and support the growth of emerging large industrial firms and high-growth SME and technology-based SMEs of the ACP region.

mandate will be to mobilize and manage third-

ries mobilize additional capital resources for investment in productive private enterprise.

-fledged ACP Trade & Investment Bank.

Option 3: Capacitating Existing Regional DFIs

As a third option, the ACP group of States could consider developing the capacity (i.e. capital increase and technical expertise) of the main sub-regional DFIs operating across the six geographical regions of the ACP space: West Africa (EIDB/BIDC and/or WADB/BOAD), Central Africa (DBCAS/BDEAC), East Africa (EADB), Southern Africa (PTA Bank), Caribbean (CDB), Pacific (To be determined).

This has been a suggestion advanced by some stakeholders during the field missions, as it will save the project sponsors the painstaking process of setting-up a new multilateral DFI.

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itica

l com

mitm

ent n

eede

d

Ab

ility

to m

obili

ze th

e ne

eded

cap

ital

High

ly p

rofe

ssio

nal a

nd sk

illed

per

sonn

el re

quire

d

AC

P ba

nk m

ust b

e ra

ted

the

next

5 to

7 y

ears

Abili

ty to

mob

ilize

the

need

ed c

apita

l

High

ly p

rofe

ssio

nal a

nd sk

illed

fund

man

ager

s

Abili

ty to

mob

ilize

the

need

ed c

apita

l

Com

mitm

ent o

f the

pre

sent

boa

rd m

embe

rs o

f the

DF

Is ta

rget

ed

Fina

ncia

l re

quire

men

ts

US

$ 2

billi

on to

star

t U

S $

500

mill

ion

to 1

bill

ion

US

$ 1

billi

on (c

apita

l inc

reas

e +

tech

nica

l ass

.)

Impl

emen

tatio

n sc

hedu

le

Fairl

y lo

ng (2

yea

rs h

orizo

n m

inim

um)

Fair

(18

mon

th h

orizo

n m

inim

um)

Fair

(18

mon

th h

orizo

n m

inim

um)

Tech

nica

l ex

pert

ise

need

s Ve

ry h

igh

High

but

man

agea

ble

Low

and

man

agea

ble

Fund

s rai

sing

di

ffic

ultie

s Hi

gh a

nd m

anag

eabl

e on

ly w

ith st

rong

pol

itica

l sup

port

Hi

gh b

ut m

anag

eabl

e Fa

ir as

ben

efic

iary

inst

itutio

ns/r

isks a

re k

now

n


Next Steps: The next steps in implementing the Financial Vehicle Option adopted within a 24-30 : month timeframe will involve the following

Setting- Proposing a draft Convention creating the Agency ACP Structuring and formalizing the Partnership Agreement with key technical partners. and deciding on the location of the

on the agreed-upon criteria of location premium, competitiveness and incentives. ital of the proposed Financial

vehicle

agreement Undertaking Road Shows towards identified potential investors to secure equity

investment into the ACP Investment Bank and/or the ACP Investment Corporation. Secure/build office premises based on the collected Office Location Premium Form the Board of Directors Recruit competitively and internationally the CEO if the ACP Investment Bank or ACP

Investment Corporation option is adopted. Recruit competitively the Managing Directors (or Partners for the Investment Corporation)

, the Audit and Risk Management Officer, and the Finance and Administration Officer if the ACP Investment Bank or ACP Investment Corporation option is adopted.

Start the operations of the ACP Investment Bank or ACP Investment Corporation gradually .

ACP BANK - Draft Final Report (2) BANK... · APIX Agence de Promotion des Investissements et des...

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