AFD group and Nigeria

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Lago

s, N

iger

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Jam

es K

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Agence Française de Développement

NIGERIA

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NIGERIAAGENCE FRANÇAISE DE DÉVELOPPEMENT

AFD Group commitments in Nigeria

NigeriaNigeria is a young democracy, marked by challenges on a scale that strictly matches its demographic and economic weight. The country has a population of over 160 million inhabitants evenly distributed between cities and rural areas. Its Gross Domestic Product which was rebased in 2014 makes it Africa’s leading economy today. However, despite strong growth over the past decade (annual average of 7%) and the considerable oil revenues generated by the trading of some 2 million barrels of crude oil a day, over 40% of the population still lives below the poverty line. Access to health, to education, to a source of drinking water or to electricity in the country is lower than the average amongst Sub-Saharan African countries. Finally, there are very important disparities within the country: in 2010, the poverty rate in Lagos State was reduced to 23% when at the same time it was nearing 60% in the North-Eastern States.

Since 2003, successive governments have been implementing a consistant reform program with the aim of bridging Nigeria’s gaps in order to bring the country up to the same level with other emerging economies. Its main objectives are to strengthen human capital (education, health and vocational training), to diversify the economy and improve its competitiveness (agriculture and food security, manufacturing industry), and to develop infrastructure (electricity, transport, information and communication technologies).

Rural roads in Enugu State © Kevin Cariou

Towards the end of 2008, AFD opened a Country Office in Abuja. Following an initial implantation phase, its activity has been growing in the context of the strategic partnership initiated between France and Nigeria with the signing of a Memorandum of Understanding in May 2009.

For a quick contribution to the development of Nigeria, AFD has decided first to rely on the World Bank’s experience in the frame-work of structured co-financings for the funding of urban trans-port, urban water supply and rural road rehabilitation projects and programs.

For the coming years, AFD’s operational strategy for Nigeria will focus on the inclusive and sustainable development of the country. In order to contribute to the attainment of Nigeria’s long-term strategic priorities, AFD seeks to: ■■ Contribute to the diversification of the economy and to the improvement of its competitiveness;

■■ Develop urban infrastructure and promote the growth of sustain-able cities.

Ibadan

Port Harcourt

Kano

Abuja

NIGER

CAMEROON

BURKINAFASO

GHANA

GABON

EQUATORIALGUINEA

GULF OF GUINEA

BENIN

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Lagos

Sectoral breakdown of approved projects (USD million)

60155

3

211270

Urban development and urban water

Transport and energy

Rural development

Financing SME investments and microfinance

Capacity building

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Power transmission lines in Wamba, Nassarawa State © Adesoji Ademola

Supporting Nigeria’s development by financing essential infrastructure In Nigeria, AFD has been essentially involved in public sector project funding (Federal Government, States Governments) with sovereign loans mainly in urban development and access to power.

In view of the infrastructural needs identified, AFD also intends to develop its non-sovereign loan operations (without a State guarantee) in support to public and private actors.

Improving urban infrastructure A major development priority for the Nigerian Government is to improve living conditions in the cities where 50% of Nigerians already live. Urban development is therefore one of the main focuses for AFD’s operations in Nigeria.

In this regard, AFD is supporting several initiatives in the urban water and public transport sectors, as well as for urban renewal in Lagos. Between 2010 and 2014, AFD allocated over USD 310m to these urban development sectors.

Scaling up access to power and promoting renewable energies and energy efficiency Nigeria, which has set access to power as the top priority for its devel-opment policy, is part of the first wave of Sub-Saharan African countries targeted by the UN Sustainable Energy for All (SE4ALL) initiative. AFD has taken part in this challenge by supporting the power transmission sector, the backbone of the power grid. AFD is therefore supporting the State-owned company TCN (Transmission Company of Nigeria) for the development of its power transmission links to the main distribution centers.

An initial project to increase the supply of electricity to the Federal capital Abuja received a first allocation in 2013 (USD 170m), and a second financing phase is already envisaged.

In parallel, AFD is also working on renewable energies, energy efficiency, and intends to support vocational training in the power sector.

Giving priority to urban public transport Lagos is the largest city in Sub-Saharan Africa, with over 15 million inhabitants and an annual growth rate of 6%. This leads to urban sprawl even beyond Lagos State borders. In November 2011, AFD approved a USD 100m loan to the Federal Government to address the challenges related to urban mobility in Lagos metropolis. In line with prevailing external borrowing guidelines, this loan was on-lent to Lagos State by the Federal Government and aims to improve public transport infrastructure and strengthen the traffic management system in the country’s economic capital.For example, under the Lagos Urban Transport Project (LUTP), a Bus Rapid Transit (BRT) corridor connecting Mile 12 and Ikorodu has been built. This corridor is considered as a priority by the local authorities and contributes to improving daily access to the Lagos peninsula for some 500,000 people.

BRT corridor in Lagos © James Keogh

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Assisting regional integration and supporting the ECOWAS agricultural policy

The Economic Community of West African States (ECOWAS) is a key actor in regional integration and, as such, is receiving increasing support from AFD, particularly in the agriculture and food security sector.

Four grants totaling USD 70m have already been allocated, including a major portion of delegated funds from the European Union.

At regional level, AFD works closely with other European donors, particularly for the implementation of a project which aims at creating a Regional Food Security Reserve, a project that has been promoted by the G20 since 2011.

Although AFD’s operations currently focus on the agricultural sector, they should continue to develop and could be extended to other sectors in the coming years (energy, infrastructure...).

Building the capacities of local and regional actorsAFD has a wide range of financial instruments allowing for support at various phases of a project life cycle, from preparation to ex post evaluation. Thus, since the early 2000s, AFD has extended several project preparation grants to the Nigerian Government, totaling USD 3m.

Farmers’ granaries in Adamawa State © Kevin Cariou

AFD Group implements a wide range of financial instruments in Nigeria

AFD Group implements a wide range of financial instruments in Nigeria:

■■ Long-term sovereign and non-sovereign loans on preferential terms;

■■ Guarantees to banks (ARIZ) to promote access to credit for small and medium-sized enterprises (SMEs);

■■ Equity investments in companies or investment funds via PROPARCO.

These instruments make it possible to support different types of project for various amounts and to assist the different development actors, both public and private.

This set of financial instruments is supplemented by:■■ Training provided by the Center for Financial, Economic and Banking Studies (CEFEB): professional master’s degree and short-term programs;

■■ AFD’s participation in national sectoral and crosscutting strategic reflection via grant financing for studies and analytical work.

The financings committed through these funds have allowed for the funding of preliminary feasibility studies in preparation to projects, such as the rural road rehabilitation project in the States of Adamawa, Osun, Niger and Enugu, in partnership with the World Bank (RAMP, Rural and Access Mobility Project).

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Supporting the development of small and medium enterprises and improving their competitivenessIn a context where the restructuring and consolidation of the bank-ing sector, following the crisis in 2009, has now created a favorable environment, support for the private sector continues to be one of AFD’s priorities in Nigeria. The aim is to support and diversify growth and tackle chronic unemployment.

AFD’s operations in this sector include the allocation of bank guar-antees (ARIZ), which allow local banks to share the risk on loans to Nigerian SMEs.

Private sector partnership for housing for the low-income households

AFD, in partnership with Lafarge, has operationalized its commitment to affordable housing. In September 2013, USD 6.5m of financing was allocated to the microfinance bank LAPO, Nigeria’s leading microfinance bank, with 900,000 clients and 323 branches.

This financing helps low-income families finance the construction, extension and refurbishment of their homes, which makes a lasting improvement to their living conditions.

This pilot project should allow over 3,000 households to access credit and improve their housing conditions.

PROPARCO in Nigeria

PROPARCO, AFD’s private sector financing arm, has been active in Nigeria since 2007. Its operations include banking intermediation loans, with or without AFD’s participation, to support 7 major banks in Nigeria.

Alongside AFD’s operations, PROPARCO finances infrastructure projects managed by the private sector (PPP). PROPARCO is part of the financial closing for Azura, a private 452 MW thermal power station (IPP) in Edo State. It is also supporting the development of solar power plants and renewable energies and is considering financing Lekki Port in Lagos State.

PROPARCO will continue to support Nigeria’s industrialization in key sectors, such as agribusiness, industry, telecoms, hospitality, health and SME development, either through direct investments with promoters, or by setting up new credit lines to banks. It will also continue to support certain microfinance institutions (MFIs) in the country.

A man in front of his house in Ogun State © Lafarge - G.Osodi - Capa Pictures

Furthermore, in 2014, AFD allocated USD 130m of financing to the Federal Government, in cofinancing with the World Bank, African Development Bank and German KfW, to support the creation of an SME development bank (Development Bank of Nigeria).

AGENCE FRANÇAISE DE DÉVELOPPEMENT

5 rue Roland Barthes 75598 Paris Cedex 12 – France Tel. +33 1 53 44 31 31 Fax +33 1 44 87 99 39 www.afd.fr

AFD ABUJA

N° 3 Udi Hills Street, Off Aso Drive, Maitama – Abuja, Nigeria Tel. 234 (0) 703249 47 71/72 http ://nigeria.afd.fr [email protected]

AFD AND PROPARCO LAGOS

C/o Consulate General of France1, Oyinkan Abayomi Drive, Ikoyi, Lagos. Tel. 00 (234) 1 462 84 64 [email protected]

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AFD, the Agence Française de Développement , is a public development-finance institution that has worked for seventy years to alleviate poverty and foster sustainable development in the developing world and in the French Overseas Provinces. AFD executes the French government’s development aid policies.

Working on four continents, AFD has seventy-one field offices and bureaus, including nine in France’s overseas provinces and one in Brussels. The Agency provides financing and support for projects that improve living conditions, promote economic growth, and protect the planet.

In 2013, AFD committed €7.8 billion to projects in developing and emerging countries and in the French Overseas Provinces. These AFD-financed projects will provide schooling for children, improve maternal health, promote equality between men and women, support farmers and small businesses, and bolster access to drinking water, transportation and energy. These newly-funded projects will also help mitigate climate disruption by abating nearly 3.3 million metric tons of carbon dioxide-equivalent annually.

Fishermen in Makoko at the foot of the Third Mainland Bridge in Lagos © Kevin Huart

FFEM

The French Global Environment Facility / Fonds Français pour l’Environnement Mondial (FFEM) is a bilateral public fund initiated by the French Government in 1994. The FFEM secretariat and its financial management are entrusted to the Agence Française de Développement (AFD). The FFEM co-finances projects that encourage the protection of the global environment in developing countries. Its co-financing is exclusively done as grants and is used for the implementation of pilot projects that combine environmental protection and economic development in the recipient countries. The FFEM is an influential strategic instrument for the French policy on Official Development Assistance regarding global environmental protection. Its activities focus on the topics of biodiversity, international waters, the climate change, land degradation and desertification, persistent organic pollutants and the stratospheric ozone layer. By the end of 2013, the FFEM has co-financed 258 projects with €299m. Two thirds were spent on sub-Saharan Africa and the Mediterranean.

www.ffem.fr

PROPARCO, AFD’s subsidiary dedicated to private investment, promotes private investment in emerging and developing countries in order to boost growth, promote sustainable development and reach the Millennium Development Goals. Its financing is tailored to the specific needs of investors in the productive sector, financial systems, infrastructure and private equity investment.

www.proparco.fr

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AFD group and Nigeria

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