Private Sector Operations The AfDB as a Development and Business Partner July 20, 2011.
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Transcript of Private Sector Operations The AfDB as a Development and Business Partner July 20, 2011.
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Private Sector Operations
The AfDB as a Development and Business Partner
July 20, 2011
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AfDB’s Position on Private sector development
• PSD is an institutional priority for the AfDB
• It is a key component of the Bank’s Vision and Strategic Plan
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The AfDB’s private sector development efforts, are anchored on three interrelated activities:
• Understanding the business environment through diagnostics and strategy development
• Assisting African governments to improve the enabling environment for the private sector
• Creating catalytic and demonstration effects by assisting entrepreneurs with specific transactions
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Strategic Areas of Activities and Tools
Financial Market Development
Direct Lending
Operations
Infrastructure PPPs
Lines of credit
Direct loansGuarantees
Equity
Direct loansGuarantees
Equity Funds
LOC + TA
Leasing
Equity/Quasi-Equity
Trade Financing
SME Financing
Enabling Environment
Budget support
Private Sector Department
Public sector / Governance Departments
Institutional support
ESWs
Capacity Building
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AfDB Private Sector Instruments
•Senior Debt – Up to 20 years (5 yrs grace period), foreign or local currencies
•Guarantees – partial risk, partial credit (long tenors)
•Subordinated Debt – local currency
•Equity – direct, equity funds, up to 25%
•Technical Assistance – grants for studies, capacity building
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Strategic Priorities
•Improving the Investment Climate - To encourage domestic and foreign investment. •Supporting Private Enterprises – Promoting entrepreneurship will create sustainable growth.•Strengthening Financial Systems – A sound financial system and a vibrant banking sector are essential. •Building Competitive Infrastructure – Participation of the private sector in infrastructure through PPPs.•Promoting Regional Integration and Trade – To assist African countries to become globally competitive.
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Strategic alignment• Country’s economic and social priorities• AfDB’s regional or country strategy
Commercial viability•Market fundamentals•Financial structure• Sponsor’s experience and financial strength
Additionality• Deal structuring• Crowding in of commercial investors • Political risk mitigation• Financial risk mitigation Development outcome
• Employment• Local content • Social and environmental impacts• Tax revenues
AfDB uses 4 criteria to select its Private Sector investments
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The AfDB’s private sector operations cover a broad range of sectors:
• Power – IPPs, PPPs, hydro, thermal, wind, solar
• Transport – airports, roads, ports
• ICT – submarine cable, satellite, telephony
• Oil & Gas – exploration, extraction, refining, pipelines
• Mining – extraction, refining, smelting
• Manufacturing – cement, fertilizers
• Agribusiness – sugar, oils, timber, bio-fuels, fishing
• Hospitality – hotels, resorts
• Health & Education – hospitals, schools
• Financial sector – banks, insurance, leasing, microfinance
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Mining8,7%
Infrastructure Funds8.2%
Infrastructure Oil & Gas
13.2%
Manufacturing0,9%
Tourism1,9%
Financial Intermediation55,3%
Infrastructure (Pow er, Shipyard)
16.6%Agribusiness
1,2%
Health0,2%
An active portfolio of over UA 2.23 bn (USD 3.57 bn) and poised for further growth
As at December 2010
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Products for financial assistance
Loans
Equity and Quasi-Equity
Lines of Credit
Guarantees
Syndication
Underwriting New areas
Guarantee0.8%
LOC52.1%
Quasi-Equity0.4%
Equity Funds9.8%
Loans30.5%
Enclave P rojects6.0%P rivate Equity
0.39%
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Ghana projects (some examples and indicative pipeline)Ghana Oil Palm Development Corporation Senior debt for expansion of processing facility
Amount committed: EUR 7.14 mDate approved: 12.12.2002
CAL Bank Limited Line of Credit for on-lending to SMEsAmount committed: USD 15 mDate approved: 24.07.2008
Tema Osono Power Plant Senior debt for the development of a power plantAmount committed: USD 30 mDate approved: 15.10.2008
Ghana Cocoa Board Trade Facility for 2010 Cocoa harvestAmount committed: USD 35 mDate approved: 16.09.2009
Kempinski Accra Hotel Senior debt for the construction of a 5-star hotelAmount committed: USD 18 mDate approved: 27.09.2010
Indicative Pipeline •Power Plant Expansion •Gas infrastructure•SME Funds•SME Guarantee Scheme•Line of Credit
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Future Orientations ( Policy Orientations in Support of Private Sector Development):
• Improving Business Environments and Strengthening RMCs’ International Competitiveness– Reforming policies and building critical institutions – Infrastructure development and infrastructure services delivery – Financial Intermediaries and Capital Markets – Economic Diversification – Transformation of the production base
• Broadening Participation and Inclusion in Private Sector led economic growth– Promoting Entrepreneurship and Entrepreneurs in Africa – Micro, Small and Medium Enterprises (MSMEs). – Empowering Women to Participate
• Embedding Social and Environmental Responsibility in Private Sector Development
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Future Orientations (Transactions):
• Financial Services Diversification (leasing, microfinance)
• Syndications
• Private infrastructure projects/Public-Private Partnerships (PPPs)
• Renewable energy (wind, solar, hydro)
• Assistance to SMEs
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Thank you