PROPARCO in. Sub -Saharan Africa

Transcription

1 PROPARCO in Sub -Saharan Africa

2 , AFRICA: A PRIORITY Africa has a population of over a billion inhabitants. The figure is expected to almost double by Both the continent and its market are experiencing sweeping changes. Growth rates have been high in recent years roughly 5% a year well above those of Organisation for Economic Cooperation and Development (OECD) countries. Yet this growth is not enough to eradicate poverty: a third of people living below the poverty line live in Africa, mainly Sub-Saharan Africa. The continent has huge financial needs and is particularly exposed to risks stemming from the global economic situation, as the recent food, financial and economic crises have shown. In order to face Africa s major challenges, it is essential to boost growth and make it sustainable. The private sector plays a key role in this. It is the main engine of growth and job creation and generates resources that allow States to play their role as regulators and wealth redistributors. It provides certain essential services and is a key player in terms of environmental and social concerns. and the impacts of its financing both demonstrate that investing in the South particularly in Africa is profitable. Since 2006, PROPARCO s commitments in Africa have more than doubled. In 2009 they accounted for 40% of its activity. This figure makes PROPARCO the most Africa-oriented development finance institution in Europe. PROPARCO works in close partnership with its clients and can tailor its activity to local challenges thanks to its continent-wide network of offices. The offices in Sub-Saharan Africa are located in Johannesburg, Lagos, Nairobi and Abidjan which means PROPARCO covers the whole of the Sub- Saharan region. Its presence in Africa is backed up by three other offices in the Mediterranean (Casablanca,Tunis, Cairo). PROPARCO a development finance institution has made Africa its priority. Its activity focuses on financing the private sector and aims to catalyze private investment in the region. Its results KEY FIGURES Over the past 3 years: 4 regional offices 920M of commitments 37% of business people hooked up to electricity 300 MW of renewable energy generated 26 million people connected to a telecoms network Casablanca Abidjan Tunis Lagos Cairo Nairobi jobs created or secured 155M contributed to State revenues every year Johannesburg

3 GIVING SUB-SAHARAN AFRICA THE TOOLS FOR ITS GROWTH AFD PROPARCO s core mandate in Sub-Saharan Africa is to promote strong growth with the aim of creating sustainable and more evenly distributed employment. PROPARCO s strategy pursues several objectives: FINANCING BUSINESSES: CREATORS OF REVENUES AND EMPLOYMENT Businesses in Sub-Saharan Africa, more than anywhere else in the world, have extremely limited access to financing. PROPARCO s activity is complementary to commercial banks. It supports businesses by offering them long-term resources: loans, guarantees and direct equity investments. It mainly finances the agribusiness sector (plantations, livestock raising, sea industries, cogeneration, subsistence industries...), the manufacturing sector (construction materials, renewable energy equipment suppliers...), the tourism industry (middle and top-end) and social sectors (education and health). PROPARCO s financing focuses on: energy in order to give widespread access to modern and clean energies; transport in order to improve the lives of city dwellers and give easier access to global markets; telecommunications in order to combat the digit divide. All the infrastructure PROPARCO finances respects the environment. PROPARCO promotes the use of renewable energies (wind, geothermal, solar energy, mini hydro). It also promotes greater energy efficiency and biomass, biogas and biofuel development. FACILITATING LONG-TERM INVESTMENT PROPARCO supports bank and financial intermediation from microfinance to private equity investment in order to give businesses and entrepreneurs access to financial and banking services. AFD Benoît Verdeaux PROPARCO RCO scales up access to energy ergy in Africa, a continent with immense energy needs, and promotes the use of renewable energies. PROVIDING BASIC SERVICES TO THE POOR Infrastructure access and quality are key factors for the attractiveness of a region, growth and improving living conditions. SENEGAL Long-term financing in local currency Senegal has the second largest banking system in West Africa after Côte d Ivoire. It is also highly competitive over fifteen banks share accounts yet the rate of access to banking services remains low (under 10%). The Banque Internationale pour le Commerce et l Industrie au Sénégal (BICIS), the country s third largest bank with 17% of the market, is BNP Paribas subsidiary in Senegal. The bank is specialized in the private customer, institutional and PROPARCO supports microfinance development in Africa in order to meet the needs of a large number of local micro-entrepreneurs. It supports microfinance institutions, holding companies and funds mainly operating in this sector. The range of local banking products is mainly limited to shortcorporate segments and seeks long-term resources in order to shore up its balance sheet and back the maturity of its resources to that of its loans. In 2009, PROPARCO granted BICIS an FCFA6.7bn line of credit with a seven year maturity. By providing long-term financing in local currency, PROPARCO has helped the bank avoid a foreign exchange risk and is giving Senegalese businesses the resources they need to invest in their growth. It is consequently helping to develop the private sector and employment in the country.

4 term products. By supporting banks and financial systems, PROPARCO gives local players the means to boost the economic fabric of their countries themselves. It offers a range of loans and lines of credit earmarked to finance SMEs, it guarantees via its signature loans allocated to businesses in local currency and directly shores up the capital of credit establishments. PROPARCO also promotes private equity investment for which it is now one of the major players in Africa. Its participation in investment funds - with the support of local teams helps scale up the impacts of its financing and reach the whole SME sector. Finally, PROPARCO supports the development of financial systems that are designed to suit the local context, are more efficient and benefit from an enhanced level of depth. UGANDA Doubling electricity production Uganda is one of the most lagging countries in the world in terms of access to electricity, with only 10% of the population connected to the electricity grid. The aim of the Bujagali hydropower plant project is to bridge this deficit. It is currently under construction with commissioning scheduled for the end of The 250 MW Bujagali dam will alone generate almost half of the energy produced in Uganda at half the cost of thermal energy. PROPARCO and AFD have cofinanced the project implemented by Bujagali Energy Limited for an amount totaling $ 72.8M, alongside other development institutions, European, African and American banks. In addition to its impacts on power generation, it was necessary to create jobs to build the dam. The project will also reduce CO 2 emissions by 1.5 million tons a year and will have limited environmental and social impacts. Nicolas Fornage Benoît Verdeaux KENYA Producing clean energy from sugar cane waste Mumias Sugar Company, a listed company located in the Lake Victoria region, is Kenya s largest sugar producer. Mumias is developing a policy to diversify its activities in order to face the future opening of the domestic sugar market to imports from countries in the region. This includes implementing a cogeneration project. By burning sugar cane (bagasse) waste, the company has now become almost totally energy independent. In 2008, PROPARCO allocated a $ 35M loan for the construction of a second cogeneration plant which has made it possible for the company to sell its production surplus (35 MW) to the national electricity supplier KPLC. Thanks to this activity, Mumias can diversify its sources of income, produce clean and renewable energy in a country which suffers from a major shortage and, at the same time, sell carbon credits on the international market.

5 CUSTOMIZED FINANCIAL SOLUTIONS PROPARCO focuses exclusively on long-term financing in countries or for counterparts that are considered too risky by commercial banks. It offers a range of financial products that are complementary to traditional commercial products. Equity investments PROPARCO always acquires minority stakes which are destined to be sold after a 4 to 8 year period, once the business has reached a level of maturity that allows it to raise capital on markets or request financing from private investors. PROPARCO makes both equity and quasi-equity investments: capital, preferential shares, convertible bonds and participation loans. PROPARCO also invests in equity in investment funds. In Sub -Saharan Africa it supports the creation or development of regional funds dedicated to SME financing. It provides a wide range of products, in particular via the Investment and Support Fund for Businesses in Africa (FISEA). Loans PROPARCO tailors its medium and long-term loan products to the depth of each market. It offers senior, junior, mezzanine and subordinated loans ranging between 5M and 100M (the average being 13M). Maturities range between 5 and 15 years depending on project requirements. These loans may be denominated in euros, dollars or local currencies. Foreign currency products PROPARCO offers guarantees or direct loans in local currency in order to reduce the foreign exchange risk. Its signature is a guarantee of solvency and may take several forms: Guarantees for bond issues or other market products; Guarantees for interbank loans; Guarantees for loans in local currency; Liquidity guarantees for mutual funds. B.Verdeaux Tea plantation in Kenya. FISEA A new equity financing solution in Sub-Saharan Africa FISEA is an investment fund that takes equity participations in businesses, banks and microfinance institutions, as well as investment funds operating in Sub-Saharan Africa. FISEA was set up in Paris in The fund is hosted by Agence Française de Développement and managed by PROPARCO. FISEA aims to be complementary to traditional private funds. It focuses on investments carrying a higher risk in unstable or post-crisis regions and makes small-scale investments in traditionally neglected sectors (agriculture, microfinance, new energies, health, education...). It has a 50M annual investment target for a five-year period. Unit amounts range between 1M and 10M and can be coupled with financing for technical assistance. FISEA aims to galvanize economic growth in this region.

6 PROPARCO is a development finance institution jointly held by Agence Française de Développement (AFD) and public and private shareholders from the North and South. The company has a mandate to galvanize private investment in emerging and developing countries with the aim of supporting growth, sustainable development and the achievement of the Millennium Development Goals (MDGs). PROPARCO was founded thirty years ago on the conviction that the private sector is a key player in development. It tripled its capital in PROPARCO finances investments that are economically viable, socially equitable, environmentally sustainable and financially profitable. It tailors its sectoral strategy to the level of development of each country and focuses on productive sectors, financial systems, infrastructure and private equity investment. PROPARCO invests in a vast geographical area that encompasses both the major emerging countries and the poorest countries, particularly Africa. The company has extremely high requirements in terms of social and environmental responsibility. PROPARCO offers a full range of financial products tailored to the needs of private investors in developing countries (loans, equity, guarantees and financial engineering). In 2009, PROPARCO invested 1.1 billion euros in eighty projects in over thirty countries. Michel Hasson 151, rue Saint - Honoré Paris Tel.: Fax: cover Benoît Verdeaux WEST AFRICA Boulevard François Mitterrand 01 BP 1814 Abidjan, Côte d Ivoire Tel.: (225) Fax: (225) proparcoabidjan@afd.fr NIGERIA AND CENTRAL AFRICA Melrose Office suites Phoenix House Plot 26E Abdulrahman Okene Close Off Ligali Ayorinde Street Victoria Island Lagos, Nigeria EAST AFRICA Royal Ngao House Hospital Road P.O Box Nairobi, Kenya Tel.: (254) (254) Fax: (254) SOUTHERN AFRICA AND MADAGASCAR Ballywoods Office Park Ironwood House, 1st Floor 29 Ballyclare Drive, Bryanston P.O. Box Sandton 2146 Johannesburg, South Africa graphic design: Vincent Collin Tel.: (234) afdnairobi@groupe-afd.org Tel.: (27) Fax: (27) proparcojohannesbourg@afd.fr