Agence Française de Développement - AFD

Agence Française de Développement - AFD

Agence Française de Développement AFD is a public finance institution and the main implementing agency for France s official development assistance to developing countries and overseas territories. AFD works with central and local governments, nongovernmental organizations, and public and private enterprises to finance and implement development projects. A subsidiary, Proparco, is dedicated to private sector development. Contact point: Nils Meyer: +33 1 53 44 39 77, MEYERN@afd.fr 1. Basic Information 1.1. Institutional Organisation AFD is the main implementing agency for France s official development assistance ( acteur pivot de la cooperation française). AFD s contribution makes up 31% of France s development assistance (ODA). The strategic orientation board was created in June 2009. It oversees both preparation and execution of the means and objectives contract that binds AFD to the French state. The board prepares the state s guidelines before they are presented to AFD s board of governors, in accordance with decisions made by the Interministerial Council for Cooperation and Development. The Minister of Cooperation presides over the strategic orientation board, which includes representatives from those supervisory ministries that also hold seats on AFD s board of governors. 1.2. Budgetary Evolution and Apportioning AFD Approval by types of funding in 2011 (total: 6.883 M commitments, including Overseas and Proparco): Loans: 5.789 M Guarantees: 325.7 M HIPC Initiative and Budget support: 319.3 M Grants and Subsidies: 311.3 M Equity: 138.2 M 1.3 Practice on forward planning Overall budget framework: The Inter-ministerial Committee for International Cooperation and Development (CICID) defines development cooperation policies and identifies the area of concentration ( zone de solidarité prioritaire, ZSP). The CICID is chaired by the Prime Minister and embraces the 12 ministries most directly concerned with development issues. CICID is supported by the Ministry for Foreign and European Affairs (MAEE) and the Ministry

for Economy, Finance and Employment (MINEFE) and, from January 2008, the Ministry for Immigration, Integration, National Identity and Co-operative Development. All programmes involving ODA covered by the budget law are grouped together in a comprehensive policy document. The draft budget law is submitted in September to the National Assembly, which has 70 days to adopt it. The two main programmes that constitute ODA (programmes 110 and 209) and, since 2007 programme 301 (development for solidarity and migrations), represent an inter-ministerial mission that is presented in an integrated format in the budget law. Programme 110 (economic and financial aid to development) is managed by the MINEFE, programme 209 (solidarity with developing countries) by the MAEE, and programme 301 by the Ministry of Immigration, Integration, National Identity and Co-operative Development. These programmes include bilateral and multilateral financing. The fiscal year begins on 1 January. Planning at operational level: AFD is the pivotal operator for bilateral assistance in sectors related directly to the Millennium Development Goals and for implementing global budgetary assistance. AFD reports jointly to MINEFE and MAEE. Programme implementation also involves France s representatives in the partner countries (diplomatic offices, co-operation and cultural action services, research centres). The main instrument for programming assistance to the ZSP countries is the Partnership Framework Document (DCP). The framework presents the indicative financing envelope for French support, by sector of intervention, and spells out agreed activities over a five-year period. The frameworks are negotiated with the partner countries and confirmed in the Strategic Orientation and Programming Conference. The DCP is the key tool of the French Action Plan for aid effectiveness. Availability of forward information: Information on the ODA budget is available in the draft budget law submitted in September. France has adopted a three-year finance law (2009-2011) that gives medium- term indicative ODA volumes. At partner country level, multiyear ODA forecasts are contained in the indicative five- year Partnership Framework Document including a mid-term review of results. 2. Implementation Mechanisms 2.1. Instruments and modes of AFD finances development projects and programmes through a specialized range of financial instruments, tailored to the needs of aid recipients. The principal funding tools of the AFD Group (AFD and Proparco) include: Loans: AFD provides (1) sovereign loans to national governments and to state-guaranteed public entities and (2) non-sovereign loans to private sector companies and public or private sector entities without state backing. Grants and Subsidies: AFD provides grants and subsidies for high-impact projects particularly in healthcare and education that do not generate sufficient profit over the short or medium term to pay back market-rate loans. AFD prioritizes grants to the poorest African

countries. AFD also provides grants and subsidies to nongovernmental organizations to fund their projects. Guarantees: AFD provides credit guarantees that can motivate commercial bank lending to third parties especially small and medium-size businesses for capital investment, job creation and projects with positive environmental impacts. Private Equity: A specialized investment capital team at Proparco manages most of the AFD Group s equity stakes. These investments provide companies and financial institutions with the funding they require for their long-term growth. AFD also offers technical assistance to aid recipients to ensure that funded projects perform as well as possible. Such assistance takes many forms: transferring knowledge and building local capacities, helping institutions arrange financing and manage projects, improving administrative and management functions, and paying for experts and consultants, among other contributions. 2.2. Implementation management Local project owner presents a funding application to the nearest AFD s field office (or bureau). Degree of decentralisation: High. The AFD office identifies projects and verifies that they fall under the agency s intervention strategy. No matter who or what the project owner or the type of funding requested, AFD follows exactly the same project selection and approval process.

2.3. Other forms of implementation Cofinancing and blending («mixage prêt don») have gained in recent years a great momentum. They demonstrate the degree of cooperation and coordination of donors and donor agencies, and AFD has greatly taken part in this dynamic. In 2012, about 40% of newly committed projects (number and volumes) are co-financed by other donor agencies. Major infrastructure investments are at the core of this exercise, as they require significant funding that a single financier will not be able to cover alone. SSA is accounting for more than half of the co-financing projects. The European Commission, via its financing instruments (blending, delegated cooperation), and the EIB are the co-financier number 1 for AFD, followed by the Word Bank Group, the Asian Development Bank and KfW. AFD has a number of partnerships and private public relations with the private sector, just to name a few of them: the Network IMS Entreprendre pour la cité (Federation of 230 enterprises committed to social business), Care France (partner for developing PPP towards BoP «bottom of the pyramid»), the Fund Danone.communities, ESSEC business school and others. 3. Sector and Geographic Focus 3.1. General: Main objectives/focus : According to the Contrat d objectifs et de moyens Etat/AFD 2011-2013 and Projet d orientations stratégiques 2012-2016», AFD deploys France s aid monies as grants and loan subsidies, concentrating : 60% of it in sub- Saharan African countries prioritizing the poorest nations (target: 80 % of the French Foreign Aid allocated to AFD must be delivered in the 14 Africans poorest countries1) 20% in North African and Middle Eastern countries bordering the Mediterranean. max. 10% of the budgetary effort : Middle-income and emerging countries benefit from large loans that use few or no public aid monies. Fragile States: 10 % of the French grant. Sectoral Concentration by geography: Africa: Agriculture and Food security, Infrastructures and Urban Development, Private Sector and Inclusive Growth, Basic Services (Health, Education, W/S). Mediterranean Countries: Inclusive Growth Employment (SME support, microfinance, Financial sector promotion, agriculture, Vocational Training); Urban and Social Cohesion; Well-being/Quality of Life (Water, Food Security, Energy). 1 Bénin, Burkina Faso, Burundi, Comores, Djibouti, Ghana, Guinée Conakry, Madagascar, Mali, Mauritanie, Niger, République Démocratique du Congo, République Centrafricaine, Rwanda, Sénégal, Tchad, Togo.

Asia: Climate Change; Renewable Energy; Energy Efficiency; Sustainable Management of Forests and Soils; Adaptation and Reduction of Vulnerabilities. Latin America: Sustainable Development (national and regional levels); Management of Natural Resources and conservation of Biodiversity; Climate Change; Urban policies (Inclusiveness). Objective: 50 % of the annual approvals are dedicated to Climate Change. (30% Proparco). Data 2011 (approvals):

3.2. Activities per country/sector Not available 4. Cooperation and coordination mechanisms between the PN Members 4.1. Existing cooperation with other European PN member agencies KfW: through blending mechanisms (Infrastructures Trust Fund for Africa, Neighbourhood Investment Facility and other regional facilities); The Mutual Reliance Initiative (donor alignment via mutual recognition of procedures); within the European Platform EUBEC; staff exchange; IDFC. AECID: Blending (Latin America Investment Facility Mexico). Morocco: Co-financing arrangements in the sectors of Health and Education. AECID: Contribution to the African Agriculture Fund. GIZ: Mainly through Delegated Cooperation : GIZ is delegatee in Pakistan and South Sudan, and a Partnership agreement on professional training (in 2009 enlarged to become tripartite with LuxDev); in April 2012, a benchmarking mission undertaken by AFD. DFID: institutional partnership DfID-MAE-AFD; delegated cooperation in Indonesia and the Sahel. LuxDev: see above at GIZ on professional training. European Commission: see above chapter 2.3 on blending and delegated cooperation.