Private Sector Operations
The AfDB as a
Development and Business Partner
July 20, 2011
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
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
Strategic Areas of Activities and Tools
Financial Market
Development
Direct
Lending
Operations
Infrastructure
PPPs
Lines of credit
LOC + TA
Leasing
Enabling
Environment
Budget support
Direct loans
Guarantees
Equity
Equity/Quasi-Equity
Direct loans
Guarantees
Equity
Funds
Institutional support
Capacity Building
ESWs
Trade Financing
SME Financing
Private Sector Department
Public sector /
Governance
Departments
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
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.
AfDB uses 4 criteria to select its Private Sector
investments
Strategic alignment
Additionality
• Deal structuring
• Crowding in of
commercial investors
• Political risk mitigation
• Financial risk mitigation
• Country’s economic and
social priorities
• AfDB’s regional or country
strategy
Development outcome
• Employment
• Local content
• Social and
environmental impacts
• Tax revenues
Commercial viability
•Market fundamentals
•Financial structure
• Sponsor’s experience
and financial strength
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
An active portfolio of over UA 2.23 bn (USD 3.57 bn) and
poised for further growth
As at December 2010
Manufacturing Health
Infrastructure
(Pow er, Shipyard) Agribusiness 0,9%
0,2%
16.6%
1,2%
Tourism
1,9%
Infrastructure
Funds
8.2%
Infrastructure
Oil & Gas
13.2%
Mining
8,7%
Financial Intermediation
55,3%
Products for financial assistance
Loans
Guarantee
0.8%
Equity and Quasi-Equity
Lines of Credit
LOC
52.1%
Lo ans
30.5%
Guarantees
Syndication
Quasi-Equity
0.4%
Equity Funds
9.8%
Underwriting
New areas
P rivate Equity
0.39%
Enclave P ro jects
6.0%
Ghana projects (some examples and indicative pipeline)
Ghana Oil Palm Development Corporation
Senior debt for expansion of processing facility
Amount committed: EUR 7.14 m
Date approved: 12.12.2002
CAL Bank Limited
Line of Credit for on-lending to SMEs
Amount committed: USD 15 m
Date approved: 24.07.2008
Tema Osono Power Plant
Senior debt for the development of a power plant
Amount committed: USD 30 m
Date approved: 15.10.2008
Ghana Cocoa Board
Trade Facility for 2010 Cocoa harvest
Amount committed: USD 35 m
Date approved: 16.09.2009
Kempinski Accra Hotel
Senior debt for the construction of a 5-star hotel
Amount committed: USD 18 m
Date approved: 27.09.2010
Indicative Pipeline
•Power Plant Expansion
•Gas infrastructure
•SME Funds
•SME Guarantee Scheme
•Line of Credit
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
Future Orientations (Transactions):
•
Financial Services Diversification (leasing, microfinance)
•
Syndications
•
Private infrastructure projects/Public-Private Partnerships (PPPs)
•
Renewable energy (wind, solar, hydro)
•
Assistance to SMEs
Thank you