AFD
Missions & financial tools
VIENTIANE
November 4th 2011
1. AFD at a glance
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What is the AFD Group?
 An “EPIC” under French law, e.g. a public establishment that has industrial and
commercial characteristics. Three French Ministries provide oversight:
 Foreign and European Affairs
 Economy, Finance and Industry
 Interior, Overseas France, Local Authorities and Immigration
 AFD, a specialized financial institution subject to banking regulations. and a
subsidiary dedicated to private-sector financing, PROPARCO, form the AFD
Group
 A development-finance and aid organization that implements France’s aid
policies, drawing on:
 Cooperation framework agreements approved in November 2010
 A ″means and objectives″ contract, defined with AFD’s supervisory ministries
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Funding growth continues
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Operating regions and new offices opened
in 2010
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AFD’s international “ecosystem”
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AFD’s French partners and interlocutors
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AFD optimizes public development-aid
monies
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Financial instruments
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AFD’s funding by region (€ Million)
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Sectors
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Development results
In 2010, AFD approved funding for developing and emerging countries that will help :
 Improve drinking-water supply for 33 million people
 Provide primary schooling for 13.4 million children
 Refurbish or build transportation systems that will be used by 85.8 million passengers
per year
 Abate 5 million tons of CO2 annually through energy efficiency
 Connect 8.2 million people to the telecommunications network
 Provide 3 million people access to traditional or renewable electricity systems
 Grant €428 million worth of microloans, benefitting more than 700,000 people
 Improve waste collection and disposal services for 2.4 million people
 Support agricultural and irrigation projects that will benefit 1.4 million people
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2. AFD in LAOS
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AFD in LAOS
Presentation
Operates since 1994
4 sectors of intervention
 Rural development
 Infrastructures : energy, water
 Urban development
 Health
 120 M€ of overall commitment
 Subsidies : 100 M€, 34 projects
 Loans : 20 M€
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AFD in Laos
Recent evolutions
 Since 2007 :
 Focus on 3 sectors
Rural development
 Health
 Urban development

 Current financings
7 projects in activity
 17,1M€ in disbursement process

AFD strategy for the future :
 development of non sovereign activity
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3. Non sovereign activity
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Non sovereign activity
General presentation
 A development pushed by :
 AFD new context tending to reduce the amount of subsidies
 Impossibility for AFD to lend money directly to the Laos State
 3 available financial tools :
 Loan
 Equity
 Guarantee
 Counterparts :
 Private sector
 Public companies
 Financial sector (banks and MFI)
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Project cycle - AFD
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Decision
Legal
negotiation
Disbursement
Financial
agreement
Appraisal
Board
Feasibility
Notification
Letter of
interest
Identification
Committee
Identification
Financing
Committee
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Non sovereign activity
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Non sovereign activity
Compulsory criteria of attribution
3
 Corruption, money laundering and terrorist financing
 As part of the Financial Action Task Force (FATF), AFD needs

Specific due diligences
– Legal documentation
– Executive management and members of the board
» Of the beneficiary company
» Of the owner’s companies (up to 10% of indirect ownership)

Undertakings to be part of the credit facility agreements
– Business Relationships
– Licit Origin of the Funds
– No Corruption
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Non sovereign activity
Compulsory criteria of attribution
Undertakings to be part of the credit facility agreements
(extracts)
 Business Relationships
 The Borrower undertakes not to enter into a business relationship with any
person, group or entity which is listed on any of the Financial Sanctions
Lists (including in particular the fight against financing of terrorism).
 Licit Origin of the Funds
 In all circumstances, the Borrower undertakes to promptly notify the Lender
in the event that information comes to its attention causing it to suspect that
the funds may be of illicit origin.
 No Corruption
 The Borrower undertakes to ensure that the Project (including the
negotiation, award and performance of contracts financed with the Facility)
shall not give rise to any Corruption.
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Non sovereign activity
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Compulsory criteria of attribution
 Environmental and social impacts
Low risk (category C)
Medium risk (category B)
High Risk (category A)
Environmental
and Social Impact
Environmental and social
impacts are expected to
be negligible (minimal or
no adverse impacts)
Environmental and social impacts
can be readily identified and
standard preventative and/or
remedial measures can be
prescribed
There may be highly
significant, negative and/or
long-term environmental and
social impacts, the
magnitude of which are
difficult to determine at the
application stage
Examples
Software development
companies and consulting
firms
General industrial companies and
plants on existing sites,
telecommunication infrastructures,
Brownfield infrastructure project.
Infrastructure and
extraction projects
No environmental
appraisal required
Environmental and social
compliance check as integrated part
of the due diligence and site visit of
a potential client
Environmental Impact
Assessment or
Environmental Audit by a
qualified external consultant
Compliance with
applicable local laws
Compliance with applicable local
laws
If necessary, remedial measures to
be included into the loan contract
Compliance with applicable
local laws
Compliance with applicable
Word Bank / IFC guidelines
and safeguard policies
If necessary, remedial
measures to be included into
the contract
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november 4th 2011
Assessment
Environmental
and Social
Requirements
AFD workshop
Thank you