African Development Bank Group Accelerating Private investment in Africa Vicenza - 24 Jan 2013 Mennella Luigi Chief Performance Monitoring Officer BUILDING TODAY A BETTER AFRICA TOMORROW
African Development Bank Population Over 1 Billion Every Year +24 Million 400 Million <15y 2
The AfDB has two lending windows: Sovereign Guaranteed Operations (public sector projects through governments at concessionary terms) Non sovereign Guaranteed Operations - OPSM (private sector projects at commercial terms) The AfDB Private Sector s activities comprise two categories: Non-sovereign guaranteed lending activities in the area of Financial Intermediation, Industries & Services, PPPs & Infrastructure, Microfinance; Non-lending activities including studies, initiatives & new programs. 3
US$ Millions African Development Bank Group The Bank has increased its Private Sector Operations in the past few years Non-Sovereign Yearly Approvals 2500 2000 1500 1000 500 0 '03 '04 '05 '06 '07 '08 '09 '10 '11 12 13 Actuals Projected 4
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. 5
AfDB Private Sector Financial Instruments Senior Debt Up to 20 years (5 yrs grace period), foreign or local currencies, risk priced Guarantees partial risk, partial credit (long tenors) For specific credits or commercial bank SME programs, risk priced Subordinated Debt Subordinated loans or bonds local currency possible, maximum 15 years (10+5), risk priced Equity Direct investments in banks, DFIs, MFIs, etc, up to 25% With or without board seat, planned exit, commercial returns Technical Assistance grants for studies, Up to USD 1 mn for institutional capacity building programs 6
Process Cycle Project Finance Legal Environmental & Social Risk Management Additionality and Development Origination Due Diligence Structuring & Negotiation Arranging Documentation Funding
AfDB uses 4 criteria to select its Private Sector investments Additionality Deal structuring Crowding in of commercial investors Political risk mitigation Financial risk mitigation Strategic alignment 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 8
AFDB s Private Sector financing Comparative advantages Vast experience across most sectors on the continent AfDB as a partner: share technical expertise / assist in securing cofinancing Use of our financial muscle (AAA rating) / risk management products: get commercially viable projects off the ground Mitigate political risks: AfDB s honest broker role Responsive and reliable: transactions get done (>$2bn in 2010) Solid project selection track record: low loss rate (<3%) 9
How to work with us 1. An enterprise/project must be located and incorporated in the Regional Member Countries (RMCs) of the Bank, whether promoted by African or non-african investors. 2. An enterprise/project must be majority-owned (51%+) by privatesector investors, or publicly owned with strong financial standing and proven managerial autonomy. 3. Projects for the establishment, expansion, diversification and modernization of productive enterprises (i.e. CAPEX). No direct financing of trade. 4. Investment size determined by Single Obligor Limit and other prudential considerations. 10
The AfDB s private sector operations cover a broad range of sectors Power thermal, hydro, wind, solar Transport ports, roads, airports 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 11
The Debra Midroc cement project will address a huge market constraint Derba Midroc Cement Project Ethiopia Investment USD 350 mn ADB loan USD 69 mn ADB roles Lead arranger Benefits Foreign exchange Taxes, royalties, jobs SME supply chain
GOPDC is an agribusiness project with high development impact GOPDC Project Ghana Investment USD 24.5 mn ADB loan USD 7 mn ADB roles Long-term lender Benefits Outgrower enhancement, SME supply chain
The Sheraton hotel is a business enabler in the heart of Kampala Sheraton Hotel Kampala Uganda Investment USD 18 mn ADB loan USD 8 mn ADB roles Long term lender Benefits Taxes, royalties, jobs SME supply chain
EVHA represents the first project in the health sector EVHA Regional Private Equity Fund USD 100M ADB Equity USD 20 M ADB Roles: Catalyst: first investor alongside with the IFC; Created the first system of redistribution aligned on Bottom of the Pyramid (BOP) goals; Benefit: Reduce Perceived «risk» related to African private health sector 15
The NDB line of credit will promote small to medium scale enterprises National Development Bank [NDB] of Botswana Project Botswana ADB LOC: YEN 5.5 billion, 12 years inclusive of a 2 year grace period ADB roles Long Term Project Financing Benefits SMEs, industry Jobs, growth Institutional reforms Sector reforms
Subregional DFIs like DBSA are considered as development partners Development Bank of Southern Africa (DBSA) South Africa ADB LOC USD 100 mn ADB roles long-term foreign currency funding Benefits infrastructure services in South Africa and SADC economic integration of SADC Region.
South Africa: Transnet s 5-year Capital Investment Program Project Cost : USD 99,36 Bilion AfDB Loan : USD 400 Million Senior loan Benefits Improved transport networks Improved social services and industrial production in the sub-region The generation of jobs 18
The PAIDF project is the largest infrastructure equity fund in Africa Pan-African Infrastructure Development Fund (PAIDF) Pan-Africa Investment USD 1 bn ADB equity USD 50 mn ADB roles Regional sponsor Fund mobilization Benefits Regional infrastructure African pension funds
The Eskom project is the Bank s largest non-sovereign loan Eskom Project Southern Africa Investment USD 20 bn ADB loan USD 500 mn ADB roles Long-term lender Regional partner Benefits 100% power access Jobs, growth Regional expansion
Uganda : Buseruka Hydropower Project Project Cost : USD 27 Million AfDB Loan : USD 9 Million Senior loan Benefits: Provide reliable electricity at lower cost Address the loss of environmental resources Jobs Creation, Improving water supply 21
Multinational : "The Other 3 Billion" (O3b) project Project Cost : USD 848 Million AfDB Loan : USD 50 Million Senior loan Benefits: Access to international bandwidth at lower prices Access of landlocked countries to broadband through submarine cables Access of Africans to online banking. 22
West Africa: Main One Cable project Project Cost : USD 300 million AfDB Loan : USD 66 million Benefits Connectivity Cheaper international calls Improved access services to Internet Development of offshore services, mobile banking services E-governance
Uganda: Bujagali Hydroelectric Power Project Project Cost : US$ 736 Million AfDB loan : US$ 110 Million Benefits: - Independent power project (IPP) - Expand the supply for electricity - Reduce Power generation cost - Long-term socio economic benefits 24
AfDB Private Sector Integrated Infrastructure Projects in Senegal o DAKAR TOLL HIGHWAY o DAKAR CONTAINER TERMINAL o SENDOU POWER PROJECT o BLAISE DIAGNE INTERNATIONAL AIRPORT (AIBD)
DAKAR TOLL HIGHWAY Project Cost : Euro 225 Million AfDB Loan : Euro12 Million Senior loan Benefits: It will reduce congestion in Dakar It will create employment opportunities during the construction and operation phases It will improve the living standards of the stakeholders 26
Dakar Container Terminal Project Cost : Euro 210 Million AfDB Loan : Euro 47,5 million Senior loan Benefits: Reduced cost of delivery of goods for import as export Knowledge Transfer Local capacity building Creating new jobs 27
Sendou Power Project Project Cost: EUR 195.8 M AfDB loan: EUR 55 M AfDB roles: - Project Structuring - Mobilization of the 85% Debt and 60% of the Equity. - Long-term lender Benefits: - 40% increase on electricity generation in Senegal; - Average 20% decrease on generation costs; - Construction of a Brick Factory to generate revenue to the local community.
Blaise Diagne International Airport Project Cost : Euro 524.81 Million AfDB Loan : Euro15 Million Senior loan Benefits: Alleviate air traffic congestion at Dakar airport Promote the development of neighboring regions The recruitment and skills development of local capacity 29
African Development Bank Private Equity Funds Participated by AFDB (1/2) South Africa Infrastructure Fund SAIF Infrastructure South Africa AIG African Infrastructure Fund AIG Infrastructure Pan-African ECP Africa Fund II PCC (EMP Africa Fund LLC) Pan African Infrastructure Development Fund Maghreb Private Equity Fund II (Mauritius) PCC ECP II Generalist Pan-African PAIDF Infrastructure Pan-African MPEF II Generalist MENA Atlantic Coast Regional Fund LLC ACRF Generalist Pan-African Growth Finance GROFIN SMEs Pan-African Emerging Capital Partners III ECP III Generalist Pan-African Agri-Vie Fund AGRIVIE Agribusiness Pan-African Pan African Investment Partners II Limited PAIP II Generalist Pan-African AfricInvest II Fund AIF II Generalist Pan-African 30
African Development Bank Private Equity Funds Participated by AFDB (2/2) African Infrastructure Investment Fund 2 (Mauritius) AIIF II Infrastructure Pan-African Investment Fund for Health in Africa IFHA Health Pan-African Emerging Africa Infrastructure Fund EAIF Infrastructure Pan-African Citadel Capital Joint Investment Fund L.P. (Africa Joint Investment Fund - AJIF) CITADEL Generalist MENA Argan Infrastructure Fund ARIF Infrastructure Africa Capitalization Fund ACF Financial Intermediation North & West Africa Pan-African African Agriculture Fund AAF Agribusiness Pan-African Catalyst Fund Catalyst Generalist Pan-African New Africa Mining Fund II NAMF II Mining Pan-African 31
African Development Bank Ivory Coast Capital: Abidjan Capital: Ethiopia Addis Ababa Area: 322,460 sq km Area: 1,110,400 sq km Total Population 2011: 20.2 Million Urban Population 2011: 51.30% Female Population 2011: 49.10% GDP: US$ 22.4 Billion GNI Per Capita 2010: US$ 1,160 Inflation Rate: 4.90% Crude Birth Rate (per 1000): Human Development Index (rank / 187): 33.60% 170 Total Population 2011: 84.7 Million Urban Population 2011: 16.80% Female Population 2011: 50.20% GDP: US$ 34.6 Billion GNI Per Capita 2010: US$ 390 Inflation Rate: 26.70% Crude Birth Rate (per 1000): Human Development Index (rank / 187): 30.80% 174 32
African Development Bank Capital: Gabon Libreville Capital: Ghana Accra Area: 267,667 sq km Area: 239,460 sq km Total Population 2011: 1.5 Million Total Population 2011: 25.0 Million Urban Population 2011: 86.40% Female Population 2011: 49.80% GDP: US$ 17.0 Billion GNI Per Capita 2010: US$ 7,740 Inflation Rate: 2.10% Crude Birth Rate (per 1000): Human Development Index (rank / 187): 27.10% 106 Urban Population 2011: 52.20% Female Population 2011: 49.10% GDP: US$ 39.2 Billion GNI Per Capita 2010: US$ 1,230 Inflation Rate: 8.70% Crude Birth Rate (per 1000): Human Development Index (rank / 187): 31.10% 135 33
African Development Bank Mozambique Capital: Area: Total Population 2011: Maputo 801,590 sq km 23.9 Million Urban Population 2011: 39.20% Female Population 2011: 51.30% GDP: US$ 14.3 Billion GNI Per Capita 2010: US$ 440 Inflation Rate: 10.80% Crude Birth Rate (per 1000): Human Development Index (rank / 187): 37.10% 184 ITALY Crude Birth Rate (per 1000): 9% Human Development Index (rank / 187): 24 34
African Development Bank ECOWAS (POP. 220 MILL) The Republic of BENIN BURKINA FASO The Republic of CABO VERDE The Republic of COTE D'IVOIRE The Republic of GAMBIA The Republic of GHANA The Republic of GUINEE Economic Community Of West African States The Republic of LIBERIA The Republic of MALI The Republic of NIGER The Federal Republic of NIGERIA The Republic of SENEGAL The Republic of SIERRA LEONE TOGOLESE Republic The Republic of GUINEE BISSAU SADC (POP. 277 MILL) ANGOLA BOTSWANA DEMOCRATIC REPUBLIC OF CONGO LESOTHO MADAGASCAR MALAWI MAURITIUS The Southern African Development Community MOZAMBIQUE NAMIBIA SEYCHELLES SOUTH AFRICA SWAZILAND UNITED REPUBLIC OF TANZANIA ZAMBIA ZIMBABWE 35
African Development Bank COMESA (POP. 389 MILL) Republic of Burundi Union of the Comoros Democratic Republic of the Congo Republic of Djibouti Arab Republic of Egypt State of Eritrea Federal Democratic Republic of Ethiopia Republic of Kenya Libya Republic of Madagascar ECCAS (POP. 124 MILL) Angola Burundi Cameroun Centrafrique Congo The Common Market for Eastern and Southern Africa Republic of Malawi Republic of Mauritius Republic of Rwanda Republic of Seychelles Republic of The Sudan Kingdom of Swaziland Republic of Uganda Republic of Zambia Republic of Zimbabwe Economic Community of Central African States Gabon Guinée Eq. RD Congo Sao Tomé et Principe Tchad 36
African Development Bank THANK YOU Please Visit: www.afdb.org 37