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Private Sector Operations The AfDB as a Development and Business Partner July 20, 2011.

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Presentation on theme: "Private Sector Operations The AfDB as a Development and Business Partner July 20, 2011."— Presentation transcript:

1 Private Sector Operations The AfDB as a Development and Business Partner July 20, 2011

2 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

3 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

4 Strategic Areas of Activities and Tools Financial Market Development Direct Lending Operations Infrastructure PPPs Lines of credit Direct loans Guarantees Equity Direct loans Guarantees Equity Funds LOC + TA Leasing Equity/Quasi-Equity Trade Financing SME Financing Enabling Environment Budget support Private Sector Department Public sector / Governance Departments Institutional support ESWs Capacity Building

5 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

6 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.

7 Strategic alignment Country’s economic and social priorities AfDB’s regional or country strategy Commercial viability Market fundamentals Financial structure Sponsor’s experience and financial strength Additionality Deal structuring Crowding in of commercial investors Political risk mitigation Financial risk mitigation Development outcome Employment Local content Social and environmental impacts Tax revenues AfDB uses 4 criteria to select its Private Sector investments

8 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

9 An active portfolio of over UA 2.23 bn (USD 3.57 bn) and poised for further growth As at December 2010

10 Products for financial assistance Loans Equity and Quasi-Equity Lines of Credit Guarantees Syndication Underwriting New areas

11 Ghana projects (some examples and indicative pipeline) Ghana Oil Palm Development CorporationSenior debt for expansion of processing facility Amount committed: EUR 7.14 m Date approved: 12.12.2002 CAL Bank LimitedLine of Credit for on-lending to SMEs Amount committed: USD 15 m Date approved: 24.07.2008 Tema Osono Power PlantSenior debt for the development of a power plant Amount committed: USD 30 m Date approved: 15.10.2008 Ghana Cocoa BoardTrade Facility for 2010 Cocoa harvest Amount committed: USD 35 m Date approved: 16.09.2009 Kempinski Accra HotelSenior 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

12 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

13 Future Orientations (Transactions): Financial Services Diversification (leasing, microfinance) Syndications Private infrastructure projects/Public-Private Partnerships (PPPs) Renewable energy (wind, solar, hydro) Assistance to SMEs

14 Thank you

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