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

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.

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

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  1. Private Sector Operations The AfDB as a Development and Business PartnerJuly 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 Direct Lending Operations Infrastructure PPPs Enabling Environment Financial Market Development Lines of credit Budget support Direct loans Guarantees Equity Direct loans Guarantees Equity Funds LOC + TA Institutional support Leasing Capacity Building Equity/Quasi-Equity ESWs Trade Financing SME Financing Public sector / Governance Departments Private Sector Department

  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. AfDB uses 4 criteria to select its Private Sector investments • 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

  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)

  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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