AFRICAN DEVELOPMENT BANK GROUP

1. AFRICAN DEVELOPMENT BANK GROUP AfDB IN ACTION: OPPORTUNITIES FOR THE PRIVATE SECTOR IN INFRASTRUCTURE DEVELOPMENT FOCUS ON UGANDA UK – Uganda Investment Forum September 15, 2010 Ladé A. Dada Senior Investment Officer Infrastructure Finance Private Sector Department

2. AFRICAN DEVELOPMENT BANK GROUP OUTLINE • Setting The Scene • Financing Infrastructure through PPPs • The AfDB – Wearing Many Hats • AfDB In Action • Eligibility Criteria

3. AFRICAN DEVELOPMENT BANK GROUP Setting The Scene

4. AFRICAN DEVELOPMENT BANK GROUP INFRASTRUCTURE – BACKBONE OF AN ECONOMY Power,Transport, ICT, WaterSupply and Sanitation • Robust infrastructure enhances economic performance and social development. • Commerce and industry are built on solid infrastructure. • Inadequate access to energy is the single largest impediment to economic growth.

5. REQUIREMENT FOR SUSTAINED DEVELOPMENT AFRICAN DEVELOPMENT BANK GROUP SUSTAINED ECONOMIC GROWTH • RELIABLE AND AFFORDABLE POWER STRONG TRANSPORT NETWORKS • EFFICIENT ENTERPRISES IMPROVED LIVING ECONOMIC ACTIVITY • SOCIAL SERVICES • EFFECTIVE ICT • NETWORKS SAFE WATER SUPPLY

6. AFRICAN DEVELOPMENT BANK GROUP AFRICA LAGS BEHIND • Only 23% of the region is electrified • 86% in Latin America and 100% in OECD countries • Generates only 4% of global electricity, despite accounting for over one sixth of world population • Vast, unexplored potential for renewable energy sources • Hydro, solar, and wind generation capacity • AICD (2009) reports that USD 45 billion will be required each year over the next 10 years

7. AFRICAN DEVELOPMENT BANK GROUP A CONTINENT IN THE DARK Electrification Rates (%)

8. AFRICAN DEVELOPMENT BANK GROUP 4000 3500 3000 2500 US$m 2000 1500 1000 500 0 Multilaterals 2000 2003/04 2005/06 Bilaterals DONOR ASSISTANCE IS INSUFFICIENT Multilateral and Bilateral investments in Africa’s infrastructure Source: ICA

9. AFRICAN DEVELOPMENT BANK GROUP PRIVATE SECTOR IS IMPORTANT PARTNER

10. AFRICAN DEVELOPMENT BANK GROUP UGANDA • GDP growth rate targeted at 7.2% up to 2015 • Policy reforms to facilitate business enabling environment • National Development Plan (2010 – 2015) • Significant investments required to develop infrastructure

11. AFRICAN DEVELOPMENT BANK GROUP Financing Infrastructure Through PPPs

12. AFRICAN DEVELOPMENT BANK GROUP BENEFITS OF PUBLIC-PRIVATE PARTNERSHIPS TRADITIONALSCENARIO EMERGINGTREND • Publicly financed – limited resources, high fiscal burden • Lack of competition – high cost and high inefficiency • Lack of incentives and accountability – low performance • Non-participatory – under/ill designed outputs and poor prioritization • Private participation – additional resources available & public resources for social dev • Increased competition - greater efficiency & reduced costs, innovation, technical exp • Incentive structure - faster delivery of infrastructure assets and services • Participatory – end-user satisfaction, job creation

13. AFRICAN DEVELOPMENT BANK GROUP DEFINITION OF PPP Public-Private Partnerships (PPPs) are a form of a legally enforceable contract between the public and private sectors, which requires new investments by the private contractor (including the provision of finance, technology, expertise/time, reputation, etc.) and which transfers key risks to the private sector (design, construction, operation, etc.), in which payments are made in exchange for performance, for the purpose of delivering a service traditionally provided by the public sector.

14. AFRICAN DEVELOPMENT BANK GROUP Value Addition PPP - AN IDEAL STRATEGY Maximizes Value Private Public

15. AFRICAN DEVELOPMENT BANK GROUP PPP OPTIONS FOR EFFECTIVE RISK ALLOCATION Concessions, BOT, BOO, BOOT schemes increasingly popular. *Except in the case of BOO.

16. RISK SOURCES AFRICAN DEVELOPMENT BANK GROUP SECTOR RISKS: MITIGANTS: • SUPPLY • TECHNICAL • COST • MANAGEMENT • ENGINEERING • Fuel purchase contracts • Experience and back-up plans • Turnkey contracts • Insurance Packages

17. AFRICAN DEVELOPMENT BANK GROUP The AfDB – Wearing Many Hats

18. AfDB’S TRIPLE ROLES AFRICAN DEVELOPMENT BANK GROUP FINANCIER ADVISOR PARTNER AfDB PLAYS THREE ROLES TO EFFECTIVELY PROMOTE PRIVATE SECTOR PARTICIPATION IN INFRASTRUCTURE DEVELOPMENT

19. AfDB’S UNIQUE PERSPECTIVE AFRICAN DEVELOPMENT BANK GROUP Long-term View Considers market cycles, crises Public Interest Considers what’s best for all stakeholders Risk Taker Invests capital in risky countries to attract private investors Development Maximizer Enhances overall development impact AS A PUBLIC INSTITUTION, PRIVATE SECTOR DEPARTMENT IS UNIQUE

20. FINANCIAL INSTRUMENTS AFRICAN DEVELOPMENT BANK GROUP SUBORDINATED DEBT SENIOR DEBT EQUITY AfDB GUARANTEES TECHNICAL ASSISTANCE LOCAL CURRENCY AfDB UTILIZES A BROAD RANGE OF INSTRUMENTS

21. Resources – able to mobilize both financing and know-how. Influence – able to effectively mitigate political risk. Reliability – able to get transactions done. Scale – able to handle small and large-scale transactions. Risk – able to effectively manage risk internally and for clients. AFRICAN DEVELOPMENT BANK GROUP SOURCES OF SUSTAINABLE COMPARATIVE ADVANTAGE

22. AFRICAN DEVELOPMENT BANK GROUP AfDB In Action

23. AFRICAN DEVELOPMENT BANK GROUP BUJAGALI HYDRO POWER PROJECT Project: 250 MW hydro generation plant Benefits: Increased supply of affordable power Creation of new temporary and permanent jobs AfDB Role: Senior Lender – USD 110 million Performed economic analysis for the lender group Financed T-line

24. AFRICAN DEVELOPMENT BANK GROUP BUSERUKA MINI-HYDRO POWER PROJECT Project: 9 MW hydro generation plant Benefits: Increased rural electrification Strengthened voltage profile of national grid AfDB Role: Senior Lender – USD 9 million Mobilized USD 10 million from PTA Bank Restructured financing plan to strengthen viability Prepared CDM documentation

25. AFRICAN DEVELOPMENT BANK GROUP AfDB – An Honest Broker • AfDB seeks to ensure a “win-win” situation for all stakeholders – the country, investors, and lenders. • AfDB often serves as the Mandated Lead Arranger and helps to ensure fairness and increased viability of transactions.

26. SENDOU POWER PROJECT AFRICAN DEVELOPMENT BANK GROUP Project: Construction of 125 MW coal-fired power plant Benefits: Added 25% of current generation Replaced 15% inefficient generation AfDB Role: Senior Lender – EUR 55 million Mobilized EUR 130 million (BOAD, DEG, FMO) Ensured environmental sustainability Promoted competitive tariff AfDB TRANSFORMED NON-BANKABLE PROJECT INTO COMMERCIALLY VIABLE TRANSACTION

27. AFRICAN DEVELOPMENT BANK GROUP AfDB – A Development Maximizer • AfDB supports commercially viable transactions with high economic returns. • AfDB aims to safeguard the interest of all stakeholders.

28. LEKKI TOLL ROAD PROJECT AFRICAN DEVELOPMENT BANK GROUP • Project: 50 km toll road in Lagos costing USD 450 m • Benefits: Job creation and tax revenues • AfDB Role: Anchor Financier – senior loan of USD 85m • First transport PPP in Nigeria • First synthetic local currency loan • Ensured comprehensive environmental due diligence AfDB TERMS AND LOCAL CURRENCY LOAN IMPROVED TRANSACTION

29. AFRICAN DEVELOPMENT BANK GROUP AfDB – An “all-weather” Financier • Following the global financial crisis, AfDB stepped up to provide affordable, long-term financing to ensure that projects achieved timely financial close for implementation.

30. ENFIDHA AIRPORT PROJECT AFRICAN DEVELOPMENT BANK GROUP Project: Construction of new airport with capacity for 7mppa / rehabilitation & operation of Monastir Benefits: Extension of Monastir airport capacity Facilitates access to key tourist destinations AfDB Role: Senior Lender – Total cost of EUR 565 million EUR 294 million mobilized from DFIs (IFC, EIB, Proparco, OFID) Facilitated timely financial close AfDB LONG-TERM FINANCING WAS REQUIRED TO CLOSE THE DEAL

31. AFRICAN DEVELOPMENT BANK GROUP AfDB – An Environmentally Friendly Partner • AfDB supports investments in renewable energy sources. • AfDB promotes environmental sustainability and social responsibility.

32. CABÉOLICA WIND POWER AFRICAN DEVELOPMENT BANK GROUP Project: Construction of 25 MW wind farm Benefits: Added 34% of current installed capacity Reduction in greenhouse gas emissions Additional revenues from carbon credits (CDM) AfDB Role: Senior Lender – EUR 15 million Technical Assistance to strengthen utility AfDB ALSO ENSURED COMPLIANCE WITH APPROPRIATE SAFEGUARDS

33. AFRICAN DEVELOPMENT BANK GROUP INFRASTRUCTURE DEVELOPMENT IS PRIORITY AfDB 2008

34. AFRICAN DEVELOPMENT BANK GROUP ELIGIBILITY CRITERIA

35. AFRICAN DEVELOPMENT BANK GROUP Eligibilityfor Non-Sovereign Financing

36. AFRICAN DEVELOPMENT BANK GROUP SENIOR LOANS ARE MOST COMMON Loans Guarantees Equity Quasi Equity

37. AFRICAN DEVELOPMENT BANK GROUP GUARANTEES ENHANCE FINANCING OPTIONS Loans Guarantees Equity Quasi Equity

38. AFRICAN DEVELOPMENT BANK GROUP EQUITY INVESTMENTS ARE POSSIBLE Loans Guarantees Equity and Quasi Equity

39. AFRICAN DEVELOPMENT BANK GROUP One thing is clear…

40. AFRICAN DEVELOPMENT BANK GROUP TOGETHER, WE CAN!

41. AFRICAN DEVELOPMENT BANK GROUP THANK YOU!