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Explore innovative approaches to enhance public-private partnerships and aid effectiveness in global development, focusing on funding, sub-national programs, stakeholder engagement, and risk mitigation. Discuss challenges and opportunities for collaboration between diverse stakeholders. Learn from successful examples of private sector contributions to public policy. Emphasize the importance of tailored financial solutions to bridge gaps in financing for sustainable development.
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International workshop onPublic-Private DialogueParis, February 1 & 2, 2006__________________« What future for Public-Private Dialogue » Luc Rigouzzo, Director Financial and Private Sector Department
The way forward • Funding • Sub-National Programs • Integration to specific country contexte • Cluster / Product markets • Post-conflict
The “Limitant Factor” Theory • We can try to improve 1 & 2 (but democracy – ex Tchad) • But more modestly, as a bilateral agency, our role could simple be to foster 3 with new stakeholders + with feed back on 1 + 2 1 2 3 4 Regulatory policies Macro-economic conditions Taxation… Risk mitigation & Financial instruments
A new paradigm of Aid Competition + New Stakeholders + More risk AFD=1% NGOs (8) ODA (58) Goals Stakeholders Tools Trade Balance (150) • N/S poverty gap & Inequalities - MDG • Development through Growth • Global Public Goods Multiple Stakeholders (public & private) Multiple Financing Sources FDI (148) Migrants Transfers (100) Internal Savings (?) Bonds 11 2002, Rogerson 2004, Global Development Finance 2003 (World Bank), in $Bn
A new paradigm of Aid : New Stakeholders Agencies Borrowers / Beneficiaries Objectives Country program Investment climate Governance Sovereign Multilaterals Non Sovereign, PPPs, Big Corporates, Civil society • Overal economic efficiency • Cost of goods, competitivity • Financial sector, efficiency Bilaterals Classical corporates • Growth • Employment • MDGs EDFIs bi-multis
Zooming in two Emerging Stakeholders essential for PPD • Local Governments: soon to be the first line of development • Growing mandate • Huge financial gap • Important institutional weakness • Businesses: a new take at them • As agents of growth • As agents of public policy • As issue of public policy
LT loans (incl. PTC) n Widen Financing offer More important volumes n ( cf . Proparco ) Equity n Locale currency n (incl. ODA = Additional subsidies ) Access to LT fundings AFD’s partners Develop Financial needs Engineering & guarantees Share / Concessionality to Adapted and covering Cover risks the service of solutions risks tools dévelopment - Environmental outputs participating loans ARIZ, PRG, bond issuance guarantee - Commodity based participating loans EDFI Partnerships / cofinancing - Tailored concessionality - Advisory, mandates A new paradygm of AidRisk sharing, tailored concessionality & financial engineering
Examples of private sector contributions to public policy
EDULOAN (South Africa) Microfinance for the training of disadvantaged population groups • Eduloan, a private company, assists more than 142 000 poor students annually, giving them access to education and training • AFD project : a guarantee on the loan (granted in Rands) by a South African bank to Eduloan
Housing sector in South Africa Rand Merchant Bank Low/Middle Income Housing Programme Promotion through Local Banking System • Integration of low income household to the program (revenue below 3000 Rands) • Training of low income borrowers • Loan of 40 million euros to a bank (RMB) to refinance of important social housing programme • Included concessionality equivalent to 3,4M€
Local authorities access to finance in intermediation Municipal Financing in Cap Vert • 5 M€ credit line to three main banks for loans to the municipalities • 0.2 M€ grant for a technical support to municipalities
The potential of guarantees with Faulu Kenya: The first financial bond emission by an MFI in Africa • Amount: 500M KES (5,52M € 03/12/03) • Maturity: 5 years • 25% of the risk supported by the subscribers (commercial banks and institutional investors) • 75 % garanteed by AFD • 24 000 beneficiaries Conclusion: how catalyse access of local authorities to the local financial market ? The guarantee issue (DAC/OECD)
Covering the risks with a mix of various instruments Commodity price based loan- SODECOTON Cameroun Hypothesis Results Reimbursement duration reduced to 8 years thanks to anticipated reimbursements during 4 years
Conclusion: How donnors can follow-up the charter with concrete actions Back to the « limitant factor theory »: What is in the « hand » of the donors community ? • Shifting from Government to Goverment to multi-stakeholders approaches • Accepting the discipline of taking/sharing risks specially at the sub-sovereign and private level • Putting the promotion of private investment and PPPs as central to their mission • Enhancing the « financial toolbox », providing bridges to private sector financing, designing tailored solution, mixing financial engineering and concessionality • Reorienting culture, capital & skills