IFC in Africa. Partnering for Transformational Change through the Private Sector. Oumar Seydi Director March 2014

Transcription

1 IFC in Africa Partnering for Transformational Change through the Private Sector Oumar Seydi Director March 2014

2 Macroeconomic Trends Growth remains strong and inflation subdued amid strong FDI inflows and rising consumer demand, despite vulnerability in balance of payments Robust growth Lower inflation FDI ex. RSA at new peak 6 5 Real Growth in GDP Annual Average % change Inflation Annual Average % change FDI Inflows into SSA ex. RSA US$ billion

3 Development Challenges Large infrastructure gap, soaring food demand, low access to finance and ongoing fragility drive our strategy Africa Africa Infrastructure Infra Spending Spending Needs Needs vs. Estimate vs Estimate ($ billion, annual) Per Capita Food Consumption 0 ICT Irrigation Power Transport Water and Sewage Spending Estimates - Public Total Needs (Capex + Maintainance) Total Spending Estimates - Private Firms with a Line of Credit as % of Total Firms Poverty Rate in FCS versus non-fcs Countries with major violence Countries with minor violence Countries with negligible or no violence Source: WDR calculations based on Chen, Ravallion, and Sangraula 2008 poverty data

4 Overview of IFC in Africa 4

5 Regional Strategy Overview Reduce extreme poverty and promote shared prosperity by driving growth and job creation Cross-Cutting Focus Areas Strategic Areas of Focus Foundation: World Bank Group Partnership Investment Climate Fragile & Frontier IDA Countries Climate Change Partnerships Gender Empowerment Bridge the Infrastructure Gap Physical, Social & Financial Infrastructure Logistics, Agri-related Infra Treasury Solutions Lead Inclusive Business Approaches MSMEs, Base of Pyramid Build a Productive Real Sector Agribusiness, Manufacturing Broad Based Growth that Generates Jobs WBG Twin Goals

6 Guided by clear targets for development impact By FY16, IFC Strategy aims to Increase or improve sustainable farming opportunities for over 550,000 people annually Provide access to financial services to 9.5 million micro clients & individuals and over 245,000 SME clients annually Increase or improve infrastructure services to over 8.2 million people annually Reduce greenhouse gas emissions by over 460,000 metric tons of CO2 equivalent annually by leveraging WBG competencies for transformational impact and shared prosperity 8

7 Close proximity to our clients and strategic staffing Regional Hubs Dakar INFRA Johannesburg A2F/FM/M&S/AS Nairobi Agri/SBA/IC Mediterranean Sea Local offices Abuja Abidjan Accra Addis Ababa Antananarivo Bamako Bangui Bujumbura Conakry Dar Es Salaam Douala Freetown Juba Kigali Kinshasa Lagos Lusaka Maputo Monrovia N Djamena Ouagadougou Dakar Conakry Freetown Monrovia Bamako Abidjan ATLANTIC OCEAN IFC Hub Offices IFC Country Offices Ouagadougou Abuja N Djamena Accra Lagos Douala Kinshasa Bangui Bujumbura Lusaka Johannesburg Juba Kigali Maputo Addis Ababa Nairobi Dar-es-Salaam Antananarivo INDIAN OCEAN

8 6,000 5,000 4,000 3,000 2,000 1, % CAGR in Total Investment Volume in the decade since FY Strong Growth in Investment Services 3,922 3,970 1,778 1,237 1,493 2,797 5,278 4,000 3,500 3,000 2,500 2,629 2, , ,500 1,644 1, , ,000 2, ,428 2,150 1,379 1,390 1,824 2, ,379 1,390 1,824 2,428 2,150 2,733 3,501 2, ,000 3,500 3,000 2,500 2,000 1,500 1, IFC own account $m Mobilization FM INR MAS 2,083 1,732 1, ,095 1, , , ,000 3,500 3,000 2,500 2,000 1,500 1, IFC own account $m Project count (R axis) Country Reach (R axis) Africa Region East & Southern West & Central 1,822 1,205 1,633 1,341 1,032 1, ,

9 $7.8 bn portfolio diversified across products, countries, sectors Committed Portfolio by Sector Overview IFC SSA Commitment FY11-FY14YTD ($M) Rapid rate of portfolio growth likely to remain FM MAS Infra Total 7,810 7,387 5,808 6,105 Portfolio by Product Type Risk Management Guarantee Loan Quasi-Equity (ET Type) Quasi-Equity (LN Type) Equity 10% 23% 0% 12% 2,679 2,600 2,826 2,545 3,007 2,746 1,868 2,106 2,016 2,057 1,260 1,398 2% 53% FY11 FY12 FY13 FY14 Committed Portfolio by Industry Sector Commitment growth accelerating. Volumes on target for FY14, Africa to become the biggest region by volume in FY17. Portfolio well balanced between three industry depts. Equity portfolio is substantial. 34% 39% 27% FM MAS Infra

10 Largest regional Advisory Services program in IFC Client-Facing Spend by Region Client-Facing Spend by Business Line Region FY13 (A) ($M) % of Total EAP % ECA % LAC % MENA % SA % SSA % WLD % PPP 19% SBA 18% IC 39% A2F 24% SSA AS is 28% of total IFC AS Client Facing Spend of $232m at end FY13 Investment Climate and Access to Finance accounted for the largest shares of spending. Strong focus on IDA countries, Fragile Situations and Climate Change

11 Advisory Services Business Lines work together to address IFC strategic developmental priorities Investment Climate Works with governments to create an enabling environment to enhance private sector growth and development Access to Finance Works with financial intermediaries to expand access to financial services, complemented by work to improve financial market infrastructure Sustainable Business Works at firm and sector level to develop inclusive, environmentally sustainable and efficient markets Public Private Partnerships Works with governments to design and implement PPP transactions for infrastructure and other basic services 11

12 IFC Advisory Services and Relationship with Japan in Africa Japan is an important donor to AS in Africa. Japan was one of the first donors to contribute flexible funding (i.e. funds appropriated to projects through internal decisions) to PEP Africa with an initial contribution in FY07 of $1.3 M. To date, Japan has contributed $10.15M to PEP Africa with most of its funding going to support Linkages, Education, Entrepreneurship and Sustainability programs. 12

13 IFC Mobilization in Africa 13

14 Mobilizing additional funds alongside IFC investments SSA Total Volume Commitment FY03-FY13 Mobilization O/A Mobilization in Africa has grown significantly since FY07 from a total mobilized volume of $264.9M in FY07 to $1.8 billion in FY13. A growth of over 571% over six years. AMC is a major player in mobilization efforts A total of $350.2M AMC mobilized funds invested in SSA (FY11- FY13) AfCap total investment of $61.5M in IDA countries ALAC total investment of $180.3M IFC Capitalization (SubDebt and Equity) total investment of $108.4M 0.0 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 14

15 Cross Cutting Focus Areas 15

16 Strategy for Working in FCS Maximize investment and advisory in key sectors via Conflict-Affected States in Africa (CASA) program; pursue WBG sub-regional & country level initiatives Streamlining investment process for smaller projects Aimed primarily at supporting project size between $20-50 million ($5-10 million for IFC) Targeted at inexperienced sponsors, weak regulatory environments Dedicated AS and IS support for smaller projects Engage with companies looking to expand regionally Client relationship strategy to promote investments in FCS Leverage existing and build new relationships with larger international and North-South sponsors to support infrastructure and agribusiness projects Leverage AS field presence to promote business development/provide market intelligence 16

17 CASA Overview CASA S MISSION Peace and Stability through PSD: To increase stability, reduce poverty, and create economic opportunities and jobs by developing the private sector in countries affected by fragility and conflict. WHAT IS CASA? Comprehensive Delivery Platform: A platform designed to deliver IFC s Advisory Services programs for private sector investment in Sub- Saharan African fragile and conflictaffected countries WHAT MAKES CASA UNIQUE Conflict-sensitive lens on addressing private sector development A holistic Advisory Services program, providing a streamlined interface with clients Flexibility to respond to changing country conditions and evolving needs of conflict-affected countries A local presence in challenging environments to strengthen client engagement and to coordinate with development partners 17

18 Strategy for Inclusive Business Approaches FM/A2F and Inclusive Business: Partner with regional players to increase Access to Finance for Individuals, MSMEs, Farmers and Women Owned Businesses as part of a programmatic approach. Strategy Going Forward 1 Strategic Client Partnerships: promote regional roll-out of large national players to increase financial penetration rates for individuals, micro and SME clients. 2 South-South: leverage strong investor interest from outside the region, particularly MENA, LAC, China; expand new mobilization platforms (e.g. SAFE); support South-South transfer of inclusive business models, esp. Health, education. 3 Mobile Solutions: ramp up our support to mobile solutions providers as a way to reach the BoP and leapfrog traditional channels of financial intermediation. 4 Open Up Large Markets: tap large markets with WB support Angola, Zimbabwe, Ethiopia, DRC. 5 Local Currency Finance: further expand partnership with Treasury to grow local currency finance offerings to clients 6 Innovative Approaches to Inclusive Business: particularly in agriculture, including GAFSP 18

19 Inclusive businesses incorporate the BOP in the value chain KTDA, Kenya Purchases tea from small tea farmers, providing comprehensive services such as agri-extension, transportation, processing, and marketing IFC committed $12M to date Interswitch, Nigeria Creates technology infrastructure, products, and services that enable financial institutions and corporations to serve low-income customers IFC committed $10M to date Food Concepts, Nigeria Purchases from small chicken farmers; sells to small-scale bakers Supplies both with high-quality inputs and support services IFC committed $20M to date 1 9

20 Gender Focused Opportunities for Africa Successful issuance of the first ever Banking on Women Bond: In October 2013 IFC launched the first women bond program in the world. Working with Daiwa Securities and targeting the Japanese retail market, IFC raised $165 million in November 2013 to expand their financial services for womenowned enterprises globally. Raising awareness of the first ever Women Entrepreneur Opportunity Fund: Fundraising undergoing for the Women Entrepreneurs Opportunity Fund (the Fund ). The Fund will make investments in financial institutions in emerging markets globally, including in Africa. The focus of the fund is on investment opportunities for financial institutions that are developing a strategic focus on the women s market, especially womenowned SMEs.

21 Examples of IFC s Support to the Private Sector in Africa 21

22 Sparking Sub-Regional Reform In West & Central Africa, IFC is providing ongoing investment climate reform support to the 17 members states of OHADA (Organisation pour l Harmonisation en Afrique du Droit des Affaires) to simplify and harmonize business laws and implementing regulations. Improving the Investment Climate Boosting Business After Conflict In 2005 the government of South Sudan requested assistance in developing a viable private sector. The Investment Climate Advisory Services in Africa has supported the government in establishing a legal and regulatory framework for investment. Rapid Reform of the Investment Climate IFC s investment climate programs in Burkina Faso, Liberia, Rwanda and Sierra Leone facilitated: creation/formalization of 23,000 new businesses; $75 to $95M in new private investment and creation of 51,500 jobs. 22

23 Partnering with the Private Sector to Boost Power Generation Powering Forward After Conflict To support Cote d Ivoire s recovery, IFC has supported the expansion of two major power producers, Azito and Ciprel increasing power generation capacity. In FY13, IFC provided a US$125 million senior loan and mobilized an additional $220 million for Phase 3 of the Azito Power Project. In FY14, IFC provided a $133 million senior loan and mobilization an additional $240 million for Phase 4 of the Ciprel Power Project. Bridging the Supply Gap To reduce Kenya s power shortage, IFC has been supporting the sole distribution company, KPLC, and two IPPs, Thika Power and Gulf Power. In FY12, IFC provided a EUR28 million loan and mobilized $76 million for the development of Thika Power, a 87 MW HFOfired IPP. In FY13, IFC also financed Gulf Power, with expected commissioning in 2014, via EUR17 million senior debt and EUR4 million subordinated debt. Cutting-Edge Solar Technology To boost South Africa s renewable energy output, IFC provided a total of $160 million in debt and mezzanine financing for two Concentrated Solar Power (CSP) power plants being developed by Abengoa, generating almost 500GWh per year of clean solar electricity. 23 Select examples of recently financed power projects by IFC Countries where IFC is currently actively engaged to develop / finance potential power projects

24 Scaling Up Support for Agribusiness and the Food Supply Chain Supporting Food Production In Nigeria, IFC is providing a loan of $70m to Olam International to support projects in cashew and sesame processing. IFC has also partnered with Olam in Cote d Ivoire, Ghana and the Asian region, supporting the firm s expansion into frontier markets. The projects are expected to boost food sufficiency. Building Commercial Agribusiness In South Africa, IFC is investing US$35 m in equity into the Hans Merensky Group, a leading South African forestry company the largest producer of avocados in Africa, supplying ¼ of this fruit s consumption in Europe. IFC financing will support the Company in upgrading timber processing capacity in South Africa with positive climate impact. Managing Commodity Price Risk In Ethiopia, the IFC is providing a 3-year, up to $10 m guarantee facility on bank loans to coffee farmer cooperatives. IFC s participation allows the commercial banks to exceed exposure limits and reach more smallholder farmers. The loans will help cooperatives to process coffee and meet working capital needs. 24

25 Better A2F for Women & Farmers In Kenya, IFC provided a landmark $100 m senior loan to Equity Bank Group to support lending to SMEs, agricultural projects and women entrepreneurs in the sub-region. The credit line is expected to enable $279 m in 24,000 new loans to SMEs, providing vital support to shared prosperity and job creation in East Africa. Encouraging Africa s Entrepreneurs Expanding A2F for SMEs In Cote d Ivoire, IFC established a $17m Risk Sharing Facility (RSF) to support SME lending in post conflict Côte d'ivoire for Banque Internationale pour le Commerce et l'industrie de la Côte d'ivoire (BICICI). The RSF is expected to generate $30m in new lending to SMEs, primarily in agribusiness, health, public works and transportation sectors. IFC signed two agreements with Micro Cred Madagascar and Senegal valued at $3.2m to strengthen the supply of affordable financial services to clients in rural areas. The project is part of the $37.5m IFC joint initiative with Mastercard Foundation. 25

26 Working to improve Health and Education Services Africa Schools Program IFC s Africa Schools Program is an integrated investment and advisory services program launched in Ghana (2005) and replicated in Kenya (2007), Rwanda (2008), and Uganda (2010) with a goal to support African governments in their efforts to increase access to quality education. Through the program, IFC delivered skills training to staff in more than 600 low- to medium-income schools; supported over 50 schools to develop business plans and diagnostic reports; trained staff of 7 partner banks on education and small and medium enterprise (SME) project finance with the goal to enable banks to increase their lending to schools. PPPs in Health Services IFC provides advice to national and municipal governments on designing and implementing public-private partnership (PPP) transactions to improve infrastructure, including social infrastructure such as health, and education services. Supported projects include: a hospital PPP in Benin; a pilot PPP for healthcare waste management in two districts and a PPP for 165 health centres in Lesotho; a PPP for a new Diagnostic Centre (with combined lab and diagnostic imaging services) in Ghana. 26

27 Annexes (1) Africa Micro, Small and Medium Enterprise, AMSME, program (2) Additional Information on Inclusive Business 27

28 (Annex 1) Africa Micro, Small and Medium Enterprise, AMSME, program Set up in 2006 to provide IFC financing and technical assistance to banks moving into the riskier SME market. Provides advisory services on strategy, credit and risk management, staff and customer training, product and marketing, delivery channels and IT/MIS support. The program includes a women markets component and trains bank customers on business and financial management. Has a portfolio of 27 banks in 18 countries with $415.5 million in investment commitments and $102 million in Trade Finance lines. The current pipeline includes 9 banks. IFC has contributed $30 million towards technical assistance to banks matched by a similar amount from the banks. 14 projects have been completed - on average the outstanding SME loan portfolios grew by 36%. Project countries include Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cote d Ivoire, Democratic Republic of Congo (DRC), Ghana, Kenya, Malawi, Mozambique, Niger, Nigeria, Senegal, Sierra Leone, Tanzania, Uganda and Zambia. 28

29 (millions committed) (# projects committed) 2 9 (2 a)agri has been SSA s largest real sector contributor to Inclusive Business over the past three years Telecom & IT 7% Oil,Gas & Mining 1% Infrastructure 3% JV - FM & MAS 4% FM 43% Manufacturing 4% Other MAS 0% Agribusiness & Forestry 35% Dollars Committed to ibiz in SSA, FY11-13 Consumer & Social Services 11% $350 $300 $250 $200 $150 $100 $50 $ FY08 FY09 FY10 FY11 FY12 FY13 $311 $272 $190 $200 $82 $102 FY08 FY09 FY10 FY11 FY12 FY13 FM INFRA MAS

30 3 0 (2b) Inclusive business models provide transformational opportunities to the client, the BOP, and IFC Case example of Ecom and coffee smallholders Good for client business. Coffee and cocoa are smallholder crops. We are very dependent on those large but fragile supply chains. --Ecom Training program to counter coffee production decrease Replicated across multiple geographies, certified farmers have produced 81K metric tons of certified coffee bought by Ecom Benefiting the smallholders. We had only one kilo per bush. Now some of them are even doing ten. And that way the farmers are gaining. --Kenyan smallholders In Kenya, farmer income grew by up to 70%, with doubling/ tripling of yields and premium grades Across geographies, 15,000 coffee farmers certified, with $13.8M in added revenue and a business driver for IFC across AS and IS IFC s business with Ecom (inv commts $M) Cumulative total of $154M since 2006 ~10 AS projects across multiple product lines, incl. farmer & SME training, ES&T standards Launch of a $55M global financing to serve six coffeeproducing countries Development of new partners, e.g., 3-party collaboration with Nespresso Latin America Source: Website search; IFC SBA donor report 2012