IFC Creating Opportunities through the Private Sector in Africa

James Emery

Africa Diaspora Initiative May 27, 2008

Principal Strategy Officer

Sub-Saharan Africa

Creating Opportunities through the Private Sector in Africa Outline Overview of IFC IFC Strategy In Africa Examples of IFC Programs and Projects

in Africa
Meeting the Challenges Ahead

IFC: Creating Opportunities for Africa

IFC Overview

IFC: Creating Opportunities for Africa

IFCs Vision:

That poor people have the opportunity to escape poverty and to improve their lives
IFC is a social enterprise, a development finance institution that fosters economic growth in developing countries through investments and advisory services. IFC demonstrates the profitability of investments in emerging markets, encouraging further investment by private sector financiers. IFC accepts substantial business risks, going where other investors are unwilling to.
IFC: Creating Opportunities for Africa

IFCs Structure Owned by 179 member countries

IFC is the main driver of private sector development in the World Bank Group
Collaborates with other members of the group, including the World Bank (IBRD and IDA) and MIGA. Global: Headquartered in Washington, D.C. Local: More than 100 offices worldwide

IFC: Creating Opportunities for Africa

Bringing Solutions to Clients IFC is responding to rising demand for private sector financing and expertise. IFC brings solutions to clients through investments and advisory services. IFC helps fill unmet needs by directing capital and knowledge to areas not yet benefiting from growth in emerging markets. To be close to clients, more than half of IFCs 3,100 staff work in field offices.
IFC: Creating Opportunities for Africa

IFCs Global Reach

100+ country and regional advisory services offices worldwide

IFC: Creating Opportunities for Africa

IFC Business Solutions: Financial Products Loans and intermediary services Equity and quasi-equity Loan participations Structured finance Risk management products Trade finance Subnational finance Treasury operations
IFC: Creating Opportunities for Africa

IFC Business Solutions: Advisory Services

Five main business lines:

Business enabling environment Access to finance Environmental and social sustainability Infrastructure Value addition to firms

IFC: Creating Opportunities for Africa

IFC Offers Clients A Unique Role World Bank affiliation Market discipline Risk-taking Preferred creditor status Political risk mitigation Emphasis on development impact

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IFC Offers Clients Unparalleled Expertise

Knowledge of global industries and local markets

Financial sector influence Long-term partnerships Sustainable investments Leadership on corporate governance Value-adding expertise

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The Reach of IFCs Projects IFCs activities help raise living standards for people throughout the developing world
Last year our reach included: 4 million hospital patients 350,000 students 9.5 million electricity customers 15.3 million water customers 5 million small business loans 53 million new phone connections
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IFC: Creating Opportunities for Africa

Fiscal Year 2007 Highlights

Investments: 299 new projects in 69 countries

Advisory services: 349 new projects in 84 countries $12 billion in financing: $8 billion for IFCs own

account, $4 billion mobilized

Frontier and IDA countries received a third of investments and over half of advisory spending
$1.4 billion invested in Sub-Saharan Africa
$1 billion invested in the Middle East and North Africa

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IFC Strategy in Africa

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IFC Strategy in Africa

Proactive engagement through investments and advisory services to support new private investment
Financial Markets Development Private and Public-Private Infrastructure Sustainable Extractive Industries Development Large scale regional projects Competitive agribusiness and industry

Focused products and services for Africas SMEs

Expanding access to finance Scaling up delivery of focused advisory services

Help Africa improve its investment climate

Advisory services to guide and support investment climate reform Benchmarking and analysis Doing Buisiness
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New Directions in Africa: Expanding Impact

Decentralization of staff and decision-making

Regional Hub office in Johannesburg More industry specialists and investment officers to field offices Legal, Credit, Environment/Social capacity in Africa Delegated authority for approvals to field-based management teams Advisory services mostly delivered by field based teams

Focused efforts on smaller, more challenging countries

Adapting IFC products and services to emerging private sector

Aggressive engagement in post conflict countries

Initial focus on Sierra Leone, Liberia, DRC, Central African Republic Country offices Advisory programs on BEE and financial markets Close collaboration with other donors
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IFC Investments: Sustained Growth

1,600 25

1,400 20 1,200

1,000
$ Millions

15

800 10

600

400 5 200

FY03 FY04 FY05 Commitments FY06 # of countries FY07 FY 08 EST

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Committed Portfolio by Country US$3.0 Billion

All Other Botswana Madagascar Cote d'Ivoire DRC Senegal Tanzania Mozambique Nigeria Africa Region

Kenya

Uganda Cameroon Ghana South Africa

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Committed Portfolio by Sector US$3.0 Billion

Sub-Sovereign Agribusiness Equity Funds Telecom IT Financial Markets Health & Education

Manufacturing

Infrastructure

Oil, Gas & Mining

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Private Enterprise Partnership for Africa IFC Advisory Services

Business Line
Business Enabling Environment
Implementation of BEE reform programs based on Doing Business SWAT Team Public-private dialogue

Infrastructure

Access to Finance

Value Addition to Firms

Environment and Social Sustainability

Structuring Concessions Public-private partnerships Private health and education Rural water and electrification

SME banking Microfinance Trade finance Leasing Housing financing Credit bureaus Securities markets

SME supply chain Energy efficiency linkages Cleaner Gender production mainstreaming Community and access to development finance HIV/AIDS business risk mitigation Corporate governance
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Growth since New PEP Africa Structure Adopted in 2005

Jun/2006

Jun/2007

Mar/2008

Programs Launched IFC Core Funding IFC Program Funding

17 $8 $5

46 $8 $11

70 $8 $53

Partner Program Funding

Staff Countries covered

$31
78 15

$53
130 28

$77
150 28
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IFC: Creating Opportunities for Africa

IFC African Country Office Presence

1 Johannesburg Hub
8 Regional Offices 4 Post Conflict Country Offices 5 Advisory Svcs Program Offices

4 Proposed Program Offices

1 Proposed IFC Rep/Prgm Office
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IFC Programs and Projects

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Supporting Complex Regional Infrastructure: East African Submarine Cable System

The Project: 10,000 kilometer submarine fiber optic cable along east coast of Africa, connecting eight coastal and island nations to each other and rest of the world. Over US$1 million in project development costs and three years of work to implementation. Technical Assistance & Financing: Donor, IFC and other DFI funding provided for feasibility, environment, regulatory studies. 26 African telephone companies sponsors agreed to ownership structure. IFC Loan $32 Million; Total cost $235 Million IFC Role: With World Bank, influenced structure of project to provide open international gateways, fostering access and competition Goal: Along with World Bank's Regional Connectivity and Infrastructure Program (RCIP) and advisory work done on backhaul networks, EASSy will provide low cost broadband access to a total population in excess of 250 million people in twenty countries, creating jobs, expanding the production of goods and services and creating avenues for effective learning, social participation, government efficiency and transparency. Cable will reduce communications prices for users by two-thirds. Technical Assistance

Mandate Letter Signed

FINANCING

Financial Due Diligence/Structuring IFC, Private Companies

Agreed Term Sheet

Loam Commitment

Feasibility Studies IFC and DFIs

Program Design & Fundraising

Program Implementation

IFC Board Approval

Loan Disbursement

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Building Competitive Financial Markets Ghana Mortgage Program

IFC Initiative with Local Banks and Financial Authorities
Project: Integrated investment and advisory package to develop from the ground up a residential mortgage lending market and institutions in Ghana IFC Advisory Services: Help government improve regulatory framework and participating banks launch and strengthen mortgage lending operations IFC Financing: $40 million in the form of direct credits to participating local banks Development Impact:

Provide more Ghanaians with the opportunity to own a house by developing broadscale and sustainable mortgage lending and investing in Ghana Help develop local capital and a mortgage-related securities market, expanding investment opportunities

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Expanding SME Access to Finance: New Products and Approaches IFC Innovation and Partnerships in Multiple Initiatives
Africa MSME Program provides advisory support to banks on SME lending, together with credit and risk management facilities Joint program with IDA funding for Partial Portfolio Guarantees of commercial bank lending to SMEs in Madagascar, Ghana, and Senegal Microfinance initiative has supported 6 greenfield commercial microfinance banks in Africa, targeting a total of 15 by 2011 Trade Finance program bringing cheaper access to import/export finance, particularly for small firm clients of smaller African Banks. Program active in over 20 countries, so far in FY 2008 22 projects for over $560 million

Together, these initiatives now reach over 170,000 SMEs

Conflict Affected Country Liberia

Early Engagement and Presence
Presence: Investment Climate Advisory program began in 2006; IFC Liberia Office opened in 2007 Investment Climate: Advisory program on new investment law,

simplifying business startup, streamlining trade procedures, and public-private dialogue microfinance bank, advisory and regulatory support concession in power sector

Financial Sector: Building existing local banks, new greenfield

Private participation in infrastructure: Mandate for private

Project development and support with a focus on agribusiness

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Challenges in Africa

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Challenges to Sustaining Private Sector Development and Growth

Initiatives currently under development
Infrastructure
Bring innovation in project structures to maximize private participation

Investment Climate
Scaling up on current efforts to capitalize on reform momentum

Agribusiness
Support for development of competitive value chains

Sustainable Development and Climate Change

Helping Africa increase power generation while maximizing low impact solutions and efficiency

Local currency Financing

Build on current swap facilities and local currency bond issues to increase long term finance options

Health
Expanding the private sector contribution to health care
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