ifc creating opportunities through the private sector in africa james emery principal strategy...

IFCCreating Opportunities through the Private Sector in AfricaJames Emery

Principal Strategy Officer

Sub-Saharan AfricaAfrica Diaspora InitiativeMay 27, 2008

IFC: Creating Opportunities for Africa 2

Creating Opportunitiesthrough the Private Sector in

Africa

Overview of IFC

IFC Strategy In Africa

Examples of IFC Programs and

Projects in Africa

Meeting the Challenges Ahead

Outline


IFC Overview


IFC’s 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.


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’s Structure


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 IFC’s 3,100 staff work in field offices.


HongKong

RiodeJaneiro

IstanbulNewDelhi

Johannesburg

Washington

Paris

Moscow

Cairo

IFCHubsIFCOffices

IFC’s Global Reach100+ country and regional advisory services offices worldwide


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 Business Solutions: Advisory Services

Five main business lines:•Business enabling environment

•Access to finance

•Environmental and social sustainability

•Infrastructure

•Value addition to firms


IFC Offers ClientsA Unique Role

World Bank affiliationMarket discipline Risk-takingPreferred creditor statusPolitical risk mitigationEmphasis on development impact


IFC Offers ClientsUnparalleled Expertise

Knowledge of global industries and local marketsFinancial sector influenceLong-term partnershipsSustainable investmentsLeadership on corporate governanceValue-adding expertise


IFC’s activities help raise living standards for people throughout the developing world

Last year our reach included:4 million hospital patients350,000 students9.5 million electricity customers15.3 million water customers5 million small business loans53 million new phone connections

The Reach of IFC’s Projects


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 IFC’s 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


IFC Strategy in Africa


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 Africa’s 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


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


IFC Investments: Sustained Growth

-

200

400

600

800

1,000

1,200

1,400

1,600

FY03 FY04 FY05 FY06 FY07 FY 08 EST

$ M

illi

on

s

-

5

10

15

20

25

Commitments # of countries


Nigeria

South Africa

DRC

Madagascar

Botswana

All Other

Kenya

Africa Region

Senegal

Uganda

Cameroon

Ghana

Tanzania

Mozambique

Cote d'Ivoire

Committed Portfolio by CountryUS$3.0 Billion


Manufacturing

Agribusiness

Financial Markets

Equity Funds

Telecom IT

Infrastructure

Health & Education

Sub-Sovereign

Oil, Gas & Mining

Committed Portfolio by SectorUS$3.0 Billion


Private Enterprise Partnership for Africa IFC Advisory Services

Business Enabling

EnvironmentInfrastructure Access to

Finance

Business Line

Implementation of BEE reform programs based on “Doing Business”

SWAT Team Public-private

dialogue

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 linkages

Gender mainstreaming and access to finance

HIV/AIDS business risk mitigation

Corporate governance

Energy efficiency Cleaner

production Community

development


Growth since New PEP Africa Structure Adopted in 2005

Jun/2006 Jun/2007 Mar/2008

Programs Launched 17 46 70

IFC Core Funding $8 $8 $8

IFC Program Funding $5 $11 $53

Partner Program Funding $31 $53 $77

Staff 78 130 150

Countries covered 15 28 28


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


IFC Programs and Projects


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.

FIN

AN

CI

NG

Man

date

Lett

er

Sig

ned

Feasibility Studies IFC and DFIs

Tech

nic

al

Assis

tan

ce

Ag

reed

Term

Sh

eet

Loam

Com

mit

men

t

Financial Due Diligence/StructuringIFC, Private Companies

Program Design & Fundraising

IFC Board Approval

Program Implementation

Loan Disbursement


Building Competitive Financial MarketsGhana 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

broad-scale and sustainable mortgage lending and investing in Ghana Help develop local capital and a mortgage-related securities market, expanding

investment opportunities

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 CountryLiberia

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

Financial Sector: Building existing local banks, new greenfield microfinance bank, advisory and regulatory support

Private participation in infrastructure: Mandate for private concession in power sector

Project development and support with a focus on agribusiness


Challenges in Africa


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

ifc creating opportunities through the private sector in africa james emery principal strategy...

Documents

private sector financing

new projects

half of advisory spending

profitability of investments

half of ifcs

small business loans53

substantial business

developing countries