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IFC’s Value Add to Emerging Markets Investors in Africa

Tap Africa’s Vast Investment Potential…

…Utilizing IFC’s Unique Capabilities

• Local knowledge in both investor and host countries

• Global industry expertise

• Relationships with key, reputable companies and banks

• African presence, including in Fragile States

• Advisory Services

• Investment climate and PPP support

• Expertise on regulatory environment

• Possible equity participation & co-investment

• Trade finance

• Potential financing in host and/or investor

local currencies

• Ability to “crowd in” additional sources of

financing

Long-term Risk Management & Capacity Building

World Bank Group Risk Mitigation

Infrastructure

Agribusiness & Forestry

Health & Education

Manufacturing & Consumer Goods

Tourism, Retail & Property

Sample IFC Supported Emerging Markets Deals in Africa

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Year Sponsor Project IFC

financing

Project

Country

Sponsor

Country

Infrastructure and

Natural Resources

Manufacturing and

Services

Financial Markets

FY 12 $35m Saham Finances Africa Region Morocco

FY 11

Leo Burundi $25m Burundi Egypt

FY 11

FY 11

Apollo Tyres $11m South Africa India

Kingdom Hotels $26m Ghana Saudi

Arabia

MAGERWA $3m Rwanda Singapore

Bank of Africa $9m Morocco

FY 12 $37m Thika IPP Kenya Lebanon

FY 11

FY 11

FY 10 Zain Distributors $6m Malawi Kuwait

FY 10 MNF House $10m Tanzania China

Kenya,

Madagascar,

Tanzania,

Uganda

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Opportunities in Key Sectors:

Agribusiness

Africa’s Agribusiness Opportunity

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Estimated

Requirement of

$20-40 B/year

$10-20 B

Private Sector:

Banks, Funds,

DFIs

Multilaterals

& Foreign

Governments

Host Country

Governments

$10-20 B

Agri <10% of of total ODA

Agri <10% of total

multilaterals

China/India investments

Average bank lending to

agriculture only 5% of

portfolio

Funds recently increasing

presence

African governments

allocate <10% of budgets

for agriculture

expenditures

Challenges Opportunity

Financing gap: big opportunity for IFC to

increase Africa Agri investments and impact Resources Land

Water

Infrastructure

Government Regulation

Intervention

Protection

IFC Reputation Risk Appetite

Negative Media Attention

Sponsor / IDD issues

Resources Land

Water

Infrastructure

Government Regulation

Intervention

Protection

IFC’s Agri Experience and Approach

IFC’s Approach & Value Add

IFC takes an integrated value chain approach, aligning with WBG transformational initiatives:

Sector/Enabling Environment: sector development, resource (water) use, investment climate and agri investment

promotion, infrastructure/logistics, inputs supply/import finance

Direct Project Investment: short/medium term financial products for key cash crops and critical agri

commodities; long term funding for capex in key large scale projects

Value Chain: short term financing through financial intermediaries and traders/aggregators; environmental &

social standards and capacity building for FIs and firms/farms; inputs (fertilizer, seeds, crop protection) distributor

finance through FIs

IFC’s Recent Experience in Agribusiness in Africa

Olam

Loan:

$120 million

Lender

2013

Africa & Asia

Patisen

Equity & Loan:

EUR 11 million

Shareholder/ Lender

2011

Senegal

Hans Merensky

Equity:

$35 million

Shareholder

2012

South Africa

Zambeef

Loan:

$30 million

Lender

2012

Zambia

ECOM

Loan:

$50 million

Lender

2012

Africa, Asia & LAC

Country Bird

Convertible Loan:

$25 million

Lender

2013

South Africa

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Project Name: Olam

Location: Nigeria & India

Project Type: Expansion of food processing facilities

IFC financing: US$120 m senior loan

Sponsor: Olam (UK)

IFC value add: Long-term local currency financing

Adoption of E&S Standards

Facilitate Sponsor’s expansion in frontier markets

Project Name: Ecom

Location: Asia, Africa & Latin America

Project Type: International railway concession

IFC financing: US$50 m loan

Sponsor: Ecom (Switzerland)

IFC value add: Improved farm-level productivity and farmer incomes

Increased access to finance through supplier advances

Adoption of E&S Standards

Select Africa Agri Projects with EM Investors

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Opportunities in Key Sectors:

Power & Utilities

Africa’s Power Sector Opportunity

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Only 39 Power Sector PPPs, with total capacity of 5,000 MW of 69,000 MW installed (7%) in Sub-Saharan Africa

Latin America – 53,000 MW of total 220,000 MW installed (24%)

Asia (non-OECD) – 119,100 MW of total 870,000 MW installed (14%)

Private Sector finances a tiny share of power sector assets in Africa relative to other regions:

Africa – 11% of annual investment flows through Private Participation in Infrastructure (PPI)

Top six Latin American economies – 50% of annual investment flows through PPI

Sub-Saharan Africa attracted the least power sector investment from private sources among all world regions in the decade 2000-2009, just US$7 per capita vs. US$175 per capital in LatAm

Opportunity

Why Has

Private

Sector

Investment

not

Expanded?

Over 500 million people lack power

Europe: 782 GW installed capacity

(1,308 W/per capita)

Sub-Saharan Africa (excl RSA): 27 GW

installed capacity (33 W/capita)

Absolute number without power has

increased over last 10 years

Lack of power cited as one of top

three constraints by businesses

operating in Africa

Between 1998 and 2008, piped water

coverage in urban areas declined from

43% to 35% while piped water

coverage in rural areas languished at

just 4-5% in the same period.

Strong and growing demand for infrastructure services in African countries. Key issue is unlocking supply of

infrastructure services, which depends on governments’ willingness and ability to structure bankable PPP

projects.

Inability to structure bankable PPPs is due often to poor project governance and preparation. Common

pitfalls include: lack of strategic business case; lack of clarity from public authority on project aims; lack

of project ownership; poorly resourced project teams; selection of advisers based purely on cost; lack of

effective communication with stakeholders; poorly conducted market sounding; poorly structured tender

process / unsolicited proposals.

Sector-wide issues: lack of legal / regulatory enabling environment for PPPs; subsidy, cost recovery issues;

counterparty credit risk issues (state-owned off-takers) etc.

Estimated Total

Requirement of

$90 B/year

Current Public

Sector Financing

$11 B

Power Financing Gap of US$30 Billion/Year

Private Sector Needed to Close Funding

Gap (currently $0.5 B)

IFC’s Power Experience and Approach

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IFC takes a multi-pronged approach to accelerate private sector investment in the power & utilities sector in Africa, partnering with World Bank colleagues and development partners:

IFC Investment: Long-term debt and equity financing for infrastructure projects

IFC Advisory Services: PPP Transaction Advisory Services for government clients

IFC Infraventures: Early stage risk capital for infrastructure project development

World Bank/IDA/PPIAF/MIGA: Sector reform, PPP enabling environment, PCGs, PRGs, PRI

IFC’s Recent Experience in Power & Utilities in Africa

IFC’s Approach & Value Add

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Select Africa Power Projects with EM Investors

Project Name: Takrodi International Co. (TICO) IPP

Location: Takoradi, Ghana

Project Type: 110 MW steam turbine capacity addition

IFC financing: US$80 m senior loan

Sponsor: TAQA (UAE)

IFC value add: Long-term financing

Mobilization: US$52.5m PLs and ICF

Adoption of E&S standards

Project Name: Thika IPP

Location: Nairobi, Kenya

Project Type: Greenfield (BOO) 87 MW HFO-fired IPP

IFC financing: US$37 m equiv. senior loan

Sponsor: Matelec (Lebanon)

IFC value add: Long-term financing

US$35 m IDA PRG to facilitate loan

US$61.5 m MIGA guarantee

Mobilization of $74m equiv. parallel loans

Adoption of E&S standards

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Opportunities in Key Sectors:

Transport & Logistics

Africa’s Transport & Logistics Opportunity

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The Opportunity

Private Sector Investment Needed to Close the

Financing Gap

Why Has

Private

Sector

Investment

not

Expanded?

$18.2 billion infrastructure spending needs annually in

African transport and logistics sector

Transport is crucial for economic development:

Improved transport makes five key contributions to

sustainable development and poverty alleviation:

Improves trade, facilitates regional and local

integration promoting economic growth and

creates economic opportunity and growth in rural

areas through better access to markets

Makes cities work better for their citizens, for the

environment and for wealth creation

Provides access to health care facilities, improving

productivity and reducing maternal mortality and

malaria deaths.

Provides access to schools and educational benefits

It provides the opportunity to be safer and cleaner

for users and communities.

Necessary to unlock Africa’s agricultural potential: #%

of the World’s arable land are in Africa, of which

currently only #% are utilized.

Key issue is unlocking supply of

infrastructure services, which depends

on governments’ willingness and ability

to structure bankable PPP projects,

often hampered by poor project

governance and preparation.

Very long term commitments in some

sectors (roads, rails) necessary, need

ability/instruments to manage long-run

financial, government and revenue risk

Sector-wide issues: lack of legal

/regulatory enabling environment for

PPPs; subsidy, cost recovery issues;

counterparty credit risk issues (state-

owned off-takers) etc.

Annual financing gap of $2 billion:

Of total spending needs ($18.2

billion) approximately 83% are met

through public and ODA financing and

only 6% through private sector

financing

IFC’s Transport Experience and Approach

IFC’s Approach & Value Add

IFC takes a multi-pronged approach, leveraging its institutional reach through the WBG:

IFC Investment: Long-term debt and equity financing for infrastructure projects

IFC Advisory Services: PPP Transaction Advisory Services for government clients

IFC Infraventures: Early stage risk capital for infrastructure project development

World Bank/IDA/PPIAF/MIGA: Sector reform, PPP enabling environment, PCGs, PRGs, PRI

IFC’s Recent Experience in Transport & Logistics in Africa

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Project Name: Magerwa

Location: Kigali, Rwanda

Project Type: Acquisition finance for leading logistics firm

IFC financing: US$3 m senior loan

Sponsor: Portek East Asia Terminals

IFC value add: Long-term local currency financing

Transaction structuring

Facilitate Singapore sponsor’s market entry

Project Name: Africa Railways Limited

Location: Kenya & Uganda

Project Type: International railway concession

IFC financing: US$10 m equity

Sponsor: Citadel Capital (Egypt)

IFC value add: Long-term equity finance

US$19 m IFC AMC mobilization

US$20 m ICF mobilization

Select Africa Transport Projects with EM Investors