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IFC Creating Opportunities through the Private Sector in Africa

IFC Creating Opportunities through the Private Sector in Africa. James Emery Principal Strategy Officer Sub-Saharan Africa. Africa Diaspora Initiative May 27, 2008. Creating Opportunities through the Private Sector in Africa . Overview of IFC IFC Strategy In Africa

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IFC Creating Opportunities through the Private Sector in Africa

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  1. IFCCreating Opportunities through the Private Sector in Africa James Emery Principal Strategy Officer Sub-Saharan Africa Africa Diaspora Initiative May 27, 2008

  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

  3. IFC Overview

  4. 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.

  5. IFC’s 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

  6. 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 infield offices.

  7. IFC’s Global Reach 100+ country and regional advisory services offices worldwide

  8. 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

  9. IFC Business Solutions: Advisory Services Five main business lines: • Business enabling environment • Access to finance • Environmental and social sustainability • Infrastructure • Value addition to firms

  10. IFC Offers ClientsA Unique Role • World Bank affiliation • Market discipline • Risk-taking • Preferred creditor status • Political risk mitigation • Emphasis ondevelopment impact

  11. IFC Offers ClientsUnparalleled Expertise • Knowledge of global industries and local markets • Financial sector influence • Long-term partnerships • Sustainable investments • Leadership on corporate governance • Value-adding expertise

  12. The Reach of IFC’s Projects IFC’s 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

  13. 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

  14. IFC Strategy in Africa

  15. 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

  16. 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

  17. IFC Investments: Sustained Growth

  18. Committed Portfolio by Country US$3.0 Billion

  19. Committed Portfolio by SectorUS$3.0 Billion

  20. Business Line Private Enterprise Partnership for Africa IFC Advisory Services Infrastructure Access to Finance Business Enabling Environment Value Addition to Firms Environment and Social Sustainability • Implementation of BEE reform programs based on “Doing Business” • SWAT Team • Public-private dialogue • Structuring Concessions • Public-private partnerships • Private health and education • Rural water and electrification • SME supply chain linkages • Gender mainstreaming and access to finance • HIV/AIDS business risk mitigation • Corporate governance • Energy efficiency • Cleaner production • Community development • SME banking • Microfinance • Trade finance • Leasing • Housing financing • Credit bureaus • Securities markets

  21. Growth since New PEP Africa Structure Adopted in 2005

  22. 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

  23. IFC Programs and Projects

  24. 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 forfeasibility, 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. Loam Commitment Program Implementation Program Design & Fundraising Agreed Term Sheet Mandate Letter Signed Feasibility Studies IFC and DFIs Technical Assistance Loan Disbursement FINANCING IFC Board Approval Financial Due Diligence/Structuring IFC, Private Companies

  25. Building Competitive Financial MarketsGhana Mortgage ProgramIFC 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

  26. 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 Expanding SME Access to Finance: New Products and Approaches

  27. Conflict Affected CountryLiberiaEarly 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

  28. Challenges in Africa

  29. 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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