USADF – GAC SME Linkages Overview

1. USADF – GAC SME Linkages Overview YEN – WA Youth Employment Network Office for West Africa May 22, 2008

2. USADF – GAC SME Linkages Overview Intro to USADF and GAC Overview of Strategic Partnership Results Lessons Learned

3. USADF OverviewFostering hope, growth and goodwill • US Government agency focused on helping Africans help themselves by providing the resources they need to advance their own economic and social development • Finance sustainable poverty alleviating initiatives that are conceived, designed, and implemented by Africans • Stimulate and expand the participation of Africa's poor in their own development • Build sustainable African institutions that foster grassroots development

4. Guinea Alumina CorporationJoint Venture Project Company • Founded as Global Alumina • Canadian public company • 75 year agreement signed in 2005 with Government of Guinea • Bauxite mining • Alumina refinery • Dedicated port • In March 2007, expanded to include strategic equity partners • 33% remained with Global Alumina • 33% BHP Billiton • 33% across DUBAL and Mubadala • BHP Billiton is the managing partner

5. Guinea Alumina CorporationProject Overview • Refinery Project • Guinea has > 1/3 of global bauxite reserves • Limited alumina refining capabilities • Proposed refinery (4.5 MT) will be one of the largest in the world • > USD 4B investment • Become operational in 2011 • Sangarédi Site • 690 square km concession area • Site for mining, refinery and power generator • Employ up to 3,000 full time workers • Create Workers Town with population up to 10,000 • Kamsar Site • New port terminal and jetty • Dedicated quay / wharf (10,000 MT vessel capacity)

6. USADF – GAC SME Linkages Overview Intro to USADF and GAC Overview of Strategic Partnership Results Lessons Learned

7. USADF-GAC Strategic PartnershipPartnership Overview • Program Overview • MOU signed in 2006 • 5 year $10M USD fund (50:50) • Goal is community social and economic development • Two components • Community development • SME linkages • Recognized as a groundbreaking public-private partnership • Community Development • Participatory development • Create community-based organizations • Fund infrastructure, training and livelihoods • SME Linkages • Invest in SMEs that can act as suppliers to GAC • Create jobs, improve employment conditions, and deliver training opportunities

8. FOCUS OF SME INVESTMENTS Community Livelihoods Construction Operations Local Consumer Economy SME Linkages Program Focus Broad program goal: maximize local economic empowerment Direct supply chain linkage to GAC Indirect consumer / community investment Construction: Fastest opportunity, provide technical assistance to local subs, strengthen national firms but require use of local workers / inputs Operations: Invest in new skills and expansion of firms based in Conakry. In other cases, initially insource but spin off to local SMEs over time Local Consumer Economy: Build consumer and business-services enterprises in and around the bauxite region Community Livelihoods: Deliver local sources of income, generally ag-based, that create employment within the footprint of the mining activities

9. SME - MNC Linkages Methodology • Linkages • Roadmap 2. SME Development 3. Link SME to MNC 4. Ensure SME Performance • Analyze MNC supply requirements • Survey community priorities • Conduct SME outreach • Prioritize sectors / spend categories • Assess SME capabilities in each sector / spend category • Define sector strategy: • Link only • Invest and link • Insource / spin off later • Formulate SME Investment and Linkage Roadmap • SME screening • Business plan development • Determine financing need • Capacity building grant (USADF EDI) • Pre-commercial expansion loan (USADF EEI) • Commercial loan / link to financial institution • Execute financing agreements / fund investments • Implement business plans • Supplier training in doing business w/ MNCs • Request for Proposal (RFP) response facilitation • Costing / pricing • Capacity planning • Working capital needs • Contracting support • Commitments / penalties • Link to legal assistance • Contract implementation • Production planning • Customer relationship management • Track enterprise performance • Quarterly financial reports • Measure against growth targets • Track supplier performance • Self reporting • MNC reporting • Intervene as necessary using proven turnaround capability • Facilitate additional market linkages

10. Requirements GatheringConstruction Schedule Analysis Sangaredi Alumina Refinery Schedule was analyzed with the following results: • Number of Projects: ~75 • Number of Sub-Projects: ~188 (across all projects) • Project Phases: Engineering  Procurement  Construction Commissioning • Construction related activities command the most demand

11. SME Capability Assessment SMEs were methodically assessed using a comprehensive toolkit covering both subjective and quantitative attributes Initial Assessment Analysis Analysis SME List GAC Needs SME Interview SME Site Visit USADF SME Assessment Toolkit SMEs were assessed and scored on the criteria below.

12. SME ScreeningVetting the Local Supply Base SMEs were identified and assessed for GAC’s needs 500 SMEs • 500 SMEs were found from various sources, including: GA, CBG, Chamber of Commerce, OPIP, 3AE • 200 SMEs selected based on local research (reputation, references, track record) • 60 SMEs were qualified based on pre-screening assessments and GA’s needs (Appendix A) • ~20 SMEs were selected based on detailed assessments (Appendix B, C) Active Pipeline 200 60 20 Sept Oct Nov Dec Manufacturing Agriculture/Foods: food conditioning, canning, seeds, flours, sugar, milk and derived, vinegars, other liquids, alcohol, chocolate Building Materials: Furnishings, glass, leather, wood, textiles, paper Chemicals: Petro-chemistry, syntheses organic, metallurgical, cold industry, greasy substances, drying, dehydration Artisan and Trades Vegetable fibre, clothing, weaving, wood, leather, shoe, metals Agriculture General farming activities, breeding, fishing and aqua-culture Services Construction, consulting, child, trade, communications, waste, education, promotion, health, market studies, environment, data processing, tourism, transport, utilities, housing, security, graphic

13. SME Development Areas

14. USADF – GAC SME Linkages Overview Intro to USADF and GAC Overview of Strategic Partnership Results Lessons Learned

15. ResultsFY 2007 Investments FY 2007 SMEs Diallo et Fils: Build a new bakery in the Workers Town Guinea Confection: Locally produce uniforms Ferme Keba: Increase local egg production SAF: Scale refrigeration service vendor in Sangarédi ENCODI: Improve skills / equipment of local construction company to take a larger role in GAC’s construction Kyoksoul: Bring local security services provide to international standards Projected Impacts • > 50% of businesses already have GAC contracts • 700 jobs projected • USD $2M in wage growth projected • > $10M in incremental revenue growth projected

16. ResultsFY 2008 Planned Investments FY08 SMEs in Development • AMSY: Guinea-wide driving school • Create the only training center for commercial trucks in Guinea • Create the first ever training for specialized mining equipment • Expand job opportunities for local Guineans • KPG: Local woodworking business • Provide construction wood (doors / windows) and furniture • Convert local waste wood into plywood • Create an apprenticeship program • UBM: Local rice production / marketing cooperative • Increase production of rice in the local communities • Strengthen contracts with mining companies • Increase production and profits

17. USADF – GAC SME Linkages Overview Intro to USADF and GAC Overview of Strategic Partnership Results Lessons Learned

18. Lessons LearnedWorking with GAC • Set up systems for communication • Changes happen frequently • Communicate every day • Define a forum for discussing strategic issues • Adjust tendering and contracting to encourage local suppliers • Share supply requirements in advance • Streamline contracting process • Offer pre-payment • Form a Procurement Council • Encourage procurement to meet and discuss local supply base • Showcase successes to build confidence

19. Lessons LearnedWorking with SMEs • Develop a trusted advisor relationship • Getting entrepreneurs to open up is difficult • Jointly diagnose issues and craft plans • Requires significant time investment • Manage dependence on GAC • GAC should be one component of the growth plan • Need other mining / non-mining growth opportunities • Keep focus on linkages / implementation • Continuously monitor each SME • Keep in regular contact with procurement

20. Thank You! Thank You! Brent Habig Regional Investment Advisor United States African Development Foundation