ifc’s value add to emerging markets investors in africa story...1 ifc’s value add to emerging...
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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
2
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