1	Private Sector Financing at The African Development Bank
2	Content of the Presentation
3	"The African Development Bank Group" The African Development Bank Group
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5	"Algeria" Algeria Angola Benin Botswana Burkina Faso Burundi Cameron Cape Verde Centr afrique Chad Comoros Congo Cote D’Ivoire Djibouti Egypt Uganda Eritrea Ethiopia Gabon Gambia Ghana Guinea Guinea Bissau Kenya Lesotho Liberia Libya Madagascar Malawi Mali Mauritania Mauritius Morocco Mozambique Namibia Niger Nigeria Rwanda Sao Tome Senegal Seychelles Sierra Leone Somalia South Africa Sudan Swaziland Tanzania Togo Tunisia Zambia Zimbabwe Democratic Republic of Congo Equatorial Guinea
6	"Argentina" Argentina Austria Denmark Finland France Germany Kuwait Netherlands Norway Portugal United States of America Spain Turkey (under consideration) Belgium Brazil Canada China India Italy Japan Korea Sweden Saudi Arabia Switzerland United Kingdom
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10	"ADB window supports development activities..." ADB window supports development activities in the Middle-income countries and also in blend countries Funds mobilized from the international capital markets (ADB is a triple A+ credit rating institution by the major rating agencies) ADB window has become very attractive since May 2005 after decisions taken by the Boards (eliminating the commitment fee for all new sovereign-guaranteed loans; expanding the range of the commitment fee for non-sovereign guaranteed operations from .50% - 1% to 0% to 1%; decreasing the lending spread form 0.5% to 0.4% and eliminating the funding margin for new sovereign loans; eliminating the market risk premium for all new fixed rate sovereign and non sovereign loans; and reducing the period for the publication of Environmental Impact Assessments for Category 1 private sector projects in all borrowing member countries from 120 days to 60 days prior to Board presentation) Loans have a maximum maturity of 20 years including a grace period on the repayment of the principal amount, generally not exceeding 5 years 60% of the ADB authorized capital is subscribed by the regional members and 40% by the non-regional states
11	"Established in 1972" Established in 1972, commenced operations in 1974 Provides development finance on concessional terms to low income RMCs which do not borrow on the non concessional terms of the Bank Poverty reduction is the main aim of the fund development activities in borrowing countries Its sources of funds are mainly contributions and periodic replenishments by State Participants The Fund finances projects and technical assistance as well as studies It lends at no interest rate, with a service charge of 0.75 per cent per annum, a commitment fee of 0.50 per cent, and a 50-year repayment period, including a 10-year grace period.
12	"Angola" Angola Benin Burkina Faso Burundi Cape Verde Centre Afrique Chad Comoros Djibouti Eritrea Cameron Congo Ghana Guinea Guinea Bissau Kenya Lesotho Liberia Madagascar Malawi Mali Mauritania Uganda Niger Nigeria Rwanda Senegal Sao Tome Sierra Leone Somalia Sudan Tanzania Zambia Zimbabwe Mozambique Cote D’Ivoire Democratic Republic of Congo
13	"NTF established in 1976 at..." NTF established in 1976 at the initiative of the Government of the Federal Republic of Nigeria From 1976 to end of 2004, 72 projects for a total of US$304,750,000 in 30 RMCs Up to 31 December, 2004, the NTF has a net asset value of US$540,000,000 Before 2001 it lent at a 4 per cent interest rate, with a 25-year repayment period, including a five year grace period. In 2001, change of interest rate from a fixed rate of 4 per cent per annum to all borrower countries to a flexible interest rate within a range from 2 to 4 per cent per annum based on the development status and economic prospects of individual borrowers (ADF: 2%; ADB: 4%; Blend countries:3%) In 2003, US$ 25 million from the corpus of NTF to provide technical assistance grants Focus remains on poverty reduction and promoting sustainable economic growth
14	"Bank co-finances projects/programs with bilateral..." Bank co-finances projects/programs with bilateral and multilateral donors (Breton Woods Institutions, UN System, European Union, Bilateral Donors, Arab Funds) Bank manages trust funds provided by various bilateral donors (environment, gender, governance, energy, participation, population, etc…) Bank has provided support to all the major African Regional Economic Communities (COMESA, ECOWAS, SADC, ECCAS, EAC, UEMOA, UMA, OMVS, OMVG, ALG, IGAD, CILSS, LAKE CHAD BASIN, RIVER NILE BASIN…etc) Bank created a number of other institutions: the Africa Re-insurance Corporation (Africa-Re); the Association of African Development Finance Institutions (AADFI); the Federation of African Consultants (FECA); the Africa Project Development Facility (APDF); the International Finance Company for Investments in Africa (SIFIDA); the African Management Services Company (AMSCO); the African Business Roundtable (ABR); the African Export-Import Bank (AFREXIMBANK); the African Capacity Building Initiative (ACBI); and the Joint Africa Institute (JAI) Banks works very closely with civil society organizations and non-governmental organizations (NGOs)
15	"Public Sector Sovereign Guaranteed Loan" Public Sector Sovereign Guaranteed Loan Risk Management Products Public Sector Non-Sovereign Guaranteed Private Sector Enterprise Loans Guarantees
16	"Agriculture and Rural Development" Agriculture and Rural Development Transportation Communications Water Supply and Sanitation Power Industry Mining and Quarrying Finance Social Environment Multi-sector Urban Development
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18	"PRIVATE SECTOR" PRIVATE SECTOR
19	"Creating an Enabling Environment" Creating an Enabling Environment Strengthening of local Financial Systems Building Competitive Infrastructure Promoting the Development of Micro-Small and Medium-Scale Enterprises Promoting Trade
20	How to Access the Opportunities for private sector financing Be consistent with the country’s development objective Posses the required comparative advantage in order to have high chances of success Have a sound project concept, technology, sponsorship and management with a confirmed market for the products or services; and Comply with the Environment Assessment Guidelines and the prevailing environmental regulations of the host country
21	Eligibility for Bank’s Private Sector Financing An enterprise/project must be located and incorporated in the Regional Member Countries (RMCs) of the Bank, whether promoted by African or non-African investors An enterprise/project must be majority-owned (51% +) by private-sector investors. An enterprise partially or totally owned by the government may also be eligible if it satisfies the criteria of operational autonomy and managerial freedom and is run on a commercial basis. Projects for the establishment, expansion, diversification and modernization of productive enterprises. Minimum intervention amount: US$ 3.5 million, with some exceptions for high impact projects Maximum investment of 1/3 of total project cost Normally not the single largest lender.
22	"Type of Financial instruments" Type of Financial instruments
23	"Hard Currency of choice (..." Hard Currency of choice ( Euro, US$, Yen) Local Currency (Currently only SA Rand) Floating or Fixed interest rates: interest rate and other chares are set in accordance with market practices to reflect the country’s and project risks ; it prices its loans at a spread above an appropriate market indicator (Libor or Euribor); spreads are set according to the credit worthiness of the borrower Flexible grace period and repayment profile: Bank loans generally run for 5 to 15 years with suitable grace period ; Maximum investment of 1/3 of total project cost Normally not the single largest lender.
24	"to cover the payment of..." to cover the payment of principal and interest for loans and debt instruments extended by others Available for both hard-currency and local-currency denominated obligations Available for Loans and Debt instruments
25	C. Lines of Credit Private and public financial institutions (not requiring sovereign guarantee) Flexibility in use of LOC proceeds by FIs But FIs bear the credit risks of the sub-loans
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27	Project Cycle
28	"To establish a special facility..." To establish a special facility for private sector development A multi-donor grant facility of US$200 million for technical assistance and risk capital of which Japan will provide US$40 million A Concessional loan facility of up to US$1.0 billion to the ADF for on-lending to ADF countries to develop the private sector enabling environment A Concessional loan facility to of up to US$1.0 billion to ADB for on-lending to private sector enterprises through the Bank’s non-sovereign window
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