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


 Overview of IFC

 IFC Strategy In Africa

 Examples of IFC Programs and Projects
  in Africa

 Meeting the Challenges Ahead

                                         IFC: Creating Opportunities for Africa   2
IFC Overview

               IFC: Creating Opportunities for Africa   3
                    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.
                                           IFC: Creating Opportunities for Africa   4
                  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

                                           IFC: Creating Opportunities for Africa   5
            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 in field offices.

                                            IFC: Creating Opportunities for Africa   6
              IFC’s Global Reach
100+ country and regional advisory services offices worldwide

                                                           IFC: Creating Opportunities for Africa   7
          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

                                    IFC: Creating Opportunities for Africa   8
          IFC Business Solutions:
            Advisory Services

Five main business lines:
•Business enabling environment
•Access to finance
•Environmental and social sustainability
•Value addition to firms

                                      IFC: Creating Opportunities for Africa   9
          IFC Offers Clients
            A Unique Role

World Bank affiliation
Market discipline
Preferred creditor status
Political risk mitigation
Emphasis on development impact

                                  IFC: Creating Opportunities for Africa   10
            IFC Offers Clients
          Unparalleled Expertise

Knowledge of global industries and local markets
Financial sector influence
Long-term partnerships
Sustainable investments
Leadership on corporate governance
Value-adding expertise

                                      IFC: Creating Opportunities for Africa   11
        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

                                       IFC: Creating Opportunities for Africa   12
             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

                                                 IFC: Creating Opportunities for Africa   13
IFC Strategy in Africa

                         IFC: Creating Opportunities for Africa   14
                        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
                                                         IFC: Creating Opportunities for Africa   15
           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

                                                                     IFC: Creating Opportunities for Africa   16
                            IFC Investments: Sustained Growth

             1,600                                                                               25



$ Millions





               -                                                                                 -
                     FY03     FY04    FY05          FY06            FY07    FY 08 EST

                                     Commitments   # of countries

                                                                           IFC: Creating Opportunities for Africa   17
                          Committed Portfolio by Country
                                 US$3.0 Billion
                             All Other
                                                 Africa Region


 Cote d'Ivoire







                                                      South Africa
                          Cameroon                               IFC: Creating Opportunities for Africa   18
                    Committed Portfolio by Sector
                           US$3.0 Billion
                         Sub-Sovereign    Health &
          Agribusiness                   Education
     Equity Funds

     Telecom IT
                                                        Financial Markets


                                                     Oil, Gas & Mining
                                                          IFC: Creating Opportunities for Africa   19
                        Private Enterprise Partnership for Africa
                                 IFC Advisory Services

                                          Business Line

  Business                                                             Value                Environment
                                               Access to
  Enabling              Infrastructure                               Addition to             and Social
 Environment                                                           Firms                Sustainability

 Implementation of    Structuring           SME banking       SME supply chain  Energy efficiency
  BEE reform            Concessions           Microfinance       linkages          Cleaner
  programs based       Public-private                           Gender             production
                                              Trade finance
  on “Doing             partnerships                              mainstreaming     Community
  Business”                                   Leasing
                       Private health                            and access to      development
 SWAT Team                                   Housing financing  finance
                        and education
 Public-private                              Credit bureaus    HIV/AIDS
                       Rural water and
  dialogue              electrification       Securities         business risk
                                               markets            mitigation
                                                                 Corporate
                                                                                   IFC: Creating Opportunities for Africa   20
    Growth since New PEP Africa Structure Adopted in 2005

                                Jun/2006   Jun/2007           Mar/2008

Programs Launched                    17          46                           70

IFC Core Funding                     $8          $8                           $8

IFC Program Funding                  $5        $11                         $53

Partner Program Funding             $31        $53                         $77

Staff                                78        130                         150

Countries covered                    15          28                           28
                                               IFC: Creating Opportunities for Africa   21
                      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
                                                            IFC: Creating Opportunities for Africa   22
IFC Programs and Projects

                            IFC: Creating Opportunities for Africa   23
                                           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
• Technical Assistance & Financing: Donor, IFC and other DFI funding provided for feasibility, 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
• 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.

              Mandate Letter Signed

                                        Feasibility Studies                        Program Design &                        Program

                                                                                                        Loam Commitment
                                                               Agreed Term Sheet

                                        IFC and DFIs                               Fundraising                             Implementation

                                        Financial Due
                                      Diligence/Structuring                                                                Loan Disbursement
                                                                                   IFC Board Approval
                                      IFC, Private Companies

                                                                                                                          IFC: Creating Opportunities for Africa   24
                 Building Competitive Financial Markets
                        Ghana Mortgage Program
         IFC 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
•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

                                                                      IFC: Creating Opportunities for Africa   25
                 Expanding SME Access to Finance:
                   New Products and Approaches

   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
                    Conflict Affected Country
                  Early 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

                                                     IFC: Creating Opportunities for Africa   27
Challenges in Africa

                       IFC: Creating Opportunities for Africa   28
    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
   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

                                                                     IFC: Creating Opportunities for Africa   29