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Money as a catalyst for sustainable change

VIEWS: 34 PAGES: 4

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                                                                                                                                Money as a catalyst




                                                                                                                     Clean Energy Development Bank Limited
              Money as a catalyst                                                                                    Clean energy development Bank Limi-
                                                                                                                     ted (CedB) is a development bank dedi-
                                                                                                                                                                   and which has invested a great deal in
                                                                                                                                                                   hydropower and other renewable ener-
                                                                                                                                                                                                                 CedB is committed to achieving a new
                                                                                                                                                                                                                 standard in banking with its unique cus-


              for sustainable change
                                                                                                                     cated to improving Nepal’s clean energy       gy. Triodos Renewable energy for deve-        tomer-orientated quality services to its
                                                                                                                     sector. CedB began its operations less        lopment Fund is a shareholder in CedB         valued customers – all done in the most
                                                                                                                     than two years ago and currently offers       through its 50% participation in FMO’s        efficient and professional way in a
                                                                                                                     a wide range of banking products and          shareholding in CedB.                         friendly atmosphere. The Bank is dedi-

              it is absolutely vital for us to see the interrelationship between                                     services – deposits, loans and advances,
                                                                                                                     safety deposits, ATM cards, and internet
                                                                                                                                                                   explaining his involvement in such a dif-
                                                                                                                                                                   ferent type of banking where building
                                                                                                                                                                                                                 cated to excellence in delivering an
                                                                                                                                                                                                                 entire range of financial services in
              problems and find integrated solutions to tackle them.                                                 banking. CedB is located in a rapidly
                                                                                                                     growing residential and business area
                                                                                                                                                                   the institution itself takes so long, Goyal
                                                                                                                                                                   says he strongly believes that it is high
                                                                                                                                                                                                                 order to achieve sound business growth
                                                                                                                                                                                                                 and maximize stakeholder values by
                                                                                                                     of Kathmandu.                                 time for Nepal to stop wasting time on        embracing team spirit, progressive tech-
                                                                                                                     Manoj Goyal, Chief executive Officer at       trading and assembly-type industries          nology and good corporate gover-
                                                                                                                     Clean energy development Bank Limi-           and activities that have a very short life.   nance.
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              The role of Triodos Bank as an inter-                                                                  ted, 42, was born into an entrepreneu-        “We should invest time and money in           in the clean energy sector, CedB is
              national investor in developing coun-                                                                  rially-minded family, but chose a career      the projects and institutions that have       focusing on renewable energy technolo-
              tries started in 1994.    Marilou van                                                                  in banking instead. When he became            long term sustainability and which can        gy, clean energy infrastructure projects,
              Golstein Brouwers, Managing direc-                                                                     the CeO of the Bank of Kathmandu ten          add value to our society. i am not attrac-    clean transport and rural electrification.
2                                                                                                                                                                                                                                                                                                            3
              tor of Triodos investment Manage-                                                                      years ago, he was (and still is) the young-   ted to quick money that does not involve      At the same time it will also provide




                                                                                                                                                                                                                                                              Clean Energy Development Bank Limited (CED B)
Upsides




                                                                                                                                                                                                                                                                                                              Upsides
              ment: “The rationale behind the                                                                        est person to have filled such a position     some level of creativity and value addi-      technical knowhow, project financing,
              decision to take up this role was a                                                                    in a commercial bank in Nepal.                tion. That means i don’t get inner satis-     pre-investment activities, investment and
              strong desire to contribute to a better,                                                               “While we were quick in setting up ope-       faction from activities such as trading in    corporate advisory services and inter-
              more sustainable world through posi-                                                                   rations, we are not in a rush to earn         shares. i want to contribute to society,      national resource mobilization.
              tive action and from a banking com-                                                                    profits or invest too heavily in clean        but not as a charity. Consequently, i feel    The main objectives of this bank are to
              petence. sustainable development is                                                                    energy business. At present we are in         a few years contributing to the develop-      serve the people and the nation by pro-
              a global issue and therefore you can-                                                                  the institutional development stage. Our      ment of this kind of an institution will be   viding world class banking products and
              not close your eyes to the ever-                                                                       foreign partners have the same convic-        worthwhile,” he explains.                     services, providing technical expertise
              increasing poverty in developing                                                                       tion. They are here with a mission to         CedB aspires to become one of the lea-        and investing in the clean energy sector
              countries. it is impossible to reach                                                                   develop clean energy projects, not for        ding development banks in the country.        to strengthen the economic standard of
                                                                                    Marielou van Golstein Brouwers


              your sustainability goals in europe by                                                                 immediate profits,” Goyal says.               The Bank was set up with the latest tech-     the nation.
              ignoring what is happening else-                                                                       CedB was nominated as a partner bank          nologies and innovative tools in banking
              where.”                                                                                                for a 100 million dollar regional fund        to offer a complete suite of banking
                                                                                                                     targeted at south Asian countries. Of         products and services in the area of con-
              since then, Triodos Bank, through its                                                                  the total fund of Usd 100 million, about      sumer banking, transaction banking,
              international funds, has built up an                                                                   Usd 20-30 million are likely to be            corporate finance, rural banking, remit-
              investment portfolio of eUR 150 mil-                                                                   coming to Nepal through CedB, avail-          tance, guarantee, safe deposit lockers,
              lion in the microfinance, sustainable                                                                  able in the form of equity and a long-        etc. Besides this, CedB also offers assis-
              trade, and green energy sectors in                                                                     term loan for hydropower projects, and        tance to other infrastructure projects and
              developing countries. “Our approach                                                                    other renewable energy technologies,          service-oriented enterprises in the clean
              is different. We start with the content                                                                according to Goyal. CedB has already          energy sector in the form of pre-invest-
              of an activity and focus on its sustain-                                                               linked up with dFCC Bank of sri Lanka,        ment activities, venture capital, advisory
              ability. The first thing we consider is                                                                which was set up by the World Bank            and consulting services.
              ‘How can this contribute to sustain-
              Money as a catalyst
              for sustainable change .............................................................................................. . . . . . . . . . . .
                                                                                                                       Money as a catalyst




              ability?’ Then as bankers, we ask our-      The bank was one of the first Western       in recent years, it has become clear                               danger of becoming a victim of its own   rid of poverty just by giving everybody     there is a risk that businesses will fail
              selves ‘is it viable?’”, says Marilou van   banks active as an investor in the          that microfinance is not only an effec-                            success, warns Marilou van Golstein      a loan. it is essential to make a careful   or people will get over indebted. That
              Golstein Brouwers.     “As an investor      microfinance sector, and as such it is      tive way of combating poverty; it is                               Brouwers. “On the one hand, we need      selection based on entrepreneurial          would not only be a disaster for those
              we always maintain our sustainable          still very closely involved in the deve-    also an economically viable banking                                to guard against unrealistic expecta-    skills, and to provide structural sup-      affected, it could also ultimately under-
              perspective.”                               lopments in this sector.                    activity. However, microfinance is in                              tions for microfinance. You can’t get    port. if loans are granted too easily,      mine the whole microfinance system.




               Houses for Africa - All customers are treated with dignity

                A decade ago in the Harvard Busi-         plan calls for further aggressive          with the ultimate goal of having a                     the systemization and standardiza-        According to sir sam Jonah, HFA’s
                ness Review, professor Robert e.          expansion into other targeted coun-        major macroeconomic impact on the                      tion of the property development          Non-executive Chairman, at the
                Kennedy traced the founding and           tries in the sub-saharan region.           countries in which it operates and                     process and of the relationships with     heart of the HFA ethos is the commit-
                development of Housing for Africa                                                    the region as a whole.                                 providers along the planning, deve-       ment that “all customers purchasing
                (HFA) in Zimbabwe. since then HFA         HFA aims to dramatically improve                                                                  lopment and funding value chains.         new homes are afforded mortgage
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                                                                                                                                                                                                                                                                                                          AUGUsT 2008
                has moved on and currently ope-           the standard of living of hundreds of      HFA enables the simultaneous deve-                     in essence, HFA plays a role akin to      options and related insurance pro-
                rates in Zimbabwe, Zambia, and            thousands of people - homeowners,          lopment of multiple housing projects                   that of a franchisor, with the neces-     ducts, which are appropriate, and
                Nigeria. in tandem, HFA’s business        their families and their communities -     in various African countries through                   sary      in-house   development   and    that all customers are treated with
                                                                                                                                                            financing      (including    investment   dignity.”
                                                                                                                                                                                                                                                                                                        
                                                                                                                                                            banking) skills and resources. As a
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                                                                                                                                                                                                                                                                                                          Upsides
                                                                                                                                                            franchisor, HFA must ensure that the      Zimbabwe
                                                                                                                                                            franchisee is fully conversant with       Trading as Houses For Africa (Pvt)
                                                                                                                                                            and proficient in all aspects of the      Limited, the organization developed
                                                                                                                                                            operation – at UPsides we raise this      4,500 low-income housing units,
                                                                                                                                                            as a point for consideration in the       and trading as Waymark Investments
                                                                                                                                                            broad topic of south-south Coope-         (Pvt) Limited, it continues to develop
                                                                                                                                                            ration.                                   the Mainway Meadows Estate, in
                                                                                                                                                                                                      which over 2,000 stands have been
                                                                                                                                                            Accordingly, HFA has established          serviced and sold.     The Zimbabwe
                                                                                                                                                            “one-stop shop” technical hubs for        business is well positioned to take
                                                                                                                                                            each new housing estate develop-          advantage of future development
                                                                                                                                                            ment to expedite land surveying and       opportunities in Zimbabwe; however,
                                                                                                                                                            titling, deeds registry and all conve-    political realities on the ground in
                                                                                                                                                            yance processes under one roof.           Zimbabwe preclude any immediate
                                                                                                                                                                                                      further development.
                                                                                                                                                            Key to its success, HFA fosters politi-
                                                                                                                                    Photos: Gerhard Engel




                                                                                                                                                            cal buy-in of in-country stakeholders,    Zambia
                                                                                                                                                            such as municipalities, local and         Trading as Lilayi Development Hol-
                                                                                                                                                            national governments, and the deve-       dings   (Cyprus)   Limited   (‘LDHC’),
                                                                                                                                                            lopment of new relationships with         together with its wholly owned sub-
                                                                                                                                                            in-country contractual savers and         sidiary Lilayi Development Holdings
                                                                                                                                                            debt/equity providers.                    (Zambia) Limited (‘LDHZ’), HFA is
                                                                                                                                                                                                      developing the Lilayi Housing Pro-
              Money as a catalyst
              for sustainable change .............................................................................................. . . . . . . . . . . .
                                                                                                                       Money as a catalyst




              Microfinance should also learn from      The results of microfinance are in fact     Golstein Brouwers. “On the one hand        on investment. You have to ask your-        in the financial world. We have all       lying real economy. After all, bank-
              what happened with Us sub-prime          so healthy, that investors increasingly     it shows that microfinance has come        self if that is the right way to go. i      seen what can happen when that            ing is about relationships – mainly
              lending. We can enjoy steep growth       see microfinance as a separate asset        of age. But on the other hand, there’s     don’t think it is. With profit-maximiz-     unilateral way of thinking takes over:    people - and not about deal making.
              rates but should not ignore the health   class. But that too is another mixed        a risk it will attract investors who are   ing investors, you get the same men-        financial products that have become       We tend to forget this and it takes a
              of the loan portfolio.”                  blessing, according to Marilou van          purely interested in the high return       tality that has led to the current crisis   totally disconnected from the under-      sub-prime crisis to remind us. For us,




                                                                                                 ject, a mixed-use integrated urban
                                                                                                                                                 Tuninvest
                                                                                                 settlement incorporating 5,000 units
                                                                                                 of emerging middle-class housing, a            Africinvest was jointly initiated by       “sustainable develop-                   activities related to financial servi-
                                                                                                 shopping      center,   light   industrial     the FMO and the Tuninvest Finance                                                  ces: banking, leasing, factoring,
                                                                                                                                                                                            ment only happens
                                                                                                 premises, schools and public health            Group as a generalist venture cap-                                                 consumer credit, brokerage, credit
                                                                                                 facilities.    HFA Zambia Limited              ital/private equity fund operating         when the company in                     agencies, rating, asset manage-
                                                                                                 (‘HFAZ’), a company incorporated in            in the Maghreb and sub-saharan             which you have inves-                   ment and insurance. it will particu-
                                                                                                 Ireland, intermediates for the provi-          regions of Africa. Africinvest was                                                 larly focus on new or existing
                                                                                                                                                                                          ted can generate future
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                                                                                                                                                                                                                                                                             AUGUsT 2008
                                                                                                 sion of mortgage finance provided              launched in 2004 with an initial                                                   financial institutions in countries
                                                                                                 by the Overseas Private Investment             committed capital of eUR 25 mil-                 earnings.”                        with nascent financial sectors, in
                                                                                                 Corporation (OPIC) and by LDHC.                lion. A second closing was signed                                                  post-war countries and in least-
                                                                                                                                                in december 2005, bringing the                                                     developed countries. These oppor-
                                                                                                                                                                                                                                                                           
                                                                                                 Nigeria                                        total subscribed capital of Africin-                                               tunities have a high risk profile but
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                                                                                                                                                                                                                                                                             Upsides
                                                                                                 HFA has identified a new project               vest from eUR 25 million to eUR 34                                                 have an interesting return potential
                                                                                                 within the Federal Capital Territory           million.                                                                           and high development impact.
                                                                                                 (FCT) in Abuja, Nigeria. It has con-
                                                                                                 cluded a land development agree-               in line with FMO’s MAssiF criteria,       Aziz Mebarek, one of Tuninvest’s         Mebarek gives some examples of
                                                                                                 ment with the FCT on a 500-hectare             the Fund focuses on a sector that         founding partners says, “FMO has         Tuninvest   investments,   prefacing
                                                                                                 site (together with a further 500 hec-         has very limited access to capital;       a development agenda that we             this by saying, “The local invest-
                                                                                                 tares yet to be identified) which will         without FMO’s 100% participation,         respect. FMO is ready to accept a        ment partners are our eyes and
                                                                                                 allow HFA to develop an integrated             it is clear that the Fund could not       higher degree of risk than would         ears on the ground. They generate
                                                                                                 human settlement of 7,000 units of             otherwise exist. Additional inves-        be acceptable to private investors.      opportunities. each local invest-
                                                                                                 emerging middle-class housing (indi-           tors are, however, expected in the        But FMO is also looking for profit,      ment partner will have an invest-
                                                                                                 cated target market USD 30,000 –               future. Moreover, FMO will play an        as the only way we can sustain           ment officer who we view as an
                                                                                                 USD 100,000), retail and commercial            active role in the investment Com-        development in companies and             extension of the team here.
                                                                                                 facilities, schools, public health faci-       mittee, help to source transactions       countries is through creating profit.
                                                                                                 lities (clinics), parklands, places of         through its partner network in Afri-                                               “The first investment we approved
                                                                                                 worship and other social infrastruc-           ca, and provide Capacity develop-         “You cannot just give money and          was actually a leasing company in
                                                                                                 ture. HFA is completing detailed fea-          ment to improve training and              claim that you have contributed to       Nigeria in which we acquired a
                                                                                                 sibility studies around the Abuja              expertise for investee companies.         development. sustainable develop-        40% stake for an initial investment
                                                                                                 development.                                   The management of the Fund rests          ment only happens when the com-          of eUR 1. One of our first projects
                                                                                                                                                with Africinvest Capital partners, a      pany in which you have invested in       in Morocco was in the corrugated
                                                                                                                                                private equity investment firm initi-     can generate future earnings.”           cardboard sector. We managed to
                                                                                                                                                ated by FMO and Tuninvest. sever-                                                  restructure and reshape the opera-
                                                                                                                                                al local African partners support         The fund invests in financial institu-   tions of a family-owned business
                                                                                                                                                the management of the Fund.               tions in Africa and, in general, into    and ended up selling the company
              Money as a catalyst
              for sustainable change .............................................................................................. . . . . . . . . . . .
                                                                                                                       Money as a catalyst




              the logical starting point is a long-    solve it together. in essence, a bank      adds its knowledge and expertise to      lose sight of the risks. i think it is          “sustainable develop-                    and solar energy, especially for
              term relationship with our investees     is an organization that brings two         this mix. if you move away from that     essential for banks to stay close to                                                     people in remote areas who are not
              and borrowers. As a bank, you are        groups of people together. people          basic principle, and into a more         the real economy. especially in the
                                                                                                                                                                                           ment is a global issue                   connected to the electricity network.
              responsible for the money you lend       who have money to spare and peo-           abstract world, you lose sight of what   case of microfinance. This is about           and therefore you cannot                   Farmers who want to buy a biogas
              and invest. if there is a problem, you   ple who need it, and then a bank           is imaginary and what is real. You       building local banks, mobilizing local          close your eyes to the                   installation can finance the purchase
                                                                                                                                           deposits and lending to local busi-                                                      with microcredit. And so two key areas
                                                                                                                                                                                          ever increasing poverty
                                                                                                                                           nesses. And ultimately about local                                                       where Triodos Bank has a great deal
                                                                                                                                           shareholders providing capital. part          in developing countries.”                  of experience and which it sees as a
               to one of the leading companies in      Mebarek reflects, “We are now clo-        panies we invest in. The success of       of our mission as an international                                                       main priority are part of the same
               the world, international paper.”        sing an investment in a large             our investment is heavily linked to       investor is to eventually become sur-                                                    solution: microcredit for green energy.
                                                       manufacturing company in Nigeria          our ability to attract good people        plus to requirements. We see our role
               Tuninvest played a very important       and in a supermarket chain in Côte        to run the projects.”                     primarily as a catalyst. We help busi-        us to see the interrelationship between    “There are a number of positive trends
               role in incubating and then incep-      d’ivoire. so our portfolio can be                                                   nesses to get started, but once they          problems and find integrated solutions     emerging. There’s growing awareness
               ting a pharmaceutical laboratory        categorized as sMes which we              Challenges    asides,   Mebarek    is     are up and running and no longer              to tackle them.” in order to make the      that we all only have one earth to live
               company. Mebarek says, “After ini-      help grow and prosper.”                   optimistic about the future, “As we       need our help, we pull out.”                  most effective contribution towards        on, and need to work together. it is
               tial teething trouble in a highly                                                 are looking at investing in micro-                                                      this development, the role of the          vital that we view the planet as our
               technical industry, we were able to     There are three main challenges in        credit companies and mortgage             There are always new challenges that          Triodos Bank has also started to           shared responsibility. Without that,
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                                                                                                                                                                                                                                                                              AUGUsT 2008
               overcome the problems and today         terms of investing in North Africa        lending companies, we’re now get-         have to be overcome. “We are                  change. ‘We are now focusing on            we won’t solve our sustainability pro-
               we are able to show a return on         and sub-saharan Africa according          ting investors coming to us wanting       increasingly seeing that the single-          equity participations in banks and         blems. positive solutions also require
               equity exceeding 50%. There is still    to Mebarek. “The private sector in        to get involved. The size of the fund     issue approach is no longer good              other financial institutions. By concen-   authenticity – not in a vague, intro-
               tremendous growth potential for         several of our countries is not           will increase as we generate wider        enough. poverty? Microcredit! Cli-            trating our expertise there, our influ-    spective way, but in a meaningful
                                                                                                                                                                                                                                                                            
               this company. This has been a great     mature. Many owners are not wil-          interest and raise the stakes. We         mate change? Bio-fuels! But we now            ence becomes much greater than             sense that’s linked to our action.”
Upsides




                                                                                                                                                                                                                                                                              Upsides
               success story for us.                   ling to open their shareholding           are rapidly gaining market share in       see that the growing demand for bio-          when we simply invest in individual
                                                       structure to outsiders. The other         Gabon, Cameroon, Côte d’ivoire,           fuel has caused food prices to                projects. We see the banks/institutions
               “in sub-saharan Africa we invested      problem is transparency and the           Burkina Faso, Mali, senegal and           explode. Nobody had ever expected             we invest in as catalysts for change
               in   consumer     credit   companies    accuracy     of    the    companies’      Congo Brazzaville. The next phase         that green energy might have a neg-           that can bring the environment higher
               which we restructured and rebran-       accounts. The third challenge is our      for us is external growth in Ghana,       ative impact on the price of food. so         up the agenda of all their clients.
               ded as Alios Finance.”                  ability to attract talent into the com-   Zambia, Kenya and Nigeria.”               it is essential for us to look at the         Moreover, we are of course also at the
                                                                                                                                           interrelationship between different           centre of a vast web of knowledge
                                                                                                                                           problems, and to try and find an inte-        and experience. We provide a forum
                                                                                                                                           grated way of dealing with them. We           for the exchange of best practices
                                                                                                                                           need a new way of thinking to tackle          between our investee banks from all
                                                                                                                                           the problems that are facing us.”             over the world.      This south-south
                                                                                                                                                                                         exchange is also manifesting itself
                                                                                                                                           The disadvantages of a one-track              in another way: local banks are
                                                                                                                                           approach are becoming increasingly            increasingly operating across borders:
                                                                                                                                           clear, and this has led to a new under-       Cambodia to Laos, Bangladesh to
                                                                                                                                           standing and new choices. “Care for           Afghanistan, peru to Mexico. The
                                                                                                                                           the earth is no longer an optional            recent participation, together with
                                                                                                                                           extra, something you do when you’ve           FMO, in the young Nepalese Clean
                                                                                                                                           got everything else sorted out; it has        energy development Bank (CedB) is
                                                                                                                                           now become an integral part of figh-          an excellent and promising example
                                                                                                                                           ting poverty. For a country like Ban-         of the role that Triodos Bank can have
                                                                                                                                           gladesh, that will become the first           as a catalyst for integrated solutions.
                                                                                                                                           victim of rising sea levels, this is com-     “The activities of CedB include pro-
                                                                                                                                           pletely obvious. it is absolutely vital for   moting the use of biogas installations

								
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