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Agri09 day iii - session v - part i -anup jagwani - ifc

Agri09 day iii - session v - part i -anup jagwani - ifc






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    Agri09 day iii - session v - part i -anup jagwani - ifc Agri09 day iii - session v - part i -anup jagwani - ifc Presentation Transcript

    • IFC Agribusiness in Africa Cape Town, RSA – June 2009 Anup Jagwani Principal Investment Officer IFC Global Agribusiness Department
    • Agenda• Overview• IFC: Global expertise in agribusiness• IFC Agribusiness experience in Africa EMRC, Cape Town - June 2009 2
    • IFC is a Member of the World Bank Group IBRD IDA MIGA IFC Multilateral International Bank International International Investment and for Reconstruction Development Finance and Development Association Guarantee Agency Corporation Est. 1945 Est. 1960 Est. 1956 Est. 1988 Role: To promote institutional, To promote institutional, To promote private To reduce political legal and regulatory legal and regulatory sector development investment risk reform reform Clients: Governments of member Governments of poorest Private companies in Foreign investors in countries with per capita countries with per capita member countries member countries income between $1,025 income of less than and $6,055. $1,025Products: - Technical assistance - Technical assistance - Equity/Quasi-Equity - Political Risk Insurance - Loans - Interest Free Loans - Long-term Loans - Policy Advice - Policy Advice - Risk Management - Advisory Services Shared Mission: To Promote Economic Development and Reduce Poverty EMRC, Cape Town - June 2009 3
    • IFC –$84 billion Invested in Emerging Markets since 1956Largest multilateral source of loan/equity financing for the emerging markets private IFC FY08 Highlights sector Portfolio $32.4 billionFounded in 1956 with 179 member countries Committed $11.4 billionAAA rated by S&P and Moody’s Syndicated $4.8 billion # of companies 1,400 +Equity, quasi-equity, loans, risk management and # of countries 85 + local currency products Sub-Saharan Middle East &Takes market risk with no sovereign guarantees Africa N.Africa Global 10% 11% 1%Promoter of environmental, social, and corporate South Asia 11% governance standards Europe & Central AsiaResources and know-how of a global 28% development bank and flexibility of a merchant bank Latin America East Asia and 25%Holds equity in over 900 companies worldwide the Pacific 14% EMRC, Cape Town - June 2009 4
    • IFC’s Global Reach 100+ country and regional advisory services offices worldwideDrawing on our experience and lessons-learned, we share sector best practices to the benefit of our clients. EMRC, Cape Town - June 2009 5
    • IFC in Sub-saharan Africa Algiers Mediterranean Rabat Sea Beirut Jerusalem Amman Cairo Dubai Sana’aDakar Ouagadougou N’Djamena Lagos Monrovia Accra Abidjan Douala INDIAN Nairobi Kigali OCEAN Kinshasa Dar es Saleem ATLANTIC OCEAN Lusaka Antananarivo Johannesburg Maputo IFC Hubs IFC Country Offices Cape Town EMRC, Cape Town - June 2009 6
    • IFC’s Products and Services Senior Structured Mezzanine Private Debt Finance Finance Equity• On-lending • Partial credit • Convertible debt • Common shares guarantees• Liquidity management • Subordinated debt • Preferred shares • Securitization• Acquisition financing • Other Tier II • Bond underwriting instruments• Warehousing facilities • Credit• Syndicated loans Enhancement Global Trade Advisory Sustainable Finance Program Services Finance • $1 billion program • Corporate governance • Carbon finance • Guarantees to issuing banks • Risk management • Renewable energy • 46 issuing banks in 24 • Small and medium • Supply chain financing countries business banking • Corporate governance • 92 confirming banks in 62 • Housing finance countries • Energy efficiency finance • $579 million of issued guarantees in first 12 months EMRC, Cape Town - June 2009 7
    • Agenda• Overview• IFC: Global expertise in agribusiness• IFC Agribusiness experience in Africa
    • IFC Value Add in Agribusiness Long-term Regional Global Sector Environmental Sustainability Country Risk Competitive Expertise & Social Risk Toolkit Knowledge Mitigation Financing Management Equity  Extensive  40+ Years of  Government  Advice on  Local Supplier Local Office Sector Relations Environmental Development Fixed/Floating Network Expertise and Social Best Rates, Local  Neutral broker  Environmental/ Practices Currencies  Local  Industry Role Social Advice Transaction Specialist  Energy and Up to 15 year  Reduced Risk of  Corporate Experience Advice and Water Use Loan Maturity Expropriation, Governance Benchmarks Management /  Strong bank Breach of Flexible Cleaner  Local partnerships  Greenfield Contract, Amortization Technologies Economic through client Convertibility Profile  Expansion/ Development networks and  Equator Modernization  World Bank Catalyst for B loan Principles  HIV/AIDS Synergies other Investors participants  Corporate Modeled after Prevention and Lenders Strategy  Witholding Tax IFC Standards  World Bank  Community Benefit Equity Synergies  Access to  Local Development Participation International Consultation Funding  Joint Venture Investors and Disclosure Capital partnership Mobilization management EMRC, Cape Town - June 2009 9
    • IFC Investment in the Agribusiness Value Chain Exceeded US$1.4 Billion in FY 2008IFC’s Goal: Deliver development impact along the global agri-supply chain, through investments and advisory services with the private sector, to create opportunities and improve peoples’ livesFertilizersand other Project/Corporate FinanceChemicals CIT – Access to Markets Land Inputs Farm Collection Processing Marketing Distribution Retail Production Infrastructure/Logistics Financial Market Institutions Infrastructure Pre-Harvest Finance Trade Finance Risk Sharing Facilities EMRC, Cape Town - June 2009 10 Note: The aggregated amounts listed next to categories above denote potential IFC investment size, subject to approvals
    • Agribusiness Committed Portfolio $2.2 Billion Committed Portfolio As Of December, 2008 By Sector By Region Other 9,5% Animal Processing S. Europe/ Cent. Asia Africa Other 20,8% 8,1% 7,1% Food 13,4% Cent. & East. East Asia Europe 15,5% 17,7% Beverages 9,5% Mid. East/ N. AfricaSugar 1,8%15,2% Grains & South Milling Asia 7,6% 7.7% Dairy South Veg Fats Products Fruits & Cent. America & Oils 4,6% Vegetables America 34,8% 14,2% 5,3% 7,2% EMRC, Cape Town - June 2009 11
    • Agenda• Overview• IFC: Global expertise in agribusiness• IFC Agribusiness experience in Africa EMRC, Cape Town - June 2009 12
    • IFC Agribusiness – Africa Portfolio$193 million Committed portfolio (December 31, 2008) Africa Portfolio by Sector EMRC, Cape Town - June 2009 13 13
    • Fighting the Food Crisis in Africa • Rising food prices may send 100 million people back into poverty, especially in Africa. • IFC responds by investing in African agribusiness. We build clients supply and distribution systems, helping more food reach more people affordably. • The focus on Africa is part of a global IFC agribusiness portfolio that has tripled in recent years. EMRC, Cape Town - June 2009 14 14
    • Karsten Farms (Egypt/South Africa) Objective: Meet buyer demand for reduced year-round global suppliers of fresh fruitApproach:1. Create scale and quality to compete internationally2. Expand geographic diversity – grapes in Egypt3. Decrease seasonality of South Africa operation - new products (berries, cherries)4. Establish fruit trading, logistics and handling – remove outside parties to assure quality5. Long term financial partner to achieve vision (possible future locations: Brazil, China, Turkey) IFC Investment: 1. $7.5m corporate loan; $15m project cost 2. Provides political risk RSA Development Impact: mitigation for the company 3. South-South FDI – addressing void in the market 4. Technical assistance: IFC against AIDS program EMRC, Cape Town - June 2009 15
    • Beverages: Sabco (E. Africa/S.E. Asia)IFC Investments:1.(2002) $37 million in loan, equity, and guarantee2.(2006) $70 million loans ($40 & $30 m tranches)3. Provide long-term financing not available in markets4. South-South FDI – regional company to global Southeast Asia * VietnamApproach: * Laos1. Build from expertise and profits in South Africa * Cambodia Eastern Africa2. Expand/upgrade operations in East Africa * Kenya3. Enter Frontier CountriesTanzania Asia * of SE4. Roll out Manual Distribution Centers –Development Impact: Eastern linkages * Uganda “MDCs” – distribution Africa of local SME providers * Mozambique * Ethiopia South Africa EMRC, Cape Town - June 2009 16
    • Rubber sector: Salala Rubber (Liberia) •$29m project to rehabilitate plantation dilapidated during the civil war. •Increase productivity gains by new plantings and renovation of processing plant, •Rehabilitate social infrastructure (housing, schools, clinics) •$10m A loan • Provide loan with long tenor appropriate for plantation cycle and not available in post conflict environment • Political and country risk cover • Implement environmental and social policies and guidelines • Long term partnership with SocFin, one of the shareholders EMRC, Cape Town - June 2009 17
    • Palm Oil sector: GOPDC (Ghana) The Project• $12.5 m to ensure reliable supply of FFB through newplantings and replanting• Improve competiveness by diversifying into value-added refined oil and improve financial structure• Financing: $12.5 m 9-yr A loan IFC Role• Provide long-term loans not available in local market• Develop long-term partnership with an emerging regional player• Institute environmental and social best practices and guidelines EMRC, Cape Town - June 2009 18
    • Logistics: Bakhresa (Mozambique-Tanzania-Malawi) The Project •$33.4m project with the Bakhresa Group, a leading Tanzania-based wheat miller. •Create grain handling port and storage facility in Mozambique •$20m investment package for three operating entities in Mozambique, Tanzania and Malawi • Long-term financing with tenors not available locally • Provide working capital needs following increase in wheat prices • Financial transparency • Technical assistance: corporate governance and HIV/AIDS EMRC, Cape Town - June 2009 19
    • Horticulture sector: Kongoni (Kenya) The Project •2 phase project to build greenhouses. •Expansion to enable geographic and product diversity. •US$2.0 m A loan IFC Role • Provide long-term loan and advice to emerging regional player • Technical advice for water management • Institute environmental and social best practices and guidelines • HIV/AIDS program support EMRC, Cape Town - June 2009 20
    • What IFC is Typically Looking for in Projects•Strong and experienced sponsors•Viable business plan that is fundamentally sound and does not rely on subsidies•Debt to Equity Ratio of 1:1 (though it varies by project)•Aggregate IFC lending amount of not less than US$5- 10 million (this varies by country)•Willingness of company to work with IFC on acceptable E&S standards, financial reporting and good governance.
    • So How Does IFC Support SMEs?•Providing long term capital to the financial sector for on-lending to SMEs•Risk Sharing Facilities•Structured Finance•Private Equity Funds•Advisory Services
    • Thank YouContact info:Anup JagwaniPrincipal Investment OfficerIFC Agribusiness DepartmentAJagwani@ifc.org+1-202-458-7901 23