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Mr. oscar chemerinski, ifc africa presentation

Mr. oscar chemerinski, ifc africa presentation

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    Mr. oscar chemerinski, ifc africa presentation Mr. oscar chemerinski, ifc africa presentation Presentation Transcript

    • IFC in AfricaPartnering for Transformational Change through the Private Sector March 2013
    • Overview of IFC 2
    • IFC in the World Bank Group The World Bank Group consists of five closely related institutions:• IBRD: The International Bank for Reconstruction and Development• IDA: The International Development Association• IFC: International Finance Corporation• MIGA: The Multilateral Investment Guarantee Agency• ICSID: The International Center for the Settlement of Investment Disputes Building Prosperity, Eradicating Poverty 3
    • IFC’s Structure• Owned by 184 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, MIGA and the International Centre for Settlement of Investment Disputes)• Global: Headquartered in Washington, D.C.• Local: More than 100 offices worldwide in 95 countries 4
    • IFC’s History• Launched in 1956: 12 years after the Bretton Woods Conference created the World Bank to finance post-WWII reconstruction and development by lending to governments• Original mandate: supporting development by encouraging private investment (a new part of the global economic agenda)• 1980s: IFC coins the term “emerging markets”• 1990s: IFC increases in size, importance after fall of Berlin Wall• Today: IFC is the world’s largest multilateral institution exclusively focused on private sector development, widely seen as an essential source of job creation, growth, and poverty reduction 5
    • IFC’s Three Businesses IFC Asset Investment Advisory Management Services Services Company• Loans • Access to finance • Wholly owned• Equity subsidiary of IFC • Sustainable Business• Trade finance • Private equity fund • Investment Climate manager• Syndications • Public-Private • Invests third-party• Securitized finance Partnerships capital alongside IFC• Blended finance $4.5 b $56.5 b $200 m per under portfolio year mgmt 6
    • Fiscal Year 2012 Highlights• Investments: 576 new projects in 103 countries• Advisory services: Nearly $200 million in program expenditures• $20.3 billion in financing: $15.4 billion for IFC’s own account, $4.9 billion mobilized• $56.5 billion committed portfolio, representing investments in 1,825 firms• IDA countries account for almost half of IFC projects overall:  $2.7 billion invested in Sub-Saharan Africa 7
    • Overview of IFC in Africa 8
    • Africa Rising  Continued strong growth  Africa seen as resilient, continued source of growth, with strong investment opportunities amid sluggish growth in global economy Fundamentals Remain Strong:  Improved macroeconomic management  Improving political stability/openness  Rising middle class; growing consumer markets  Favorable demographics  Reform momentum December 3rd, 2011  Strong FDI inflows Economic Growth Set to Remain Strong Inward FDI has returned to peak levels Real GDP, average annual percent change 40 US$ bn 37.3 36.2 36.9 2012-17 35 30.0 6.4Developing Asia 7.8% 29.5 30 13.7 11.0 SSA 5.5% 2.4 5.9 25 8.1 20.2 5.7 World 4.3% 17.1 5.6 20 6.8 8.5 14.5 6.4 CIS 4.2% 12.8 7.1 1.4 6.2 9.5 15 1.3 4.2 3.4 1.5 5.9 5.9 MENA 4.1% 10 4.0 3.4 2.8 16.1 LAC 4.0% 6.3 4.6 4.6 12.6 13.5 11.8 5 9.6 4.6 7.0 3.4% 3.5 3.2 Central & E… 0 Advanced… 2.3% 2003 2004 2005 2006 2007 2008 2009 2010 2011 0% 2% 4% 6% 8% West Africa Central Africa East Africa Southern Africa 9
    • Several key challenges to address to sustain growth and boost shared prosperity Inclusiveness 122m ppl to join African labor force through 2020*. Increase access to finance to entrepreneurs & women, expand mobile solutions & vocational training Food Insecurity Urbanization places additional strain on food production. Raise agricultural productivity Infrastructure Gap Main factor impeding competitiveness. Critical as urbanization accelerates. Expand electricity and transport networks. Investment Climate Despite improvement, Africa still most difficult region in which to do business. Promote enabling environment Regional Integration & South-South Investment Need to achieve economies of scale with better infrastructure, more global and regional integration Fragile Situations Africa’s Fragile States risk becoming stuck in a low-level equilibrium trap Climate Change Need to tackle climate change impacts on water, agriculture, cities & infrastructure. * According to McKinsey, based on current trends, Africa will create 54 million stable wage- paying jobs by 2020, leaving a gap of 68 million. 10
    • IFC targets transformational change through the private sector, in close coordination with IDA and Development Partners Core Strategic Pillars Additional Foci as Africa Develops, Urbanizes Fragile, poorest IDA Vocational Training Mobile Solutions Climate Change Food Security Transform Regional Integration Encourage Key Sectors Investment Entreprene Climate Infra, Agri, South-South Investments urship Health E&S Standard Setting InclusionFounded on Strong Collaboration with IDA, MIGA and Development Partners for Transformative Impact 11
    • Close proximity to our clients and strategic staffing Regional Hubs Mediterranean Sea Dakar INFRAJohannesburg A2F/FM Nairobi MAS/SBA Local offices Dakar Bamako Ouagadougou N’Djamena Abidjan Conakry Addis Ababa Accra Freetown Lagos Addis Ababa Monrovia Abidjan Accra Bangui Juba Antananarivo Douala Bamako Nairobi INDIAN Bangui Kigali OCEAN Kinshasa Bujumbura Bujumbura Dar-es-Salaam Conakry ATLANTIC Dar Es Salaam OCEAN Douala Freetown Lusaka Juba Antananarivo Kigali Kinshasa Johannesburg Lagos Maputo Lusaka IFC Hub Offices Maputo IFC Country Offices Monrovia N’Djamena Ouagadougou 12
    • Africa is a Key Strategic Priority for IFCIFC makes major contribution to African private sector development• Total Investment volume (IFC’s own account + mobilization) of record $4 billion in FY12, with strong diversity across financial and other sectors• Advisory Services add value to IFC investments• Mobilizations become key part of IFC contribution to private sector development• Focus on equityStrong organization in place to drive continued growth and impact• Strong field presence essential for successful operations in complex region• Regional hubs with sector focus (Dakar, Nairobi, Johannesburg) 13
    • IFC’s Investment Teams Work Across Three Groups IFC works with Financial Institutions to increase access to finance, particularly for micro, small and medium-sized Financial Markets (FM) enterprises (MSMEs) while deepening Africa’s local debt and equity capital markets and crafting local currency finance solutions. IFC works with sponsors and governments and alongside World Infrastructure & Natural Bank Group colleagues to deliver critical infrastructure services in the power, transport, utilities, telecoms, media & Resources (INR) technology and natural resources. IFC works with clients to boost Africa’s manufacturing base, strengthen food security through investments across theManufacturing, Agribusiness & agribusiness supply chain, expand access to vital health and Services (MAS) education services, and foster strong tourism, retail and property sectors. 14
    • Strong growth in Investment Services 131% CAGR in Total Investment Volume in the decade since FY02 Record level of investment for IFC’s own account, project count & reach 3,000 2,733 1404,500 3,970 3,9224,000 2,428 120 2,500 2,1503,500 100 1,2373,000 1,493 2,797 2,000 1,824 802,500 1,941 647 1,500 1,379 1,3902,000 1,644 60 1,403 1171,500 265 13 1,000 700 700 2,428 2,150 2,733 401,000 1,824 405 445 405 445 500 252 252 166 1,379 1,390 140 20 500 405 445 700 0 252 26 140 0 0 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 IFC own account $m Mobilization IFC own account $m Project count (R axis) Country Reach (R axis) IFC own account commitments by industry group, US$m IFC own account commitments by subregion, US$m3,000 3,000 Africa Region East & Southern West & Central2,500 2,5002,000 FM 2,000 1,732 1,633 INR 1,364 1,2051,500 MAS 1,500 1,341 1,095 1,619 1,032 563 1,000 688 6551,000 521 1,016 626 640 593 500 604 420 500 463 644 466 418 570 576 101 139 316 178 246 702 186 71 151 81 132 372 474 87 234 212 167 172 188 263 415 215 408 117 68 205 75 89 39 88 94 0 64 66 7 76 117 150 122 158 0 14 70 70 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 15
    • $6.9 bn portfolio diversified across products, countries, sectors Committed Portfolio by Product Committed Portfolio by Sector Risk Mgt Guarantee 1% 13% Equity INR FM 23% 37% 38% Mezzanine 13% Loan MAS 50% 25% Committed Portfolio by Sub-Region Portfolio by Project Balance Size Central 3% 41m-60m 21m-40m 11% Southern 18% Eastern 19% 20% <=20m 26% 61m-80m Cross- 9% regional 15% Western >101m 43% 26% 81m-100m 10% 16
    • Examples of IFC’s Work in Africa 17
    • IFC’s Experience and Approach: Agribusiness IFC Offers Tackle Sector Constraints Invest Directly in Projects Support the Entire Value Chain Solutions to  Sector development: land  Short/medium term financial  Short term financing through financial Agri fragmentation, low productivity & products: for key cash crops and intermediaries and traders/aggregators Investors, regulatory disincentives critical agri commodities  E+S, standards and capacity building for Delivering  Resource (water) use  Long term funding: for capex in key Fis and firms/farms Strong  Key role of business environment large scale projects  Inputs (fertilizer, seeds, crop protection) Financial &  PPP/Infra, WB to address sector  Project development resources to distributor finance through FIsDevelopment infrastructure/logistics work with governments/ sponsors Returns  Inputs supply/import finance Successful Track Record: Recent Agribusiness Investments in Africa 18
    • IFC’s Experience and Approach: Manufacturing  Several African economies are on the cusp of a structural transformation that is poised to lift workers from lower productivity agriculture and the informal sector to wage-based employment in higher-productivity manufacturing.  IFC is focused on supporting the African entrepreneur and regional producers expand production of The Manufacturing and Consumer Goods on the continent, with 75-80% of IFC’s Manufacturing andOpportunity Consumer Goods business is with local and regional clients.  IFC has deep local and international knowledge of key sectors, with a particular focus on cement, steel, fertilizers / petrochemicals and fuel imports in Africa.  Driven by falling relative labor costs, opening up new opportunities in export-oriented light manufacturing  Challenges include poor infrastructure, education, trade logistics, electricity and access to finance Successful Track Record: Recent Manufacturing & Consumer Goods Investments in Africa Africa Region South Africa South Africa Uganda Africa Region Sierra LeoneVitafoam Sierra Leone Safal Group SRF South Africa Marico South Africa Roofings Rolling Mills Heidelberg Africa Equity: $ 110,000,000 A-Loan: $ 2,900,000 A-Loan: $15,000,000 A-Loan: $ 20,000,000 A-Loan: $ 5,000,000 A-Loan: $ 24,000,000 AMC Mobilization: $28,000,000 Lender Lender Lender Lender Lender Shareholder October 2011 November 2011 May 2010 July 2012 February 2011 March 2010
    • IFC’s Experience and Approach : Power & UtilitiesIFC Offers Solutions to Power Sector Investors, Delivering Strong Financial and Development Returns IFC takes a multi-pronged, solutions-oriented 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 Infraventures: Early stage risk capital for infrastructure project development  World Bank/IDA/PPIAF/MIGA: Sector reform, PPP enabling environment, PCGs, PRGs, PRI Successful Track Record: Recent IFC Power & Utilities Investments in Africa 20
    • IFC’s Experience and Approach: Tourism, Retail & Property IFC Offers Solutions to TRP Investors, Delivering Strong Financial and Development Returns  Provide long-term financing where institutional capital is scarce •  Share global/regional sector knowledge, best practices, strengthen operational standards •  Promote and facilitate improvements in E&S and Green Building standards Tourism Retail  Leverages IFC network to connect clients to build  Focus: Food/Grocery retail outlets in key urban cities on sector expertise. with supply/demand gap with focus on low income  Provide long-term financing with long grace period segment matching the often long development phase and  Global Trade Supplier Finance (GTSF), a recent addition long payback period mostly not readily available to IFC’s short term trade finance programs to provide  Demonstration effects can be shown by raising the short term financing for open-account trade for emerging standards of the hotel sector in a given destination, market firms/exporters with respect to physical product, service standards  IFC Advisory Services Food Safety Program to implement and knowledge transfer (via training). food safety management systems Successful Track Record: Recent Tourism, Retail & Property Investments in Africa Africa Region Nigeria Ghana Rwanda Ghana Kenya Actis Africa Real Estate Persianas Group Market Shopping Fund II A&C Mixed Use Centre Kigali Kingdom Hotel A-Loan: $ 50,000,000 Investments TPS East Africa Equity: $ 37,000,000 A-Loan: $ 10,000,000 A-Loan: $ 20,000,000 Equity: $ 25,000,000 AMC Mobilization: A-Loan: $ 4,400,000 A-Loan: $ 1,300,000 Equity: $ 3,000,000 B-Loan: $6,000,000 $29,600,000 Shareholder Shareholder & Lender Lender Lender & Shareholder Lender & Arranger Lender May 2011 June 2012 June 2012 June 2011 Feb 2011 July 2010 21
    • IFC’s Experience and Approach: Transport & Logistics IFC Offers Solutions to Trans. & Log. Investors, Delivering Strong Financial and Development Returns  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 Infraventures: Early stage risk capital for infrastructure project development  World Bank/IDA/PPIAF/MIGA: Sector reform, PPP enabling environment, PCGs, PRGs, PRI Successful Track Record: Recent Transport & Logistics Investments in Africa 22
    • Some Recent IFC-Supported EM Deals in Africa Industry FY Sponsor Project IFC $m Host Origin FY 13 TICO IPP $80 m Ghana UAE FY 12 Thika IPP $37 m Kenya LebanonInfrastructure and FY 11 Leo Burundi $25 m Burundi EgyptNatural Resources FY 11 MAGERWA $3 m Rwanda Singapore FY 10 Zain Distributors $6 m Malawi Kuwait FY 13 SRF $20 m South Africa India FY 13 Indorama Eleme $150 m Nigeria IndonesiaManufacturing and FY 11 Apollo Tyres $11 m South Africa India Services Saudi FY 11 Kingdom Hotels $26 m Ghana Arabia FY 10 MNF House $10 m Tanzania China FY 12 Saham Finances $35 m Africa Region MoroccoFinancial Markets Kenya, Madagascar, FY 11 Bank of Africa $9 m Tanzania, Morocco Uganda 23
    • Sample of IFC Investment Partners in FY12 in AfricaInfrastructure Natural ResourcesAgribusinessAgribusinessManufacturing & Services Financial Markets & Funds 24
    • IFC’s Value Added to Private Sector Companies 25
    • How We Finance Projects •Project Type •IFC Investment•Greenfield, total cost •Up to 35% of project costless than $50 million for IFC’s account•Greenfield, total cost •Up to 25% of project costmore than $50 million for IFC’s account•Expansion or rehabilitation •Up to 50% of project cost •Umbrella for participants in IFC’s syndication program: IFC lender of record, immunity from taxation and provisioning requirements. •IFC’s total financing (for its own account) must be less than 25% of total company capitalization, and IFC does not manage or have largest stake. 26
    • Financial Products - From Equity to Debt • Corporate and JV • Typically 5-15% shareholding (not to exceed 20% of total equity) Equity • Long-term investor, typically 6-8 year holding period • Not just financial investor, adding to shareholder value • Usually no seat on board • Subordinated loansMezzanine / • Income participating loansQuasi Equity • Convertibles • Other hybrid instruments • Senior Debt (corporate finance, project finance) • Fixed/floating rates, US$, Euro and local currencies available • Commercial rates, repayment tailored to project/company needsSenior Debt • Long maturities: 8-20 years, appropriate grace periods • Range of security packages suited to project/country& Equivalents • Mobilization of funds from other lenders and investors, through cofinancings, syndications, underwritings and guarantees 27
    • IFC’s Value Added •Long Term Financing •Corporate / Project / AcquisitionIndustry knowledge • Foreign / Local currencies • Equity / Quasi-equity • Carbon FinanceRelationship with /understanding of IFC’s Products • Capital Mobilizationlocal authorities • B loan program • Credit enhancement (Partial Credit Guarantee)Expertise in • Pre-IPO stamp of approvalemerging markets •Advisory Services 28
    • IFC Customer Profile: Multinationals, Regional and LocalWhat is important about IFC to a company, by size and locationWhat IFC brings to an investment Multinational Regional LocalQuality stamp of approvalCountry risk mitigationExposure to country risk volatilityGood contacts/knowledgeCompetitive cost AlwaysLong tenors OftenAccess to local currency funding SometimesComplementary funding source 29
    • THANK YOU!!! 30