Mr. oscar chemerinski, ifc africa presentation

1. IFC in Africa
Partnering for Transformational Change through the
Private Sector
March 2013

2. Overview of IFC
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3. 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
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4. 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
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5. 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
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6. 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
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7. 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:
 $2.7 billion invested in Sub-Saharan Africa
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8. Overview of IFC in Africa
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9. Africa Rising
 Continued strong growth
 Africa seen as resilient, continued source of growth, with strong investment
opportunities amid sluggish growth in global economy
Fundamentals Remain Strong:
 Improved macroeconomic management
 Improving political stability/openness
 Rising middle class; growing consumer markets
 Favorable demographics
 Reform momentum
December 3rd, 2011  Strong FDI inflows
Economic Growth Set to Remain Strong Inward FDI has returned to peak levels
Real GDP, average annual percent change 40 US$ bn 37.3 36.2 36.9
2012-17
35 30.0 6.4
Developing 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
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10. 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.
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11. 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
Inclusion
Founded on Strong Collaboration with IDA, MIGA and Development Partners for Transformative Impact
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12. Close proximity to our clients and strategic staffing
Regional Hubs
Mediterranean
Sea
Dakar INFRA
Johannesburg 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
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13. Africa is a Key Strategic Priority for IFC
IFC 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 equity
Strong 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)
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14. 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 the
Manufacturing, Agribusiness & agribusiness supply chain, expand access to vital health and
Services (MAS) education services, and foster strong tourism, retail and
property sectors.
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15. 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 2,733 140
4,500 3,970
3,922
4,000 2,428 120
2,500
2,150
3,500 100
1,237
3,000 1,493 2,797 2,000 1,824
80
2,500 1,941 647 1,500 1,379 1,390
2,000 1,644 60
1,403 117
1,500 265 13 1,000 700
700 2,428 2,150 2,733 40
1,000 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$m
3,000
3,000
Africa Region East & Southern West & Central
2,500
2,500
2,000 FM
2,000
1,732 1,633
INR 1,364 1,205
1,500 MAS 1,500 1,341
1,095 1,619 1,032
563 1,000 688 655
1,000 521
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
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16. $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%
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17. Examples of IFC’s Work in Africa
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18. 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 FIs
Development infrastructure/logistics work with governments/ sponsors
Returns  Inputs supply/import finance
Successful Track Record: Recent Agribusiness Investments in Africa
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19. 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 and
Opportunity 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 Leone
Vitafoam 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

20. IFC’s Experience and Approach : Power & Utilities
IFC 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
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21. 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
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22. 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
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23. 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 Lebanon
Infrastructure and
FY 11 Leo Burundi $25 m Burundi Egypt
Natural 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 Indonesia
Manufacturing 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 Morocco
Financial Markets Kenya,
Madagascar,
FY 11 Bank of Africa $9 m Tanzania,
Morocco
Uganda
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24. Sample of IFC Investment Partners in FY12 in Africa
Infrastructure
Natural
Resources
Agribusiness
Agribusiness
Manufacturing
& Services
Financial
Markets &
Funds
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25. IFC’s Value Added to Private Sector Companies
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26. How We Finance Projects
•Project Type •IFC Investment
•Greenfield, total cost •Up to 35% of project cost
less than $50 million for IFC’s account
•Greenfield, total cost •Up to 25% of project cost
more than $50 million for IFC’s account
•Expansion or rehabilitation •Up to 50% of project cost
•Umbrella for participants in IFC’s syndication program: IFC lender of
record, immunity from taxation and provisioning requirements.
•IFC’s total financing (for its own account) must be less than 25% of total
company capitalization, and IFC does not manage or have largest stake.
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27. Financial Products - From Equity to Debt
• Corporate and JV
• Typically 5-15% shareholding (not to exceed 20% of total equity)
Equity
• Long-term investor, typically 6-8 year holding period
• Not just financial investor, adding to shareholder value
• Usually no seat on board
• Subordinated loans
Mezzanine / • Income participating loans
Quasi Equity • Convertibles
• Other hybrid instruments
• Senior Debt (corporate finance, project finance)
• Fixed/floating rates, US$, Euro and local currencies available
• Commercial rates, repayment tailored to project/company needs
Senior 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
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28. IFC’s Value Added
•Long Term Financing
•Corporate / Project /
Acquisition
Industry knowledge • Foreign / Local currencies
• Equity / Quasi-equity
• Carbon Finance
Relationship with /
understanding of IFC’s Products • Capital Mobilization
local authorities • B loan program
• Credit enhancement (Partial
Credit Guarantee)
Expertise in • Pre-IPO stamp of approval
emerging markets
•Advisory Services
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29. IFC Customer Profile:
Multinationals, Regional and Local
What is important about IFC to a company, by size and location
What IFC brings to an investment Multinational Regional Local
Quality stamp of approval
Country risk mitigation
Exposure to country risk volatility
Good contacts/knowledge
Competitive cost
Always
Long tenors
Often
Access to local currency funding
Sometimes
Complementary funding source
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30. THANK YOU!!!
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