Operational Report Printed by Ariane in Belgium

AfIF Africa Investment Facility

2016 Operational Report Printed by Ariane in Belgium

Printed on Process Chlorine Free paper (PCF) PEFC certified and EMAS Verified environmental management

This document has been prepared for the European Commission. However, it reflects the views only of the authors, and the European Commission cannot be held responsible for any use which may be made of the information contained therein. Neither the European Commission nor any person acting on behalf of the European Commission is responsible for the use which might be made of the following information. This report does not engage the responsibility of the Financial Institutions mentioned therein.

Luxembourg: Publications Office of the European Union, 2017

Photo on cover page: © Getty Images Photos are © Getty Images, except P3 and P36: © EU.

Print ISBN 978-92-79-70574-8 ISSN 2529-6256 doi:10.2841/03388 MN-AT-17-001-EN-C PDF ISBN 978-92-79-70573-1 ISSN 2529-6264 doi:10.2841/165139 MN-AT-17-001-EN-N AfIF OPERATIONAL REPORT 2016 1 INTRODUCTION 2016 Operational Report

The Africa Investment Facility (AfIF), set-up in 2015, is the newest of the EU’s regional blending facilities. The blending facilities are innovative financial instruments that use EU development grants to leverage additional funding from European and regional development financial institutions and the private sector. They help implement key infrastructure and private sector support projects that are critical to sustainable development in partner countries worldwide.

AfIF, which is funded mainly from different programmes under the European Development Fund (EDF), but also under the EU's Development Cooperation Instrument (DCI), provides various kinds of grant funding for development projects:

• Investment grants, to finance specific project components (with, for example, social or environmental added-value) or a percentage of the total project cost (thereby reducing the amount of debt for the partner country).

• Technical assistance, providing tailored support to meet specific project needs, both during project preparation and implementation. This assistance helps ensure the quality, efficiency and long-term sustainability of a project and may address aspects related to the project-enabling environment or other aspects that are key for a project’s successful AfIF implementation. Africa Investment Facility • Risk sharing instruments, such as risk capital and guarantees, to allow the available funds to be used efficiently by reducing risks and unlocking additional financing.

This is the first Operational Report for AfIF. The report details the Facility’s operational activities in 2016 and provides a comprehensive overview of the 16 projects funded. In 2016, AfIF provided a total of over €288 million in contributions to important infrastructure projects across Africa. The transport sector received the lion’s share of funding, with nine projects benefitting from a combined AfIF contribution of just over €183 million, followed by the energy sector, with an AfIF contribution of €85 million to five projects. One ICT project benefitted from an AfIF contribution of over €17 million and a project in water and sanitation received a contribution of almost €3 million.

Like the other EU blending facilities, AfIF acts as a catalyst to pool resources and improve the coordination and coherence of donor actions, underpinning the policy principles of ownership, partnership and shared responsibility. The Facility contributes to leveraging the funds needed to finance capital-intensive projects in key sectors, which might otherwise be too large to finance using market instruments alone, or by development financial institutions or benefi- ciary governments on their own.

In its first year of operations, AfIF has already made an important contribution to strengthening transport, energy and communications infrastructure, holding the promise of a major contribution to sustainable and socially-equitable development in Africa. AfIF CONTENTS

INTRODUCTION 1 FOREWORD 3

AfIF Africa Investment Facility 4 Advancing EU Policy Goals in Africa 6 AT A GLANCE 8 HIGHLGHTS 2016 10 1. Overview 11 2. Projects 12

AfIF Supporting Africa in its Efforts to Combat Climate Change 34 AfIF Closing Remarks 36 AfIF Organisational Structure 37 AfIF / ANNEX 38 AfIF / ACRONYMS 40 AfIF OPERATIONAL REPORT 2016 3

AfIF FOREWORD Neven Mimica

Africa is a continent of huge opportunity and potential. However, for this potential to be fully realised, a number of significant challenges need to be overcome. Poverty, unemployment and inequalities remain high, and the region is particularly vulnerable to the impacts of climate change. These challenges lie at the core of the EU’s partnership with Africa, which focuses on alleviating poverty, fostering peace and stability, consolidating democracy and good governance, and boosting economic growth and job creation. In this way, we can help to unleash the opportunities needed to achieve truly inclusive and sustainable development in Africa.

As part of our new vision for the EU's role in international cooperation and development, the European Union and its Member States signed a new European Consensus on Development in June 2017. This underlines the EU's determination play its part in implementing the internationally agreed UN 2030 Agenda for Sustainable Development. It also includes a commitment to explore all available means of financing, including by combining traditional development aid with other resources.

The Africa Investment Facility (AfIF) was set up in 2016, to support investment in Africa and mobilise additional funding in a broad range of sectors. In line with the priorities agreed with our partner countries, activities focused on areas such as micro, small and medium-sized enterprises (MSMEs), agriculture, infrastructure, environment, and the social sector. Like other EU blending Neven Mimica facilities, AfIF uses EU resources as a catalyst to leverage further financing from European finance European Commissioner, institutions, regional and multilateral development banks, and other investors. International Cooperation and Development Building on the success of this approach, the European Commission proposed a new External Investment Plan (EIP) in September 2016, to encourage investment and strengthen partnerships in Africa and the EU Neighbourhood. This new Plan is an innovative approach to investment, which focuses on important socio-economic sectors, such as sustainable energy, agriculture and social infrastructure, and support to MSMEs. These are all essential ingredients for sustainable growth and inclusive jobs, which are in turn necessary to fully implement the 2030 Sustainable Development Agenda, and to improve the lives of millions of African citizens.

The EIP will focus on three pillars of intervention: mobilising investment through a new European Fund for Sustainable Development (EFSD); providing technical assistance; and pioneering policy dialogue and cooperation to improve the overall investment climate in our partner countries. Blending will be a central pillar of the EFSD, which will be made up of around €2.6 billion from the two Regional Investment Platforms for Africa and the EU Neighbourhood and a €1.5 billion guarantee on the EU budget. In this way we aim to mobilise up to €44 billion of additional investment. The adoption of the Plan by a large majority in the European Parliament in July 2017 was a major milestone. This will allow us to start the implementation of the EIP in the autumn and to present tangible progress at the AU-EU Summit at the end of the year in Abidjan.

As we look to the future, we must apply the lessons we have learned, in order to reap the maximum impact from our activities and to make our development support as effective as possible. By integrating the Africa Investment Platform, into which AfIF will evolve, into the EIP, we will link innovative financing with policy dialogue and technical support in view of mobilising more investments in Africa. These efforts will be critical in supporting the aims of the Africa-EU partnership, and ensuring that our development efforts in Africa have the maximum impact, and benefits those who need it the most. AfIF Africa Investment Facility

AfIF is one of the EU’s blending facilities, innovative financial instruments which combine EU grants with other public and private sector resources, such as loans, equity and other financing, for investments that promote sustainable and socially-inclusive development. AfIF was created in August 2015 and started oper- ating in November of the same year. AfIF OPERATIONAL REPORT 2016 5

In line with EU and partner countries’ agreed policy objectives, AfIF aims to support sustainable and inclusive growth in Africa by fostering investments that have a positive impact on socio-economic development in the region, such as infrastructure in transport, communication and energy interconnections and the promotion of renewable energy. In addition, it can support access to finance for households, micro, small and medium-sized enterprises (MSMEs), the social sector and for municipal development. It can also contribute to actions in the environmental sector, including water supply and sanitation, climate change adaptation and mitigation, agriculture, information and communication technologies as well as social infrastructure.

The final beneficiaries of the Facility are the EU’s partners in Africa either directly or indirectly, through their central, regional and local administrations or public or semi-public institutions. Other beneficiaries can include the private sector, in particular households and MSMEs.

AfIF is funded from different programmes, mainly under the European Development Fund (EDF), but also under the EU's Development Cooperation Instrument (DCI), and supports national, regional and inter-regional projects in eligible countries in Africa. Resources allocated to the AfIF amounted to €905 million for the period 2015-2016. From its launch in 2015 to the end of 2016, AfIF has contributed over €288 million in grants to projects representing a combined investment of over €2.3 billion. AfIF Advancing EU Policy Goals in Africa

The EU’s most comprehensive development coop- political cooperation. It incorporates civil society, the eration partnership is with African (sub-Saharan), private sector, trade unions and local authorities. Caribbean and Pacific (ACP) nations. It dates back to Areas for support foreseen in the Agreement include the founding of the European Community in 1957. investment and private sector development, macroeconomic and structural reforms, and economic Successive agreements have been revised to meet sector development. new challenges. Poverty eradication and sustainable development are at the core of the ACP-EU Cotonou The ACP-EU Council of Ministers adopted in June 2014 Agreement (2000-2020). The main features of this a Declaration on the Post-2015 Development Agenda, partnership are development cooperation – at na- reaffirming the shared commitment to work together tional, regional and multi-regional levels – the pro- towards achieving poverty eradication and sustainable motion of economic links and trade exchanges and development, as outlined in the Cotonou Agreement. AfIF OPERATIONAL REPORT 2016 7

Advancing EU Policy Goals in Africa

cooperation it has with Northern Africa, South Africa and sub-Saharan Africa.

The New European Consensus on Development calls for a focus on the economic, social and environmental dimensions of sustainable development. It also underlines the links between development and other policies, including peace and security, humanitarian aid, migration, the environment and climate change.

AfIF, set up in 2015, supports operations financed by EDF and DCI resources that are relevant to the different priorities and development objectives defined in the regional and national programmes. AfIF complements activities undertaken through different aid modalities and tools, including budget support actions, projects and programmes implemented under central management, the ACP Investment Facility, EU-Africa Infrastructure Trust Fund (EU-AITF), the Se4All Initiative, GEEREF, “ElectriFI”, and “AgriFI”.

By enabling joint European operations (combining bilateral and EU grant funding with eligible The European Development Fund (EDF) is the main Finance Institution operations), AfIF will generate financing instrument for the 2014-2020 frame- enhanced coherence and coordination between the work aimed at the implementation of the Cotonou donors, in line with the Paris Declaration principles. Agreement priorities. EDF resources are implement- The AfIF projects approved in 2016 clearly reflect ed in the context of the national, regional and Intra- these policy objectives. ACP programmes. As a financial instrument that is fully aligned Under the Union’s budget, the Development with the general policy framework of EU-Africa Cooperation Instrument (DCI) establishes the cooperation, AfIF is ideally placed to build on its Pan-African Programme which provides dedicated beginnings and continue to play a central role support to the Africa-EU Strategic Partnership. in delivering the EU’s development objectives in The programme allows the EU to link up the Africa into the future. AfIF AT A GLANCE

Key AfIF figures

AfIF resources allocated Financing from financial Amount leveraged by to the 16 projects institutions to projects AfIF support

€ 288.5 €1.6 €2.3 million billion billion

Total programme budget (2015-2016): €905 million

ICT Water and Sanitation 6% 1% Technical Assistance Transport 23% Investment Energy 63.5% Grant 29.5% 77% Breakdown Breakdown by by sector type of support AfIF OPERATIONAL REPORT 2016 9

AT A GLANCE

Senegal €13.08 million/1 project

Burkina Faso Mauritania Mali €28 million/1 project

Central African Republic €17.47 million/1 project Benin Togo Kenya Ghana million/1 project Cameroon €19.11

Guinea Nigeria €29.6 million/1 project €18 million/2 projects

Ivory Coast Madagascar €24 million/1 project €7.8 million/2 projects

Regional / Nigeria and Cameroon €24.5 million/1 project

Regional / Ivory Coast, Ghana, Togo, Benin and Nigeria €9.13 million/1 project

Regional / Guinea and Mali €30 million/1 project

Regional / Ivory Coast and Mali €28 million/1 project

Regional / Mauritania and Senegal €20 million/1 project € Total volume of AfIF contribution approved

Regional / Togo and Benin €20 million/1 project AfIF HIGHLIGHTS 2016

In 2016 Of the 16 contributions in 2016

The first AfIF contributions were 13 can be reported as climate action approved. according to the Rio Convention on Climate Change.

In total, over €288 million of AfIF contributions were allocated to 16 Nine contributions support projects projects. with a regional dimension.

AfIF support leveraged €2.3 billion Energy was the second most in investment (an average leverage funded sector, with a combined ratio of over 1:8). AfIF contribution of €85 million to five projects.

The total EU budget allocated to AfIF at the end of 2016 was €905 million. The Port of Mombasa upgrade is a project of significance not only for Kenya, but for the entire East Africa region. AfIF allocated almost €183 million to nine transport projects. The Central African Republic component of the Central Africa Backbone Project will make Investment grants account for a significant contribution to almost €225 million of the total intraregional connectivity and AfIF contribution, while technical the information society. assistance accounts for almost €64 million. All the contributions have a component that aims at creating opportunities for women and young people. AfIF OPERATIONAL REPORT 2016 11

1. OVERVIEW

In total, 16 AfIF projects were approved in 2016, for a Country-specific projects are mainly in the energy sector, total contribution of over €288 million. This contribution with four projects supported in 2016. One of these involves will leverage funding for projects involving a combined the construction of 287 km of electricity lines in an effort to total investment of €2.3 billion, which equates to over €8 modernise energy infrastructure in Senegal. Another aims to leveraged by every euro provided by the AfIF. improve the human resource base for the energy sector in Nigeria by enhancing vocational training. Also in Nigeria, the In terms of geographical distribution, of the 16 contribu- SUNREF project aims to improve energy supply in the country tions allocated to projects in 2016, nine are for regional by scaling up private investment in renewable energy and projects, the majority of which are in the transport sector energy efficiency. A further project concerns the production mainly in West Africa. One of these aims to upgrade and distribution of renewable energy in Ivory Coast. the Bamako-Zantiebougou-Boundiali-San Pedro Corridor, connecting Ivory Coast and Mali. Another will finance the The other three national projects supported in 2016 con- construction of the Rosso Bridge across the Senegal River cern the upgrade of the Port of Mombasa in Kenya, a ring on the border between Mauritania and Senegal. A third road around Antananarivo, the capital of Madagascar, and project aims to rehabilitate the Gounghin-Fada N'Gourma- the definition of investment priorities for the upgrade of Piéga-Niger Border section of the CU2a Community Road waste water infrastructure in Antananarivo. in Burkina Faso; a fourth concerns the rehabilitation of the Coyah-Forecariah-Farmoreah road in Guinea, towards the In terms of sectoral distribution, the transport sector accounts border with Sierra Leone; and another aims to rehabilitate for a combined AfIF contribution of over €183 million in 2016 the Lomé-Cotonou Highway section of the Abidjan-Lagos (63% of the total 2016 AfIF contribution), which will leverage Corridor. Another project aims to upgrade the trans- total investment of over €1.3 billion. The five energy projects port corridor between Bamenda (Cameroon) and Enugu received a combined AfIF contribution of more than €85 mil- (Nigeria), thus connecting two regions, while one contri- lion, to leverage almost €802 million. The ICT project bene- bution concerns a study for a 6-lane highway between fitted from around €17.5 million from AfIF, towards a total Abidjan and Lagos. investment of almost €148 million, while the project in the water and sanitation sector was allocated approximately €2.8 One regional project in 2016 was supported in the energy million, towards a total project cost of €34 million. sector. It concerns the construction of a 920-km electricity interconnector between Guinea and Mali. Another one Concerning the type of support provided by AfIF in 2016, concerns the Central African Republic Component of the investment grants amounted to €222.5 million (77% of the Central Africa Backbone, the aim of which is to provide total AfIF contribution in 2016), while €66 million took the broadband access in Central Africa by installing optical form of technical assistance (accounting for the remaining fibre links between countries in the region. 23% of the total AfIF contribution in 2016). 2. PROJECTS AfIF OPERATIONAL REPORT 2016 13

priorities for the sector. In addition, it will help to finance a number of studies focused on institutional issues to improve the sustainability of future investments. Modelling WATER AND SANITATION of the drainage network will also be carried out, to improve the resilience of the urban area to flood risk and climate Antananarivo Integrated Drainage and change. Sanitation Programme The project aims to improve the health and living conditions Madagascar of the people of Antananarivo and to limit flooding in the city. Other goals include enhancing the operation Total budget: €34 million of drainage and sanitation networks in the capital and strengthening governance of the sector. AfIF contribution: €2.815 million The funding provided under the project will be used to pur- Lead finance institution: AFD (€25 million) chase equipment and conduct the work needed to rehabilitate the city’s drainage and waste water networks, including protection measures against flooding. To maximise the Co-financiers: health benefits for the local population, part of the funding Government of Madagascar (€6.185 million) will be devoted, through NGOs that are active in sanitation, to involve local populations in hygiene programmes. Type of AfIF support: Investment Grant (€0.5 million) and Technical Assistance (€2.315 million) The project will have an important social impact in low-lying areas of the city. Drainage in Antananarivo will improve, reducing flooding, which will have a positive economic impact by reducing flood damage, making it possible to improve transport infrastructure and create an enabling The Malagasy capital is experiencing significant population environment for local MSMEs. The impact on public health growth. With growing numbers of residents and a vibrant and quality of life for the population will also be positive. urban hub, its infrastructure, from roads to public transport, The project will also enhance the investment climate in is an essential ingredient to encourage economic growth the water and sanitation sector, paving the way for more and prosperity. projects in the future.

The Antananarivo Integrated Drainage and Sanitation The AfIF contribution will focus on providing crucial Programme will prepare a Drainage and Waste Water technical assistance to ensure the overall efficiency of the Master Plan, to define medium and long term investment services and the improvement of the sector framework. ICT

Central Africa Backbone Project – Central African Republic Component Initiated in 2007, the Central Africa Backbone (CAB) project aims to install terrestrial optical fibre links that Central African Republic interconnect the countries in the Central Africa region. Each country in the region should implement cross- Total budget: €147.91 million border interconnection links (as well as missing links in its territory) with at least two neighbouring countries, as recommended by the Programme for Infrastructure AfIF contribution: €17.47 million Development in Africa (PIDA) and the commitment made by the Heads of State of the Central African Economic Lead finance institution: AfDB (€101.48 million) and Monetary Community (CEMAC) member countries.

Co-financiers: Global Environment Facility The CAB project is implemented through three inter- (€7.02 million), Governments of Cameroon and connected national components: CAB Cameroon, CAB Congo and CAB Central African Republic. By providing Congo (€21.94 million) broadband access from the landing points of submarine cables, the project will significantly facilitate broadband Type of AfIF support: Investment Grant access and the development of an information society (€15.7 million) and Technical Assistance (€1.77 million) in the countries involved. AfIF OPERATIONAL REPORT 2016 15

A landlocked country in the heart of Africa, the Central training programme, which will initiate 8,000 women in the African Republic is the only country in the region not to use of ICT tools, is also part of the project. have a fibre optic link. As a result the internet penetration rate in the country is extremely low, at only 4%. Therefore, The economic impact of the project will also be felt in investment in ICT services has been identified as critical the agricultural sector. Part of the project involves the to unleash the untapped potential of a more digitalised introduction of a Market and Climate Information System society for the rapid economic development of the country. (MCIS). Through the MCIS, agricultural cooperatives and private businesses in rural or remote areas can boost The AfIF support to the CAB project will contribute to the productivity by accessing the prices of agricultural products implementation of the Central African Republic component, and livestock, as well as weather forecasts, through in order to quickly attain the global project objectives. connected community centres. Optical fibre links will contribute to reducing the cost to business of accessing high-quality telecommunications Overall, the project will have a positive impact on socio- services in the country. economic development and empowerment of the local population, especially women and youth. The use of Beyond the 900 km of optical fibres to be laid (inter- ICT-enabled public service delivery will have a positive connecting Central African Republic with Cameroon and impact on education and healthcare, and will also Congo), 20 Digital Community Centres are expected to be be an effective means of promoting job creation and built, providing 1,000 young people with employment. A entrepreneurship. Energy

Sovereign loan to Ivory Coast for renewable electricity access, production and distribution Ivory Coast

Total budget: €129.2 million

AfIF contribution: €24 million

Lead finance institution: AFD (€105.2 million)

Type of AfIF support: Investment Grant

In the Ivory Coast National Development Plan for 2016- 2020, the country has set itself a target of raising the national electrification coverage rate from 48% in 2016 to 64% in 2018 and 77% in 2020. By strengthening the distribution network, it is planned to improve the quality of the electricity service and reduce cut-off time and technical losses, which should also improve the underlying economic fundamentals of the electricity sector.

This project is part of a larger investment programme and comprises three components. The first is a rural electrification component that provides for the electrification of 354 rural communities with almost 400,000 inhabitants. The majority of the residents in the project areas live below the poverty line.

The second component aims to strengthen and extend the urban and peri-urban distribution network in 12 regional capitals. This will allow the connection of new residential areas and help adapt the existing network to deal with growth in demand for electricity.

The third component involves the rehabilitation of the 165 MW Buyo Hydroelectric Plant, which will help reduce greenhouse gas emissions.

The project’s objectives are fully aligned with the Ivory Coast's National Rural Electrification Programme, which aims to electrify all localities with more than 500 inhabitants. The project also supports the government’s Electricity for All Programme, which aims to finance one million connections by 2020, with a mix of grants, repayable concessional loans, and commercial non-concessional bank loans.

The AfIF contribution will finance the electrification of 154 rural communities in central Ivory Coast, out of the total 354 communities identified for the rural electrification component. AfIF OPERATIONAL REPORT 2016 17

Policy adopted by the Senegalese government in 2012 set a target for rural electrification of 50% by 2017, Energy which has since been raised to 60%.

Senegal Electricity Modernisation The Senegal Electricity Modernisation Programme will play a major role in achieving these targets. It will sup- Senegal port two pillars of the government’s overall plan for the rehabilitation of the electricity sector: upgrading of trans- Total budget: €158.98 million mission and distribution networks and the operational restructuring of Société Nationale d’Electricité du Sénégal (SENELEC). AfIF contribution: €13.08 million The upgrade and modernisation of the electricity Lead finance institution: EIB (€75 million) transmission and distribution networks comprises the densification and extension of the electricity network, Co-financiers: World Bank (€65.92 million), the inter-connection of currently isolated networks, and the modernisation of crucial distribution equipment and Government of Senegal (€3.37 million), facilities. The Programme also involves the installation Other financiers (€1.61 million) of 450,000 pre-paid meters, 30,000 advanced meters for large electricity consumers, and the setting up of a Type of AfIF support: Investment Grant modern customer relationship management system.

The AfIF contribution will be dedicated to rural electrification, contributing to the electrification of an additional 150 remote villages, with about 55,000 inhabitants located close to the newly built lines. Rural electrification has been identified as an essential prerequisite for economic growth in Senegal, as it is This rural electrification will result in significant improve- required to fuel the development of the agricultural ments in terms of agricultural development in the region of sector. Senegal enjoys high levels of urban electrification; Casamance, opening up the possibility for food processing ensuring rural access to similarly reliable and stable and manufacturing. More generally, the Programme will electricity supplies will promote rural integration into contribute to job creation and to the stabilisation of the the national economy. The Energy Sector Development jobs created, by reducing seasonality. SUNREF West Africa II is a tailor-made programme that aims at financing small and medium green Energy investments in Ghana and Nigeria, with a view to creating a demonstrative effect on the market. It is SUNREF Nigeria an extension, for English-speaking countries, of the SUNREF West Africa I project, co-financed by EU- Nigeria AITF, which is ongoing since 2014 in Senegal, Ivory Coast, Togo, Benin and Burkina Faso. Total budget: €134 million The objective of SUNREF West Africa II is to support national priorities in the energy and environmental AfIF contribution: €10 million fields and scale-up much-needed private invest- (in addition to an EU-AITF support to SUNREF West ments though: Africa II, with €4 million dedicated to Nigeria) • A facility to enhance private sector access to Lead finance institution: available financing at lower interest rates and AFD (€100 million) more appropriate maturities.

• Technical assistance to facilitate the origina-

Co-financiers: tion of viable and bankable projects, provide Project developers (€20 million) technical and financial support at critical stages of project development and increase Type of AfIF support: Investment Grant the knowledge and the expertise of the main stakeholders (sponsors, banks, consultants, equipment providers).

AFD will provide long term loans to Partner Finance Institutions (PFIs) at concessional rates and the AfIF OPERATIONAL REPORT 2016 19

The Broader Context

In coordination with local public policies, since 2007 AFD has put in place targeted support to develop innovative green investments through environmental credit lines for local financial institutions. This support, called SUNREF (Sustainable Use of Natural Resources and Energy Financing) includes both technical assistance (TA) and credit lines (i.e. loans) to local financial institutions for them to finance small and medium- sized projects implemented by public and private entities. The benefits of the SUNREF programme include: • Enforcing public policies towards entrepreneurs that AFD cannot reach directly because of their size (small companies such as MSMEs and even individuals). • Using financial intermediaries as channels for disseminating these types of projects through reliable local counterparts with technical skills. • Disseminating technical know-how and good practices PFIs are expected to on-lend to sub-borrowers at concessional rates, to finance energy efficiency and through the TA. renewable energy investments in industry, SMEs, agribusiness, commercial services and the residen- From 2007 to the end of 2014, AFD has committed more tial sector in Nigeria and Ghana. than €2 billion through green credit line programmes with 35 financial institutions to finance green projects in developing Along with the credit facility, the programme aims and emerging countries. AFD has been a pioneer in Africa in at developing financial intermediaries’ capacity and appetite in these fields as well as providing support financing green projects through credit lines to local financial to investors. institutions. SUNREF West Africa I started successfully in September 2014 and covers five countries: Senegal, Ivory The AfIF contribution will be dedicated to reducing Coast, Benin, Burkina Faso and Togo. The programme is the cost of loan repayment for the final beneficia- co-financed by AFD (€30 million), the Fond Français pour ries and to encouraging the beneficiaries and the l’Environnement Mondial - FFEM (€1.5 million) and EU-AITF banks to change their vision and practices in order to finance energy efficiency and renewable energy (€6 million). It is composed of concessional credit lines, projects in a sustainable manner. a regional TA programme, and an investment grant scheme. Taking into account African economic growth and its potential In 2015 and 2016 the macroeconomic environ- negative impacts in terms of energy and raw material ment was greatly affected by the decline in oil price, consumption and pollution, AFD intends to further focus in the hence the project implementation has been delayed next few years on Sub-Saharan Africa for the development of since the crisis was affecting local banking sectors. Achievement of expected results is therefore con- green credit lines, in line with the objectives of the European ditioned by a swift economic recovery, however Union’s Sustainable Energy for All initiative and post 2015 Nigeria is now showing signs of recovery and the objectives. The purpose is to engage the private sector to banking sector seems keen to participate again in contribute towards successfully achieving energy efficiency the financing of the economy and diversification in and renewable energy policy goals in Africa. green investments in Nigeria. Energy

Enhancing Vocational Training delivery for the power sector in Nigeria Nigeria

Total budget: €50.7 million

AfIF contribution: €8 million

attractiveness by building new technical infrastructure Lead finance institution: AFD (€42.7 million) and acquiring equipment for a network of eight regional training centres and the institute’s headquarters in Type of AfIF support: Technical Assistance Abuja. In this way, the project will not only strengthen NAPTIN’s capacity to design and implement vocational training but it will also contribute to reforming the institute’s policies and procedures, helping to transform it into a more business oriented institution. Nigeria's economic activities and growing population are putting increasing demand on the country’s electrical grids. By improving human resource skills in electricity companies, The country has an installed power generation capacity of the project will promote the financial, economic and technical about 8.5 GW and actual generation available on the grid performance of operators and, consequently, their ability to of 4.5 GW. Highly trained staff and field experts are needed provide reliable electricity. The resulting improved access to to help satisfy the country's growing demand for electricity. energy, upgraded quality standards and increase in electricity generation, transmission and distribution will, in turn, have To ensure an enabling environment for private investors a direct impact on the productivity of enterprises, especially and to provide a steady stream of qualified replacements SMEs, the diversification of the economy and on national for technical staff exiting the workforce, in 2009 Nigeria’s economic development. Through these interventions, the Federal Ministry of Power set up the National Power project will contribute to the success of power sector reform Training Institute of Nigeria (NAPTIN). NAPTIN provides in Nigeria, a key ingredient in Nigeria's future. state-of-the-art training and capacity building programmes in partnership with national and international stakeholders. The AfIF contribution will finance much needed technical assistance, contributing to the development and setting This project aims to support NAPTIN by developing up of training assets and new procedures and policies for training curricula adapted to market needs and also to NAPTIN. This technical assistance is essential to transform train local trainers. It also aims to reinforce NAPTIN’s NAPTIN's long-term vision and structure. AfIF OPERATIONAL REPORT 2016 21

Energy

Electrical Network Interconnection in Guinea and Mali

Guinea and Mali The Guinea-Mali interconnector is a 920-km power line from the Nzérékoré substation in Guinea to the Total budget: €329 million Sanankoroba substation in Mali. The power line is the missing link to a network which will connect seven West AfIF contribution: €30 million African countries, thus creating a major regional electricity market through the gradual integration of isolated national networks into a unified system. This will provide Lead finance institution: AfDB (€ 70 million) significant cost reductions and improved synergies.

The various localities crossed by the line will be connected Co-financiers: WABD (€23 million), IDB (€53 million), to the grid and will benefit from lighting fixtures. The cost EBID (€48.5 million), AFD (€35 million), others (€51.7 of connecting interested households will be included in million), Government of Guinea (€14.2 million), Govern- the project costs, ensuring maximum beneficial impact ment of Mali (€3.6 million) for the local population. Women and young people are expected to benefit in particular, as a result of increased Type of AfIF support: Investment Grant opportunities for economic activities in trade and crafts. (€18.86 million) and Technical Assistance The project also includes a rural electrification component (€11.14 million) targeting localities in a 20-km wide corridor along the interconnector. These communities are home to more than 1,000 inhabitants each. A total of 80 localities are affected in Mali and 121 in Guinea, bringing the Located in the heart of West Africa, Mali and Guinea lie population of the electrified rural area to more than in a region with growing demand for rural and urban 200,000 beneficiaries. electrification. The two countries also lie between two regional power grids: a grid connecting Mali, Senegal and The AfIF contribution will help finance the rural electrifica- Mauritania and another connecting Ivory Coast, Liberia, tion component as well as providing technical assistance to Sierra Leone and Guinea. ensure efficient and effective implementation of the project. Transport

Coyah-Forecariah-Farmoreah Road Rehabilitation Project Guinea

Total budget: €75.1 million

AfIF contribution: €29.6 million

Lead finance institution: AfDB (€ 44.79 million)

Co-financiers: Government of Guinea (€710,000)

Type of AfIF support: Investment Grant (€24.73 million) Technical Assistance (€4.87 million)

The Dakar-Lagos Trans-African coastal corridor connects a number of economic hubs in West Africa. It also connects these hubs to poorer areas, providing them with vital access to important trade routes.

The project consists of the rehabilitation of the Coyah- Forecariah-Farmoreah road in Guinea, a 75-km section of the Dakar-Lagos corridor, and will provide the missing link between Guinea and Sierra Leone on this corridor. It will complement projects already undertaken by the European Union, which has contributed to financing the construction of road sections on the Sierra Leone coast.

The project’s overarching aim is to reinforce regional integration and promote intra-regional trade in the Economic Community of West African States (ECOWAS) zone. Specifically, the project aims to strengthen Guinea's competitiveness, particularly in its trade relations with Sierra Leone, to facilitate the mobility of people and goods, and to allow better access to social facilities.

The project will also help to address the critical need to open agricultural and mining production areas in both Guinea and Sierra Leone and contribute to reducing poverty and improving the competitiveness and diversification of their economies.

The project is expected to reduce travel times along the section by 66%, and add 50 km of rural access roads to ensure the local population is given higher mobility. Four multifunctional platforms for women in the region will also be financed as part of the project.

The AfIF contribution will provide funding for the multifunctional platforms, as well as for crucial technical assistance for project oversight and control. AfIF OPERATIONAL REPORT 2016 23

extensive measures are needed to improve the efficiency Transport of the existing infrastructure in order to accommodate the growth that has already taken place, in addition to the 5%-6% increase in annual traffic expected over the next Port of Mombasa Berths Upgrade few years. and Rehabilitation The project consists of the comprehensive rehabilitation Kenya and upgrade of a number of existing quays, and a land reclamation component that aims to increase the port’s €172.58 million Total budget: storage capacity. After completion, the facilities will be used for both containers and general heavy cargo handling. The AfIF contribution: €19.11 million project also includes a capacity building and environmental management component targeted at the Kenya Ports Lead finance institution: EIB (€76.74 million) Authority.

Capacity and efficiency are the two main factors influencing AFD (€76.74 million) Co-financiers: transit time at the port. Time savings translate into cost reductions to be passed on, in various degrees, to consum- Type of AfIF support: Investment Grant ers and exporters, making goods less expensive and busi- (€15.61 million) and Technical Assistance (€3.5 million) nesses more competitive. This also supports private sector development, including SMEs. Reducing the time needed for goods to transit the port contributes directly to the goal of reducing transport and trade-related costs, especially along the Northern Corridor.

The Port of Mombasa plays a vital role in the transport The economic benefit will then filter down into the region, network of East Africa, serving a region with a population increasing trade opportunities, market accessibility, and of over 250 million people and handling traffic to Kenya, private sector competitiveness, in turn sustaining regional South Sudan, Uganda, Rwanda, Burundi, Democratic integration and development, ultimately contributing to Republic of Congo (DRC) and Tanzania. The vast majority of poverty reduction. foodstuffs, raw materials, vehicles, and iron/steel that are imported or exported in the region are handled through the Finally, the project is also aligned with sustainable trans- Port of Mombasa. The port is also the UN’s major supply port objectives by reducing congestion and transport times gateway to East Africa, supporting major peacekeeping and along freight routes and, consequently, by reducing green- humanitarian operations in the region. house gas emissions and increasing the safety and security of the port’s facilities. The Port of Mombasa has experienced major traffic growth, averaging 10% annually over the past ten years. As traffic Support from AfIF will complement EIB and AFD loans pro- demand continues to soar (particularly for container freight), viding crucial funding that will strengthen the governance the port’s facilities are not large enough, nor sufficiently and financial capacities of the Kenya Ports Authority, en- specialised to efficiently handle the increase. Consequently, suring the long-term sustainability of the project. Transport

Project to Rehabilitate the Gounghin- Fada N'Gourma-Piéga-Niger Border Section of the CU2a Corridor The CU2a corridor forms part of the West African Economic and Monetary Union’s (WAEMU) road network and is a major Burkina Faso trade route for the region. Providing transport connections through Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Total budget: €177.5 million Mali, Niger, Senegal and Togo, the network is critical for intra-regional integration. AfIF contribution: €28 million The average daily traffic on the road in 2015 was 1,310 vehicles, of which 50% were trucks. This is expected to Lead finance institution: AfDB (€104 million) increase to 1,570 vehicles per day by 2020, with the same proportion of heavy goods vehicles. As traffic increases, Co-financiers: JICA (€40 million), West African maintaining excellent road conditions and expanding rural Economic and Monetary Union (€2 million), access to this major route is necessary to sustain economic growth. Government of Burkina Faso (€3.5 million) This project involves the rehabilitation of the Gounghin- Type of AfIF support: Investment Grant Fada N'Gourma-Piéga-Niger border section of national (€20 million) and Technical Assistance (€8 million) road No. 4 on the CU2a corridor, a 218-km section of road in need of maintenance. It also includes the construction of 83 km of rural roads which will connect local villages and farms to the trading route. AfIF OPERATIONAL REPORT 2016 25

The project is important in terms of the opportunities it offers for economic growth for the entire region. The rehabilitation of the road section will provide Burkina Faso, Niger and Mali with easier access to the ports of Lomé in Togo and Cotonou in Benin, improving their access to export markets. The project is expected to reduce travel times between Niger and Burkina Faso by over 33%, with a simultaneous increase in the volume of traffic crossing the border.

The project will have a significant impact on mobility in the region. The 300 km of new and improved roads will increase road access and mobility for 2.5 million people. As part of the project, ten multifunctional platforms will be built in the Fada N'Gourma area, providing local women with crucial services.

The project will improve transport efficiency, thereby generating an enabling environment for trade and local entrepreneurs. This will have a knock-on positive impact on the living conditions of people directly in the project intervention area and in the region as a whole. TRANSPORT

Project to Rehabilitate the Lomé-Cotonou Highway and Facilitate Transport on the Abidjan-Lagos Corridor, Phase 2; and to Protect the Togolese Coast from Erosion Togo and Benin

Total budget: €147.02 million

AfIF contribution: €20 million

Lead finance institution: AfDB (€30.58 million)

Co-financiers: EIB (€50 million), Global Environment Facility (€5.47 million), WADB / EBID /IDB (€38.1 million), West African Economic and Monetary Union (€0.61 million), Government of Togo (€2.26 million)

Type of AfIF support: Investment Grant (€11.27 million) and Technical Assistance (€8.73 million) AfIF OPERATIONAL REPORT 2016 27

The Abidjan-Lagos corridor is a major road that connects enabling the implementation of income-generating five West African countries: Benin, Ghana, Ivory Coast, activities for vulnerable coastal populations, particularly Nigeria and Togo. Stretching over 1,000 kilometres, this those currently involved in the extraction of coastal corridor connects several state capitals, not to mention sands and gravels. It will also cover institutional some of largest and economically most important cities support to the project implementation agencies. in the entire continent. Providing landlocked countries with access to ports in the region, it is the major lifeline of West As a result of the project, 30 km of dual carriageway will African trade. be built. Over 10 km of eroded coastline will be salvaged, creating the necessary conditions to sustain traffic This project consists mainly of the rehabilitation and wid- capacity. The reduction in travel times along this section ening of the Avépozo-Aného section of the Lomé-Cotonou of the corridor is expected to be approximately 25%. As highway, part of the larger corridor. The project also fore- part of the investment, five multifunctional centres and sees the development of coastal erosion protection struc- platforms will be built in the area, specifically targeting tures in Togo, which faces serious coastal erosion prob- the socio-economic development of women and youth. lems and has seen the coastline to the east of the port of Lomé receding by 15 to 20 meters per year. This is having The project will have an economic impact that stretches a major environmental impact, as well as socio-econom- well beyond the creation of jobs in road and infrastructure ic effects on coastal communities in the area. In Benin, construction. Improved market access will reduce poverty in support will mainly cover the development of three road the region by providing job opportunities and better delivery studies, asphalting of the Adjaha-Athiémé road, and the of social services. Safety will also improve on the highway construction of sidewalks on the Cotonou-Ouidah road. as a result of the project, leading to a reduced number of accidents. Finally, better infrastructure and reduced transport The AfIF contribution will cover activities aimed at costs will also create conditions conducive to foreign invest- strengthening the inclusive aspect of the project and ment, with related benefits in terms of employment.

The Broader Context

The Abidjan-Lagos corridor runs along the coast of the Gulf of Guinea and passes through the most densely populated cities of the region. An estimated 75% of economic activity in this sub-region takes places along this corridor. The corridor is a priority of the African Union's African Infrastructure Development Program (PIDA) and the Economic Community of West African States (ECOWAS) Regional Transport Facilitation Program. The overall goal of PIDA is to promote socio-economic development and poverty reduction in the African continent by providing the local population with improved access to integrated regional and continental infrastructure networks and services. Focusing on trans-border, regional and continental projects in sectors such as transport, energy and ICT, it is a key programme in the strategic framework for the socio-economic development of Africa. hubs. The ring road project complements road infrastructure work already being undertaken by the city.

Transport This circumferential route will provide the city's inhabitants with internal transport along southern, eastern Ring Road in Antananarivo and northern connections, while simultaneously contributing to the reduction of transit traffic from urban roads. Madagascar Regional integration is also considered in the project.

Total budget: €62.8 million Inter-city transport will be streamlined, as the project will address traffic flows from the port of Tamatave in AfIF contribution: €4.8 million the eastern part of the country to the capital, an essential route which connects Antananarivo to international naval commerce. Lead finance institution: AFD (€24 million) The project design covers all the necessary crossroads and Co-financiers: EIB (€28 million), Government of pathways for pedestrians and persons with reduced mobil- Madagascar (€6 million) ity. The project also includes an environmental and social management component. The necessary control of hydrau- lic systems in the Ambatobe Valley and urban planning in Type of AfIF support: Technical Assistance the vicinity of the new road are also taken into account.

Smoother transport connections from the urban periph- As the capital and largest city on the island-nation of ery to the city-centre will provide significant economic Madagascar, Antananarivo and its larger urban area repre- stimulus to both areas. Strategic urban planning will sent the political and economic heart of Madagascar. Urban reduce travel times and facilitate trade both inside and population growth has created the need for improved in- outside the capital. frastructure to sustain economic growth and urban trade. With expected traffic to be as high as 25,000 vehicles As part of a larger transport development plan aimed at per day, these 8 km of new and improved roads in one developing national and urban infrastructure, this project of Madagascar's major traffic arteries will create an en- entails the construction of an urban ring road in the abling environment for a more dynamic economic hub. north and north-east of Antananarivo. The objective is to improve transport conditions in the greater Antananarivo The AfIF contribution will mainly finance the service metropolitan area and upgrade links to the city’s economic contract for the supervision and control of the works. AfIF OPERATIONAL REPORT 2016 29

Transport

Road Improvement and Transport Facilitation Project on the Bamako- Zantiebougou-Boundiali-San Pedro Corridor Ivory Coast and Mali

Total budget: €209.82 million

AfIF contribution: €28 million

Lead finance institution: AfDB (€176.94 million)

Co-financiers: West African Economic and Monetary Union (€2.94 million), national contributions (€1.94 million)

Type of AfIF support: Investment Grant (€26.82 million) and Technical Assistance (€1.18 million)

The Bamako-San Pedro corridor between Mali and Ivory As part of the project's effort to deal with issues of Coast provides an alternative route to open up access gender, part of the funding will go to the construction of from landlocked countries in the hinterland to the Gulf 14 multifunctional platforms and centres for the area's of Guinea and its international ports. As traffic along this women, providing them with the training and equipment vital route grows, maintenance and improved mobility needed to improve their socio-economic conditions. are essential to guarantee the steady movement of people and goods in the region. The project will directly or indirectly benefit all users of the corridor and, in particular, those involved in agricultural This project will connect Mali as well as the northern production and in importing consumer products. The new part of neighbouring Guinea to San Pedro in Ivory Coast, roads will provide improved rural road access to 60% making it an important transit port for the region. In light of the local population. With large areas of land unused of its strategic importance, the road is included in the due to lack of access to efficient transport links, the priority programmes of the West African Economic and project will help the area develop its untapped economic Monetary Union (WAEMU) and the Economic Community potential, thereby making a significant contribution to of West African States (ECOWAS). poverty reduction in the region.

The project consists of improvement and maintenance The AfIF contribution will amplify the project's impacts, in work on 140 km of the corridor in Mali and 135 km in Ivory particular with regard to related infrastructures, transport Coast. The works are expected to reduce travel times by facilitation measures and activities designed to strengthen 70% and significantly lower the cost of transportation the inclusive aspect of the project. between Mali and the port of San Pedro. This will result in increased opportunities for economic development and trade, both between Mali and Ivory Coast and for communities living along the route. Transport

Rosso Bridge Construction Project Mauritania and Senegal

Total budget: €90 million

AfIF contribution: €20 million

Lead finance institution: AfDB (€40 million)

Co-financiers: EIB (€26 million), Governments of Growing traffic volumes along the route have placed Mauritania and Senegal (€4 million) significant planning pressure on the twin-cities of Rosso- Mauritania and Rosso-Senegal, which find themselves on a major transport route without a paved border crossing. The Type of AfIF support: Investment Grant (€18 million) construction of the 1.5 km bridge is expected to increase and Technical Assistance (€2 million) the traffic capacity of the border by 262% as well as reduce travel time over the river by 80%. The construction of 9 km of access roads to the bridge will ease traffic flow in the two border cities, particularly in the areas congested by ferry traffic. The Senegal River creates a natural border between Mauritania and Senegal, stretching from its source and The overall objective of the project is to improve the level splitting the two countries from their eastern-most frontier of service on the Nouakchott-Dakar corridor, with a view to the Atlantic Ocean. This border is traversed by the to increasing trade, particularly between Mauritania and Nouakchott-Dakar corridor, which runs along the Atlantic Senegal. Reducing local transport costs will result in lower coasts of the two nations, connecting their capital cities. consumer prices for agricultural products and increased Part of the transport corridor between Tangiers and Lagos, market accessibility, as well as business development this corridor is a section of one the major continental and trade opportunities at both regional and international routes in Africa. levels. Communities living along the route stand to benefit from improved access to basic services, as the project The main element of this project is the construction of includes funding for the creation of 26 health, educational the Rosso Bridge border-crossing on the Senegal River. and training facilities. This bridge will provide the crucial missing link on the increasingly important Nouakchott-Dakar corridor. The The AfIF contribution will finance non-bankable compo- project will connect the two banks of the Senegal River and, nents of the project, such as transport facilitation, transit in so doing, create an efficient border crossing for traffic on measures and ancillary works, including those designed to this important road. strengthen the inclusive aspect of the project. AfIF OPERATIONAL REPORT 2016 31

Growing population, intra-regional trade and greater internal mobility are all factors contributing to a significant growth Transport in traffic along the route. In February 2013, the presidents of the five countries in question agreed to work towards Study for the Abidjan-Lagos Corridor the expansion of existing roads and the construction of a six-lane highway (three-lane dual carriageway) from the Highway Development Project economic centre of Ivory Coast, Abidjan, to its Nigerian counterpart, Lagos. The five countries signed a treaty Regional outlining the framework upon which the corridor would be designed, studied, implemented and operated. Total budget: €14.37 million The objective of the Abidjan-Lagos Corridor Highway Study is AfIF contribution: €9.13 million to undertake all the necessary research on the hard and soft aspects required for the effective implementation, operation, Lead finance institution: AfDB (€5.04 million) and economic development of the corridor. The study will be based on the principle that the highway shall primarily follow a new alignment, incorporating sections of the existing align- Co-financiers: Economic Community of West African ment, where necessary, to ensure route optimisation. States (€0.2 million) The comprehensive study will include key elements such as Type of AfIF support: Technical Assistance engineering, financial, economic and environmental analy- ses of the project and a detailed engineering design of the road. Analysis will also be conducted on an implementable public-private partnership (PPP) investment scheme. An assessment will also be carried out of the physical, tech- The 1,028-km Abidjan-Lagos Corridor links the major eco- nical, policy, economic and market aspects of the corridor, nomic centres in the five countries it traverses: Ivory Coast, in order to develop a realistic masterplan, development Ghana, Togo, Benin and Nigeria. It interconnects with a rail framework and delivery strategy for the highway. network, major international ports along the gulf of Guinea, and airports. It also crosses several corridors running on The study will involve consultations with a broad spectrum a north-south axis, providing landlocked countries such as of society, beyond traditional stakeholders. These will Burkina Faso, Mali, Niger and Chad with vital access to in- include development partners, local communities, civil ternational trade routes. The corridor is directly involved in society, farmers, industrialists, market traders, enterprises, 75% of trade in the sub-region, making it central to West border and customs agencies, transport and logistics Africa's commercial life. It is therefore a critical piece of operators, and regional entities such as the West African infrastructure, underpinning the socio-economic develop- Economic and Monetary Union (WAEMU). ment of the countries it links. Transport

Transport Facilitation Programme on the Bamenda-Enugu Corridor - Cross River Border Bridge Nigeria and Cameroon

Total budget: €391.39 million

AfIF contribution: €24.5 million

Lead finance institution: AfDB (€259.25 million)

Co-financiers: IDA/World Bank (€23.5 million), JICA (€34.5 million), Government of Cameroon (€30.63 million), Government of Nigeria (€18 million), Economic Community of West African States (€1.01 million)

Type of AfIF support: Investment Grant AfIF OPERATIONAL REPORT 2016 33

Intraregional trade is becoming ever more important preparation work along the corridor for the subsequent in Africa. To ensure growth in this vital element of laying of optical fibre. local economies, the continent as a whole is acting to lower logistical barriers to the movement of goods and Local communities will benefit from auxiliary infra- people between neighbouring countries, in an effort to structure provided under the project, such as rural facilitate regional integration. roads, market warehouses, classrooms, women and youth centres, drinking water points, small agricul- The Bamenda-Enugu Corridor and Cross River Border tural processing facilities and transport equipment. Bridge project is part of a larger programme comprised The project will create job opportunities, with an of several transport and transit facilitation projects that expected 2,500 permanent jobs resulting from aim to upgrade inter-state roads and streamline traf- post-construction work. Moreover, the improved fic. The overarching objective is to promote increased transport infrastructure will generate new employ- exchanges and closer cooperation between countries in ment opportunities in services. the Central African Economic and Monetary Community (CEMAC) zone and those in the Economic Community of The project will contribute to the opening of production West African States (ECOWAS). This project is specifi- areas in both countries and to increased trade. It will also cally targeting trade between Cameroon and Nigeria. help improve the competitiveness and diversification of the economies of Cameroon and Nigeria, thereby The project consists of the development of 445 km contributing to poverty reduction. of road between Bamenda (Cameroon) and Enugu (Nigeria) of which 240 km are in Nigeria and 205 km The EU contribution will fill the funding gap in the in Cameroon. Transport facilitation measures include a financing of the bridge, amplifying the positive impact single border control post for the two countries, a dou- of the bridge through the foreseen interventions in ble-lane bridge between Cameroon (Ekok) and Nigeria Ekok, and increasing the overall concessionality of (Mfum) to replace an existing one-way bridge, and the project. AfIF Supporting Africa in its Efforts to Combat Climate Change

Sub-Saharan Africa is one of the most vulnerable at supporting the implementation of projects regions in the world to the impacts of climate change, helping partner countries tackle climate change which is affecting food production, water supply, through mitigation and/or adaptation measures, health and livelihoods on the continent. Therefore, AfIF and the other EU regional blending mechanisms investments addressing the climate resilience and help mainstream the fight against climate change. adaption of infrastructure in these sectors are a These windows have been created in all regional priority for Africa. blending facilities in order to enable tracking of all climate change related projects supported. At the 21st Session of the Conference of Parties Their main purpose is to promote additional to the United Nations Framework Convention on investments and provide visibility to projects which Climate Change (COP21) in Paris in December 2015, have climate change as their principal objective. countries pledged to strengthen the global response Those can target either mitigation or adaptation, to the threat of climate change, in the context of or both, and should contribute to the objective of sustainable development and efforts to eradicate stabilising greenhouse gas concentrations in the poverty, including by making finance flows consistent atmosphere. with a pathway towards low greenhouse gas emissions and climate-resilient development. The EU and In establishing Climate Change Windows in the EU it partners built a broad coalition of developed and regional blending facilities, the main aims are to: developing countries in favour of the highest level of ambition. A Communication from the European 1. Establish a tracking system for climate change Commission was issued in March 2016 following the related operations; Paris Agreement. 2. Ensure transparency of EU financing of In its Communication on A renewed partnership climate change projects, including by making a with the countries of Africa, the Caribbean and distinction between programmed funds within the Pacific, published in November 2016, the geographical instruments and new, additional European Commission recognises that sustainable resources; development and human well-being depend on healthy ecosystems and a functioning environment. 3. Guarantee better tracking and EU visibility for all Furthermore, it warns that climate change and en- its climate actions; vironmental degradation are threatening to derail economic progress, jeopardise peace and stability 4. Mainstream the fight against climate change in and cause large-scale migration. projects (co)financed by the EU;

In this framework, climate action is a central focus 5. Attract additional financing for climate change. of the blending mechanism, with the majority of projects having climate adaptation or mitigation The tracking system is based on the contribution of measures as their principal or significant objective. each project to the climate mitigation and/or adaptation With their Climate Change Windows (CCWs) aimed objectives of the Rio Convention on Climate Change: AfIF OPERATIONAL REPORT 2016 35

AfIF Supporting Africa in its Efforts Results to Combat Climate Change

• Rio Marker 1: projects where the contribution Of the 16 AfIF contributions allocated to projects to mitigating and/or adapting to climate in 2016, 13 target climate action. Out of the total change represents a significant objective €288.5 million, €112.3 million can be reported (40% of the AfIF contribution can be as climate action support according to the Rio reported as climate action support); Convention on Climate Change (Rio Marker 1: 40% of the AfIF contribution, Rio Marker 2: 100% of the • Rio Marker 2: projects where the contribution AfIF contribution). to mitigating and/or adapting to climate change represents the principal objective From its launch until the end of 2016, 2 AfIF (100% of the AfIF contribution can be contributions can be reported as Rio Marker 2, reported as climate action support). with AfIF contributions totalling €12.8 million to be reported as climate action support. Another 11 Mitigation measures include: projects were reported as Rio Marker 1, with AfIF contributions totalling €99.5 million to be reported • Limiting the emission of greenhouse gases as climate action support. caused by human activity; The full list of AfIF contributions approved in 2016 • Improving energy efficiency and increasing is available in the annex at the end of this report. energy savings; This annex includes detailed amounts per project to be reported as climate action support in accordance • Increasing the production and use of with the Rio Markers tracking system. renewable energy;

• Protecting and/or enhancing greenhouse gas sinks and reservoirs. Rio Marker 2 Rio Marker 0 2 contributions 3 contributions Adaptation measures include:

• Reducing human and environmental vulnerability to the impact of climate change; AfIF Contribution to • Promoting climate change adaptation Climate Change Rio Marker 1 technologies, including the related 11 contributions infrastructures;

• Measures for emergency prevention and preparedness to cope with natural disasters. AfIF CLOSING REMARKS

Last year saw a real step change in terms of the European Union's partnership with Africa, in line with our determination to make our development cooperation more flexible, responsive and effective.

2016 was the first year of operations for the Africa Investment Facility (AfIF). As agreed with our partner countries, a key priority for the AfIF in 2016 was regional growth and integration, including facilitating intra- African trade. This translated into 16 projects focusing on major upgrades to transport and energy, ICT, and water and sanitation infrastructures. A total of over €288 million of EU support contributed to investments worth over €2.3 billion.

The Facility also aims to improve the pipeline of potential projects in Africa, which is an important bottleneck to investment in the region. As an example, financing for a study on the Abidjan-Lagos corridor highway development project was approved in 2016. The fight against climate change has been at the core of all our investment in Africa, with more than Stefano Manservisi 90% of our support contributing to these efforts. Director General, International Cooperation and Development AfIF is an open and effective cooperation platform where the EU joins forces with European development financial institutions and regional development banks. It has been designed to cover a wide range of sectors, which also include agriculture, social services and support to micro, small and medium-sized enterprises, with a strong focus on youth and women. The pipeline of projects is very promising, including in these crucial sectors. AfIF's first year of activities is proof of the EU's commitment to support global efforts to achieve genuinely sustainable development in Africa and beyond.

Building on this success, and building on the logic of the new European Concensus on Development, the EU intends to further scale up its efforts. This notably means pursuing, including through innovative financing models and further mobilising the private sector, in the context of the new External Investment Plan (EIP). The EIP will integrate the activities of the AfIF, which will evolve within the EIP into the Africa Investment Platform, into a holistic approach, which also seeks to improve the overall investment climate and business environment. In this way, we hope to spur more inclusive growth and responsible investment in Africa, which ensures that the social and economic benefits are felt by all. AfIF OPERATIONAL REPORT 2016 37

AfIF ORGANISATIONAL STRUCTURE

EU Blending Frameworks are chaired by the Commission with the partic- ipation of the European External Action Service A new governance structure for blending instruments (EEAS) and financial institutions. was agreed with the EU Member States in 2014. Within this new structure, the EU implements blend- Based on the results of the discussions at the ing operations under the Development Cooperation Technical Assessment Meeting, proposals are Instrument (DCI), the European Development Fund either considered mature enough for submission (EDF), the European Neighbourhood Instrument (ENI) to the Board, may be returned for re-submission and the Instrument for Pre-Accession Assistance at a subsequent meeting, or may be rejected. (IPA) Blending Frameworks, corresponding to the financing instruments supporting the EU's external The Board is responsible for formulating opin- policies. Through their corresponding facilities, the ions on individual blending operations. It is Blending Frameworks cover the countries and the- chaired by the Commission with the participa- matic operations concerned. tion of the EEAS and the EU Member States, as voting members, and the financial institutions Resources for the AfIF are made available from the as observers. Based on Board opinions for the different EU financing instruments (EDF and DCI), in selected proposals, a complementary decision is coherence with the priorities established in the rele- adopted by the Commission. vant programmes, to support national, regional and inter-regional projects in eligible countries in Africa. Secretariat

Project assessment The Secretariat of the EU Blending Frameworks is run by the Commission. The Secretariat and Board opinion supports the management of the EU Blending Frameworks by providing support, including A blending operation needs to be developed by in the assessment process and formulation a financial institution, as it involves the provision of opinions by the Board, coordination of of a loan or other type of financing from one or consultations and organisation of technical more financial institutions. assessment and Board meetings, reporting, dissemination of information, sharing of best The Lead Finance Institution is in charge of practices and training. The Directorate-General submitting a project proposal via an application for International Cooperation and Development form, which is discussed and assessed at an AfIF (DG DEVCO) provides support to the DCI and Technical Assessment Meeting. These meetings EDF Blending Frameworks. AfIF ANNEX LIST OF APPROVED PROJECTS (ALL FIGURES ARE IN € MILLION) Amount to be Tendering of EU Consortium of Total project AfIF reported as Climate financed project EU financed TA/ Year of Rio Finance cost contribution Action support components Construction of the Guarantee/Risk Country approval Title of the project Marker Institutions Sector (€ million) (€ million) (€ million) Type of AfIF support Status started? project started? Capital started?

Transport Facilitation Programme on the AfDB, IDA/WB, Cross-regional 2016 Bamenda-Enugu Corridor - Cross River Transport 391.40 24.50 9.80 Investment Grant Approved No No No JICA Border Bridge

Sovereign loan Ivory Coast for renewable Ivory Coast 2016 AFD Energy 129.2 24.00 9.60 Investment Grant Approved No No No electricity access, production and distribution

Port of Mombasa Berths Upgrade and Investment Grant/TA/ Kenya 2016 EIB, AFD Transport 172.58 19.11 7.64 Signed No No No Rehabilitation others

Madagascar 2016 Ring road in Antananarivo AFD, EIB Transport 62.8 4.80 0.00 TA Signed No No No

Antananarivo Integrated Drainage and Madagascar 2016 AFD Water/Sanitation 34 2.82 2.82 Investment Grant/TA Approved No No No Sanitation Programme

Enhancing Vocational Training delivery for Nigeria 2016 AFD Energy 50.7 8.00 3.20 TA Approved No No No the power sector in Nigeria

Nigeria 2016 SUNREF Nigeria AFD Energy 134 10.00 10.00 Investment Grant Approved No No No

Regional Central Central Africa Backbone Project – 2016 AfDB ICT 147.913 17.47 6.99 Investment Grant/TA Approved No No No Africa Central African Republic Component

Regional West 2016 Rosso Bridge Construction Project AfDB, EIB Transport 90 20.00 8.00 Investment Grant/TA Approved No No No Africa

Project to Rehabilitate the Lomé-Cotonou Regional West Highway and Facilitate Transport on the AfDB, EIB, WADB, 2016 Transport 147.02 20.00 8.00 Investment Grant/TA Approved No No No Africa Abidjan-Lagos Corridor, Phase 2; and to EBID, IDB Protect the Togolese Coast from Erosion

Project to Rehabilitate the Gounghin-Fada Regional West 2016 N'Gourma-Piéga-Niger Border Section of the AfDB, JICA Transport 177.5 28.00 11.20 Investment Grant/TA Approved No No No Africa CU2a Corridor

Road Improvement and Transport Facilitation Regional West 2016 Project on the Bamako-Zantiebougou- AfDB Transport 209.82 28.00 11.20 Investment Grant/TA Approved No No No Africa Boundiali-San Pedro Corridor

Regional West Electrical Network Interconnection in Guinea AfDB, WADB, IDB, 2016 Energy 329 30.00 12.00 Investment Grant/TA Approved No No No Africa and Mali EBID, AFD, others

Regional West Coyah-Forecariah-Farmoreah Road 2016 AfDB Transport 75.1 29.60 11.84 Investment Grant/TA Approved No No No Africa Rehabilitation Project

Regional West Study for the Abidjan-Lagos corridor highway 2016 AfDB Transport 14.37 9.13 0.00 TA Approved No No No Africa development project

Senegal 2016 Senegal Electricity Modernisation EIB, WB Energy 158.98 13.08 0.00 Investment Grant Approved No No No

TOTAL 2,324.38 288.50 112.29 AfIF OPERATIONAL REPORT 2016 39

LIST OF APPROVED PROJECTS (ALL FIGURES ARE IN € MILLION)

Amount to be Tendering of EU Consortium of Total project AfIF reported as Climate financed project EU financed TA/ Year of Rio Finance cost contribution Action support components Construction of the Guarantee/Risk Country approval Title of the project Marker Institutions Sector (€ million) (€ million) (€ million) Type of AfIF support Status started? project started? Capital started?