Sub-Saharan Africa INCREASING IMPACT 2006 REGIONAL REPORT 2006 REGIONAL REPORT Sub-Saharan Africa ANGOLA BENIN BOTSWANA BURKINA FasO BURUNDI CAMEROON CAPE VERDE CENTRAL AFRIcaN REPUBLIC CHAD COMOROS DEMOCRATIC REPUBLIC OF CONGO REPUBLIC OF CONGO CÔTE D’IvOIRE DJIBOUTI EQUATORIAL GUINEA ERITREA ETHIOPIA GabON THE GaMBIA GHANA GUINEA GUINEA-BIssaU KENYA LESOTHO LIBERIA MaDAGascaR MaLAWI MaLI MaURITANIA MaURITIUS MOZAMBIQUE NaMIBIA NIGER NIGERIA RWANDA SENEGAL SEYCHELLES SIERRA LEONE SOMALIA SOUTH AFRIca SUDAN SWAZILAND TaNZANIA TOGO UGANDA ZaMBIA ZIMbabWE IFC’S STRATEGY FOR SUB-SAHARAN AfRicA COMMITMENTS (U.S.$ millions) • Increase investment commitments to about $900 million by FY09 Financing for IFC’s own account Syndications • Improve the investment climate; enhance support for small and medium enterprises; and proactively develop large investment projects $900 • Increase emphasis on cross-border activities, with specific attention 700 to the development of financial and physical infrastructure, trade $600 finance, small business competitiveness, and support for global expansion of emerging enterprises 405 445 • Significantly increaseI FC’s reach and sustained impact in frontier $300 countries by integrating technical assistance and investment operations 140 26 $ 0 0 0 0 FY03 FY04 FY05 FY06 OVERVIEW OF IFC AcTIVITY IFC’S LARGEST COUNTRY EXPOSURES FY06 FY05 Committed portfolio for IFC’s own account as of June 30, 2006. Total number of investment projects 38 30 (U.S.$ millions) Total expenditures for technical assistance Nigeria and advisory service projects (U.S.$ millions) $27 $26 FY06 $ 544 FY05 $ 419 South Africa IFC STAFF AND CONSULTANTS FY06 $ 206 Headquarters Field Offices FY05 $ 191 As of June 30, 2006 5 237 Cameroon FY06 $ 190 FY05 $ 121 PROJECT FINANciNG AND PORTFOLIO Kenya (U.S.$ millions) FY06* FY05** FY06 $ 152 Financing committed for IFC’s account $ 700 $ 445 FY05 $ 115 Loans*** 393 357 Mozambique Equity*** 72 36 FY06 $ 121 Guarantees and risk management 235 52 FY05 $ 139 Loan syndications signed 0 0 TOTAL COMMITMENTS SIGNED 700 445 * Includes regional shares of Veolia Water AMI investments, which is officially classified as a global project. Committed portfolio for IFC’s Committed portfolio for IFC’s account 2,033 1,698 account includes regional share of BAPTFF, which is officially classified as a global project. Committed portfolio held for others 168 194 ** Includes regional share of BAPTFF investment, which is officially (loan and guarantee participations) classified as a global project. *** Loans include loan-type, quasi-equity products. Equity includes equity- TOTAL COMMITTED PORTFOLIO 2,201 1,892 type, quasi-equity products. PAGE 2 OLO K A TIM A HETU F S AI Advanced Bio-Extracts Limited works with farmers in Kenya, Tanzania, and Uganda to supply critical active ingredients to the pharmaceutical industry. IMPROVING THE CLIMATE FOR PRIVATE INVESTMENT The Sub-Saharan region has seen six sector investment and better integration IMPROVING ACCESS TO FINANCE consecutive years of GDP growth, of IFC’s investments and technical In Africa, 80 percent of firms are small, including economic expansion of assistance, has led to a substantial and gaining access to financing is an 4.6 percent in calendar year 2005. increase in our business in Sub-Saharan even greater challenge for private National and international efforts to Africa. Commitments in the region companies here than in other emerging increase foreign direct investment have totaled $700 million during the regions. To bridge this gap, IFC and the met with some success, with investment fiscal year, an increase of nearly International Development Association, in natural resources particularly strong. As 60 percent from the previous year, and the World Bank’s concessionary lending a result of high prices for minerals and oil were concentrated in financial market arm, are working together to strengthen and a rise in profitability for investments in and infrastructure projects. IFC’s total local environments for financial markets the extractive and natural resource sectors, portfolio in the region surpassed by enhancing the ability of financial resource-rich nations have dominated $2 billion this year for the first time. institutions to lend profitably to small the region’s recent economic growth. In late 2005, IFC launched the businesses and developing innovative Macroeconomic management in several Private Enterprise Partnership for Africa, ways to supply risk capital. The IDA-IFC large countries has steadily improved, and, or PEP Africa, as its primary vehicle for SME program is being piloted in 10 notwithstanding some continuing problem promoting sustainable private sector African countries: Burkina Faso, Ghana, spots, there is greater political stability, growth. In response to the challenges Kenya, Madagascar, Mali, Mozambique, with fewer conflicts across the region. of the regional investment climate, PEP Nigeria, Rwanda, Tanzania, and Uganda. Intraregional investments, led by South Africa is collaborating with the World The program offers technical assistance, African firms, have increased, as have Bank and African governments to capacity building, output-based grants, investments by firms based in developing streamline business start-up procedures and assistance with regulatory reform. countries outside of Africa. and tax systems, as well as to improve Financial products available include Economic expansion, along with the private sector property rights and performance-based lending, region’s growing appreciation of private women’s access to finance. microfinance, and local currency PAGE 3 2006 REGIONAL REPORT portfolio guarantee products. This About half of IFC’s Sub-Saharan collateral, IFC is increasing its investments program complements IFC initiatives investments are in financial sector projects, in leasing projects as well as its support for trade and housing finance, the and we also support financial sector to private banks that provide alternative pilot SME Solution Centers we have development with technical assistance. means of financing. Commitments this set up in Madagascar and Kenya, and Because some African countries lack year included financing for credit lines and our initiative for small and medium property rights, and local borrowers microfinance facilities for small businesses enterprises in Mozambique. cannot arrange financing without in Kenya, Nigeria, and Uganda. INfrASTRUCTURE INVESTMENTS IFC’s Global Trade Finance Program aims During FY06, IFC committed $185 million to projects in the power, to increase developing countries’ share of water and sanitation, and transportation worldwide trade and promote trade to sectors. To expand the number of viable infrastructure projects in Africa, IFC has and from emerging markets. increased its collaboration with other members of the World Bank Group. IFC L A H BEH S JE Ra GRAPE GROWER EXPANDS BEYOND in other countries across the region gain a black economic empowerment SOUTH AfRicAN BASE by diversifying their risk exposure and project, the Thandi program, which is a developing experience in other markets. joint effort between IFC and Capespan, IFC made a rand-denominated loan IFC’s investment in Karsten also supports South Africa’s premier fruit exporter, equivalent to $7.24 million this fiscal year the continued growth of a successful to help black South African farmers. to Karsten Farms, a leading South African firm, allowing it to increase capacity, Working with a farm involved in exporter of table grapes. The firm is diversify its production base, and work the program, Karsten is sharing using the loan to expand its operations in toward year-round operation. its technical skills and marketing South Africa and establish grape farming In addition to providing financing, experience with small farmers, operations in Egypt. This reflects a trend IFC will help the company implement upgrading the quality of grapes for in foreign direct investment by emerging community programs for HIV/AIDS, export, and training other Africans market firms, known as south-south adult literacy, skills training, and health in international standards for quality investment. African companies investing care. Karsten is the technical partner in control and handling of fruit. PAGE 4 provided advice and technical assistance on the bidding process for the railway network linking Kenya POWER GENERATION IN SENEGAL and Uganda, and we are working with the World Bank’s partial risk IFC played a key role in developing and financing a 67.5-megawatt independent guarantee department to finance power project in Senegal that will provide much-needed capacity to the the new concession. Our support country’s electricity sector. IDA provided a partial-risk guarantee to help a local includes a PEP Africa program that commercial bank provide local currency financing for the project. € maximizes economic links to the IFC’s commitment for 17 million, part of a package of loans from a number Kenyan economy. IFC and the World of development banks, will be used to build a privately run, heavy fuel oil–fired Bank have also worked together to diesel power generation plant outside of Dakar. Intended to provide baseload provide financing combined with capacity, the plant is more cost-effective than other power generation options. technical and policy advice for Power from the plant will be purchased by Société Nationale d’Electricité du infrastructure projects in Cameroon, Sénégal (Senelec), the state electric utility, under a 15-year agreement,