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AFRICAN DEVELOPMENT BANK

AFRICAN DEVELOPMENT BANK . Sierra Leone Mining, Energy / Oil & Gas Infrastructure Indaba 2013 Fr eetown – July 2 nd , 2013. Building today, a better Africa tomorrow . Content. AfDB at a Glance Infrastructural Development in Africa 3. AfDB and Infrastructure Development

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AFRICAN DEVELOPMENT BANK

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  1. AFRICAN DEVELOPMENT BANK Sierra Leone Mining, Energy / Oil & Gas Infrastructure Indaba 2013 Freetown – July 2nd, 2013 Building today, a better Africa tomorrow.

  2. Content AfDB at a Glance Infrastructural Development in Africa 3. AfDB and Infrastructure Development 4. AfDB: Mining, Oil and Gas Development Approach Africa50fund: An Innovative solution 6. Case Studies

  3. AfDB, a Development and Business Partner • The premier Development Finance Institution in Africa • Established in 1964 • Key Facts • AAA credit Rating • Authorized Capital: USD105 billion • Shareholders: 53 African countries • 24 Non African countries

  4. Two lending windows: Public & Private. Public Window Governments or state owned enterprises Sovereign Concessionary Private Window Privately owned enterprises or state owned enterprises autonomous & financially strong Non-Sovereign Commercial Recipient Guarantee Financial terms

  5. Bank Group Strategy 2013 - 2022 Two objectives to support transformation Three areas of special emphasis Inclusive Growth Five core operational priorities Fragile states A continuum & regional approach Age Infrastructure Development Regional Integration Private Sector Development Governance & Accountability Skills and Technology Geography Gender Agric. & food security Supporting value chain Green Growth Gender Economic empowerment Legal & property rights Building resilience Sustainable infrastructure Managing natural resources

  6. Infrastructure Deficit • Africa’s biggest challenge remains the lack of adequate infrastructure • Energy & Transport sector are most affected • Bridging the continent’s infrastructure gap requires US$94bn annually over 10 years • Africa spends 4% of its GDP on infrastructure compared to China’s 14% • Africa can be boosted on average by about 2% per annum if infrastructure gap is bridged

  7. Examples: Energy and Transport Deficits • Energy • 600 million people in Africa lack electricity connection • 85% of rural Africans continue to burn biomass • Energy cost 14c per KW-hr against 5c – 10c in developed countries (Sierra Leone more) • Transport • 33% of rural population have access to roads • Only 25% of road network in SSA is paved • Cargo dwell time averages at 20 days in SSA against 3 – 4 days elsewhere

  8. The Bank’s Contribution to Infrastructure Development Financing Infrastructure development is a high priority for the Bank US$20bn (2006 – 2012) AFDB’S Contribution to Infrastructure Financing 48% of bank’s lending in 2012 “There cannot be true economic transformation in Africa without first addressing Africa’s serious infrastructure deficit in transport, power, water and connectivity” Dr. Donald Kaberuka

  9. PPPs as a solution to Africa’s Infrastructure Deficit

  10. AfDB’s approach to PPPs through its Public & Private Sector Windows The Bank plays as honestbrokerbetween public and private sector agents, fixing beneficiaries at the top of the agenda

  11. Public Sector Support to Infrastructure

  12. Private Sector Financing Instruments.

  13. Investment Framework • Strategic alignment • Country’s national economic and social priorities • Bank’s strategy in the country/region • Commercial viability • Sector’s perspectives • Financial structure • Sponsor’s track record, experience and financial strength • Cash flows • Additionality • Structuring and Operations • Political & financial risk mitigation • Catalytic role • Development outcomes • Job creation, gender effects, local content, households benefits • Fiscal revenues (taxes, royalties etc..) • E&S performance • Private sector development

  14. Mining, Oil & Gas Development Approach • Optimize local valorization and monetization of oil & gas resources • Promote industrial development, providing local value added and transformation • Favor associated gas use through processing/transformation/distribution • Prioritize the supply to local and/or regional markets – import substitution, export • Benefit the local governments and economies • Promote transfer of skills and local training • Foster inclusive growth through local business linkages and communities development programs • environmentally and socially sustainable and viable • Promote CSR programs and adhere to transparency fundamentals

  15. Key Issues / Actions • Align your activities with host government’s long-term economic and political incentives. • SME Linkages programs are the new sustainable paradigm. • Engagement with host communities, government, regulators and NGOs to communicate the value that the project brings to the community is critical. • Investors must be prepared to adopt international best practices to successfully operate in the continent. • Consultation, compliance, inclusiveness and good CSR are the best risk mitigation tools to ensure mining project success.

  16. Infrastructure Financing Gap in Africa he Gap Annual Financing Needs = $95 billion Actual Investment = $45 billion All Together We Must Scale-Up Public Sector $30 billion Innovative Solution Required Private Sector $9 billion Financing Gap $50 billion DFIs $6 billion

  17. Existing Initiatives to support Infrastructure Development • Infrastructure Consortium for Africa (ICA) • Membership on the African side is led by the AfDB • Other membership: G8 countries, WB, AfDB, EC, EIB, Development Bank of Southern Africa • ICA's work in infrastructure covers four sectors: Energy, Transport, Water & ICT • ICA members champion four regional programmes: Horn of Africa Initiative, Eastern & Central Transport Corridors, North-South Corridor and West Africa Power Pool • Act as a platform to increase infrastructure funding • The NEPAD Infrastructure Project Preparation Facility (NEPAD-IPPF) • Volume of fund : US$ 24 million • Assists in preparing viable regional/continental infrastructure projects • Developing partnership for project implementation; • Promoting infrastructure projects and programs aimed at • Enhancing regional integration and trade • EU-Africa Infrastructure Trust Fund • EDF 10 support to fund = EUR5.6bn • Is an EU / Africa partnership on Infrastructure and underpins EU Strategy in Africa • Support Africa’s identify and address the missing links in existing Infrastructure (Soft and Hard)

  18. Existing Initiatives to support Infrastructure Development • Sustainable Energy Fund for Africa (SEFA) • A bilateral Trust Fund administered by the African Development Bank • Partner with Government of Denmark • Support sustainable private-sector led economic growth in African countries through the efficient utilization of untapped clean energy resources • Climate Investment Funds • CIF one of the largest fast-tracked climate financing instruments in the world (USD 6.5 billion). • AfDB is an implementing agency of CIF • CIF supports Africa’s move toward climate resilience • Transformations into clean technology, sustainable management of forests, increased energy access through renewable energy, and climate-resilient development.

  19. Africa50Fund An Innovative Solution For Africa and by Africa 2012 PIDA Declaration by African Leaders Africa50Fund Unlocking private financing and accelerating the speed of infrastructure delivery in Africa

  20. Africa50Fund Funding Equity Tranches + Return – + Risk – BONDS EQUITY

  21. Africa50Fund Leveraging Effect LEVERAGE 10-to-1 Equity Tranches BONDS + Return – + Risk – EQUITY

  22. Africa50Fund Equity Making it Happen… Total Commitment of USD 10 billion Initial Drawdown USD 3 billion Second Drawdown USD 7 billion Total Infrastructure Projects Delivered: USD 100 billion

  23. Africa50Fund Structure • Independent • Agile and flexible vehicle • Own governance and capital structure

  24. Africa50Fund Getting it done with AfDB • Jointly deliver infrastructure investments • Leverage AfDB’s convening power and knowledge • Benefit from AfDB’s extensive presence and sector expertise

  25. Sample of AfDB Investments in the Mining Sector

  26. Sample of AfDB Investments in the Oil/Gas Sector

  27. Sample of AfDB Investments in the Transport & Energy Sectors

  28. THANK YOU Website: www.afdb.org

  29. Nigeria Liquefied Natural Gas Project

  30. Hasdrubal Oil & Gas Field Development Project During the financial crisis, the Bank played a countercyclical role

  31. The Egyptian Refinery Company Project During the financial crisis, the Bank played a countercyclical role

  32. The Rift Valley Trail Project Running from Port in Mombasa to Kampala

  33. The Transnet Railway Project Revitalizing and expand Vital Railway Infrastructure in South Africa

  34. Tunisia - Enfidha international airport Capacity: 7 million passengers per year

  35. Senegal – Dakar Toll Road A Typical Public – Private Partnership in the road sub-sector

  36. Uganda – Bujagali hydro power 250 mega-watts generation capacity & 97km transmission l lines + substation

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