African Development Bank
Agricultural Finance and Rural Development
20181Investment Opportunities
2

ENCOURAGING FACTS – A RISING CONTINENT

3

ENCOURAGING FACTS – DEMOCRACY More than 100
elections in the last 5
years which have led todemocratic transitions
in several countries;
e.g. Burkina Faso,
Angola, etc.
 Rise of civil society
organizations as major
actors in the public
space.
Source: World Bank, 2017

4

ENCOURAGING FACTS – SUSTAINED GROWTH
Sustained economic growth in some countries (17 countries with growth rates above 5% in2017) and sometime outperforming the rest of the world (7 countries among the 20
world’s fastest growing economies)
10
8
6
4
2
0
2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

-2
-4
-6

Asia and Pacific

AfricaLatin America and the Caribbean

Source: IMF, WEO, 2017

World

European Union

Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
16
17
19
20

Country
Macao SAR

Ethiopia
Côte d'Ivoire
Nepal
MyanmarBangladesh

Djibouti
Cambodia
Lao P.D.R.
China, People's Rep. of

SenegalGuineaIndia
Philippines

Tanzania
Turkmenistan

Burkina Faso
Vietnam

Real GDP
Growth Rate
13.4
8.5
7.6
7.5
7.2
7.1
7
6.9
6.9
6.8
6.8
6.7
6.7
6.6
6.5
6.5
6.4
6.3

5

ENCOURAGING FACTS – EXPORTS & DIVERSIFICATIONPart of this growth is due to commodity prices,
yet many other performers without oil or othermineral wealth: e.g. Cote d’Ivoire, Ethiopia,
Rwanda, Senegal, etc.

Source: UNCTAD, 2013

Source: Deloitte, 2015

Increasing exports flows towards emerging markets (e.g.
China, India, Turkey, Brazil…) and within Africa (17% of
6Africa’s total exports in 2015, up from 10% in 1995)

ENCOURAGING FACTS – DEMOGRAPHICS
Potential demographic
dividend:
 Today: 1 billion youth

By 2050: close to 2
billion youthIn the meantime, labor
force in other parts of
the world will decline

40% of Africans live inurban areas in 2014; thisfigure will reach 56% in
2050
Source: Visual Capitalist, 20167

ENCOURAGING FACTS – THE RISE OF THE MIDDLE CLASS Average income increased by about 30% over the past 10 years (as compared
to 20% of decrease between 1980 and 2000)

 By 2060, 43% of Africans will belong to the middle or upper classes,
implying considerably higher demand for goods and services

Source: Pwc, 2017

Source: Brookings 20168

ENCOURAGING FACTS – RETAIL & CONSUMPTION
By 2030, combined consumer and business spending is expected to reach$6.7 trillion
2017 Global Retail Development Index

African retail value “stages”

Source: Global Retail Index, 2017
Source: Global ATKearney, 20179

Investment Opportunities in Agriculture
10

AGRICULTURE IN AFRICA – UNTAPPED MARKET
Africa contains 65% of the world’s
most arable uncultivated land, and it
has an abundance of fresh watersupplies.

Food grain production growth potential:
Actual 1980-2004 and projected 2005-2050(percent change).
150

160

80

140

75

120
100

44

80 64

80

40

60 47

21

60
40

Asia
South
America20
01980-2004

AfricaEuropeNorth
America

2005-2050

11

African Agriculture – A US$ 1.0 trillion opportunity
African food and beverage markets

Today:
US$ 300 billion

expanded access to capitalelectricity and infrastructure
better technology
irrigated land
partnership between government and agribusiness

2030 Potential:
US$ 1.0 trillion

The continent is bursting with potential:
•

•
•
•

Almost 50% of the world’s uncultivated land, which is suited for growing food crops is in Africa, comprising as many as 450 million
hectares that are not forested, protected or densely populated
Africa uses less than 2% of its renewable water sources, compared to a world average of 55%
Yield gaps are as wide as 60-80% compared to other regions
Post harvest losses run 15 to 20% for cereals and higher for perishable products

Farming is the primary source of food and income for Africans and provides up to 60% of all jobs on the continent:• Africa currently spends US$ 35-40 billion on food imports

A vibrant, sustainable, inclusive and resilient agriculture sector is vital for Africa’s economic future

12

There is an exciting opportunity, as well as an imperative, to drive an inclusive and sustainabletransformation of agriculture in Africa• African Development Bank estimates1 suggest
import bill could rise from $35bn in 2015 to $111bn
in 2025, which will be both fiscally difficult for
African economies to sustain, and creates increased
exposure to foreign exchange risks and foodinsecurity.
• Taking a more holistic value chain approach is an
opportunity to transform agriculture, in a way thatdelivers broad-based and inclusive economic value.
The role of agriculture as a way of life is now shifting
to a source of broad based economic development.
• What is required is substantial improvements in
productivity and downstream activities to absorb
and add value to agricultural production, the right
regulatory conditions and sufficient liquidity tofinance this transformation.

African agriculture faces a broad set of challenges,
including (but not limited to) low productivity
Average yields across Africa versus best practice2; mT/(hectares oranimals), 2013
Africa25.4

Best practices2

19.2
9.4

10.0

8.3
2.0

Cassava Maize

3.6

2.5

1.2

Rice

Soy

0.5 1.3

0.2 0.4

0.5

Cocoa

Beef

Milk

If left unaddressed, the trajectory is likely to beunsustainable – for example in terms of imports
Net imports, $bn, 2010-2025

+12%
CAGR

+15%
CAGR

$111.0bn$72.1bn$20.5bn2011$35.4bn

2015

2020

((1) ‘Feed Africa – Africa’s Agricultural Transformation, African Development Bank, 2016; (2) Best practices = average of top 10 countries in the world by yield in the commodity; Notes: Figures in
Billions USD and exclude intra-African trade; . Source: IFPRI; IITA, AFDB, Dalberg analysis

2025

South-South cooperation & investment in Africa is accelerating
China: total direct investment by Chinese companies in Africa by 2016 reached almost US$16 billion and President Xi
Jinping recently announced a commitment of US$60 billion in major capital projects which are tied to developing
local economic capacity. Agriculture investments are targeted to Zambia, Zimbabwe, Mozambique, Tanzania, Nigeria
and Sudan. Mainly for the production of grains, cash crops, animal husbandry, fisheries, forestry, agro processing andcommodity trading, but also including agricultural technology development and training centers (23 across Africa).
India: Indian investment in African agriculture has been specifically supported by lines of credit from India’s Export-Import
Bank. For example, Prime Minister Modi recently announced US$ 10 billion in concessional credits to Africa for
the upcoming five year period and nearly 80 Indian companies have invested approximately US$ 2.5 billion in
Africa’s agriculture sector. Indian agribusiness is notably involved in selling modern farm technology, such as irrigation
pumps, tractors and harvesters, and / or investing in large scale farms (Ethiopia).
.

How to leverage South-South cooperation and major capital investment flows tofacilitate and accelerate private sector investment in African agribusiness?

14

Intra-African investment is trending up but much larger growth opportunities lie aheadfor African businesses positioned to lead the expansion
FDI in Africa originating from African countries, has largely been driven by intra-continental investors in South Africa, Morocco, Kenya, andNigeria
More intra-African investment is required to enable regional trade to flourish – investments yield complementary assets and build equity in
African brands. African investors are also more likely to have competitive advantages: proximity, managerial and operational expertise15

ENCOURAGING FACTS – DIGITAL & MOBILE TECHNOLOGY
Africa Mobile Technology Growth Forecast

Source: ATKearney, 2015

16

FROM AGRICULTURE TO AGROBUSINESS: NEXT STEPS

10.0
SOY

COCOA

BE E F

0.5

0.4

0.2

1.3

0.5

RICE

3.6

2.5

CORN

1.2

2.0
CASSAVA

8.6

9.4

19.2

25.4

Low Productivity – Average Yields in Africa vs. Best Practices(Tons/Hectare or Animals, 2013)

MI LK

 Africa spends far too muchon food imports –approximately US$35
billion in 2016. Leftunchecked, the figure is
expected to surge to
US$110 billion by 2025
 Low value addition toagricultural commodities
and primary production
 How to create acompetitive environmentthat encourage private
investors and businesses
to boost food production.
17

Challenges

18

CHALLENGES – FRAGILITY & VULNERABILITY
PeoplePeople ininhumanitarianneedneedhumanitarian
anddisplaced
displaced
and

73m
73m
Ebola epidemic(2014/2015)

5 countries hit
and $6bn
economiclosses for SSA
Source: World Bank, 2017

Terrorism
Killed more than
22000 people across
AfricaFavorable weather, ample supply, and low prices do notguarantee food availability everywhere: Drought conditions have caused crops failures inparts of Ethiopia, Somalia and Kenya and led tosevere food shortages
 Conflicts in South Sudan, Yemen and Nigeria have left
millions in need of emergency food19

CHALLENGES – POVERTY & INEQUALITY
Poverty decreased inrelative terms but not in
nominal terms, i.e.
number of poor in Africa
is close to 500M

Sub-Saharan Africa
HDI average still low at
0.523; over 60% ofAfrican countries have alow HDIBy 2030, nine out often low-income
countries will be in
Africa20

CHALLENGES – DEMOGRAPHICS
Risk of missing the demographic
dividend: Between 12-14m youth enter
the labor market each yearOnly 2-3 of those find a job

Professional training andeducation not properly
designedImpact of 4.0 Industrial
Revolution?
Source: Visual capitalist, 201621

CHALLENGES – BUSINESS ENVIRONMENT
 Progress in overall easeof Doing Business
Rankings remains slow

 Power outages among
the highest in the world Attracting FDI into
diversified and higher
value-added sectors stilla challenge African firms are someof the most highly taxed
in the world
Source: Workd Bank, 201622

CHALLENGES – ACCESS TO INFRASTRUCTURE
 Still low access to basic
infrastructure Several critical corridors forregional integration still to beaccomplishedSource: Deloitte, 2014

Source: Deloitte, 201423

CHALLENGES – NO VALUE ADDITION•

In African countries lessthan 30% of harvests areprocessed into value added
products

•

30%

60%

•

•

$40

Employs 60% of its
population•

30%

Only $40 of value areadded to one ton ofprocessed products in
AfricaIn developed countries,
over 98% of harvests areprocessed into value added
products•$180 of value are added to
one ton of processed
products in developed
economies

Contributes to 25-40%
of GDP

98%

Data from ECOSOC, 2003

$180

Agricultural Value Added per worker correlateswith Per Capita Gross National Income

Agricultural Value Added, USD per Worker (2015)

Europe & NA

World Bank data, 2014-2015

Asia
LAC

Color legend:

AfricaGross National Income, USD per Capita (2015)

AfricaAsia
EuropeLAC
North America
OceaniaCHALLENGES – DEBT SUSTAINABILITY
Since 2014, 14 countries experienced
a deterioration in their DSA; 9 of
those are now at high risk of debt
distress or in debt distress

DSA Traffic
Light

Source: IMF, World Economic Outlook, October 20172014 2018 Variation

Low risk ofdebt distress

13

5

-8

Moderate risk ofdebt distress

17

17

-0

High risk ofdebt distress

7

12

+5

In debt distress

2

5

+3

26

New Ways of Investing inAgriculture27Addressing this gap requires moving beyond traditional ODA, and mobilizing sources from theprivate sector
Across all sectors (including agriculture)
private sources of finance for development far
exceed and are growing faster than ODA

ODA for agriculture is slowing down, and is
not sufficient to meet the gap in financing
needs

Select financing flows to developing countries$bn (current prices), 2000-15

Global ODA for Agriculture$bn, 2006-14

Sufficient sources of private capital exist, evenjust in Africa alone, that could potentially bemobilised to address the financing gap
NOT EXHAUSTIVE

+2%

+29%

3.9

5.3

9.7 9.3 9.2
8.3 7.5 8.7
6.5

2006 2007 2008 2009 2010 2011 2012 2013 2014

• Overseas Development Assistance has
been growing at 2% per year since 2008 toreach ~$170bn2 by 2016, compared with~12% per year from 2000-2008.
• Conversely, private flows (at market terms)
and remittances are increasing. Excluding
the downturn in 2015, private flows havebeen growing 20% per year since 2008.
Combined, these sources have reached~$600bn• These trends are also true for agriculture:
ODA for agriculture globally grew
relatively rapidly, at almost 30% per year
from 2006 to 2009, but since then has
grown only 2% per year.

• ODA cannot be expected to fully
meet the financing gap

Institutional
Investors (e.g.
Pension Funds,
SWFs)

In Africa, Pension Funds andSovereign Wealth Funds have$160bn and $360bn AUM
respectively. Beyond Africa,
pension funds in Europe arestarting to increase exposure to
African agriculture

Commercial
Lenders

Currently lending $660m
annually, 4.8% of ~$14bn;room to increase exposure
further, especially given ag
sector share of GDP

Conventional PE& VC$25-35bn is available acrosscommercial returns seeking PE
and VC funds with a regional
focus on Africa, representing<2% of the emerging market
industry

Impact funds~$8bn targeting Africa, raised
across 80 funds in recent years3

Value Chain
Actors, Other>$3bn4 from value chain actors,
other non-traditional sources(e.g. remittances)(1) Data is preliminary, does not include FDI; (2) Includes other official flows, although the total figure is dominates by ODA; (3) assumes 40% of impact funding is focused on nor can be leveraged
for Africa investments, out of a total of $19bn; (4) $3bn is amount of lending to smallholders, does not include financing to other actors in value chains (e.g. to agro-dealers, processors etc)
Sources: OECD stat; World Bank “Migration and Remittances Data” 2015;

But providers of finance observe a range of finance-related bottlenecks and challenges, leading to aperception of the sector as high risk and constraining their appetite to supply financeReal and Perceived Challenges to Investing in a Value Chain Actor
Example Challenges
Challenges in the
Enabling
Environment

Challenges in
Serving Agriculture
as a Sector for
Investment

Challenges affecting
the performance andinvestmentworthiness ofUnderlying Farmers
and Agribusinesses

Example Interventions

Policy / Regulation

Regulation and/or unpredictable policy interventions
constrain liquidity, prevents market formalization

Increase alignment in policy & regulation to meetinvestor requirements; incentivise good policy

Enabling Sectors

Insufficient interface with surrounding sectors (e.g.
physical & digital connectivity, technology, data)

Identify & build links between investments inenabling sectors (e.g. technology)

Awareness

Lack of knowledge across value chains and typicalagri-business economics

Capacity

Investments processes optimised for other sectors
and cannot support agri-businesses

Product Terms

Prohibitive material collateral requirements; lack oftrust in financial reporting for cash flow lending

Risk Management

Lack of understanding drives inflated risk perception;lack of appropriate risk mitigation tools

Liquidity

Low allocation of liquidity for agribusinesses; higher
returns often available from lower risk sectors

Cost to Serve

Rural MSMEs are widely dispersed, supported bypoor infrastructure and & expensive to served

Awareness

Insufficient agronomic, business, market and/or
financial knowledge

Capacity

Farmers and agribusinesses unable to meet lender
standards

VC linkages

Poor access to inputs; volatile volumes for each stage
in chain; volatile prices; too many intermediaries

Engage and link actors in the value chain; offtakeagreements

Agronomic / Climate

Changing productivity and inputs required;unpredictable volume

Support introduction of resilient practices; offer
supporting mechanisms (e.g. insurance)

Source: interviews; Dalberg analysis

Technical assistance on value chains, how to
identify & assess / underwrite opportunities, andproduct design

Focus of this report:
Offer supporting mechanisms to efficiently
redistribute risk and support returns (e.g.
guarantees, concessional capital)
Find aggregators / work with value chain actors;
use technology to reduce costs

Technical assistanceA broad set ofinterventions are neededto address them,including:- Policy & advocacy- Supporting sector
investments- Technical assistance toproviders of financeand underlying farmers& agribusinesses- Using technology andother methods toreduce costs to access
farmers- Innovation in inputs- Supporting financial
mechanisms
This report focuses on
financial mechanisms,
but this is only one of abroad set of interventions
needed.

New possibilities to bring multiple different types of providers of finance together, with different
objectives, and risk-return appetites

Typicallyseeking nil
returns

Can take diverse range of
positions across risk-return
spectrum

Typically seeking (near) commercial
returns

Finance providers

Description

Examples• Includes resources from pension funds, unclaimed financial assets authorities, insurance
funds, HNWIs wealth managers. Usually have a cap on investments outside capital
markets• Financing by formal financial institutions whose core business includes lending; primarily
commercial banks and micro-finance banks.

• Pædagogernes Pensionskasse (PBU), PKA
and PensionDanmerk into the Danish
Climate Investment Fund• KCB, Equity Bank, Cooperative Bank, JP
Morgan• Provides investment capital, usually in form of equity or debt with expectations of a
return. Includes private equity, venture capital funds.

• Standard Chartered PE; Carlyle Group;
Leapfrog; Shore Capital

Corporates, Value
Chain Actors• Private companies typically participating in value chains themselves and providing value
chain financing, or otherwise able to derisk finance (e.g. offtake agreements)• Buyers / traders: Cargill, Olam, Ecom
• Food companies : Starbucks, Nestle

Financial Instrument
Providers• Storebrand
Guarantco,
Authority

Government• Focused providers of specific instruments to support the reallocation of risks; includes
insurers, hedging platforms / swaps providers, and players that either solely or mostly
focus on providing guarantees• Formal and informal entities that organize farmers and provide multiple services, which
may include the provision of or on-lending of credit to individual farmers as well as
collective investments• National government public funding either through budget allocations or ministerial
allocations to programs/initiatives

Impact Investors &Catalytic Funds• Private funds offering debt or equity, with a focus on the effectiveness of theirinvestments in driving impact, and with typically a secondary interest in return. Includes
impact-first funds, high net-worth individuals or family offices

Development FinanceInstitutions• Provide financing for development, usually at terms that are significantly concessionalversus commercial providers

Philanthropy &Foundations• Seek to achieve impact, primarily through provision of grants, for private philanthropy andcharities. Foundations may deploy a range of financial instruments

Multi- & Bilateral
Donors• Provide resources for development, usually in the form of grants. Majority tends to beprovided with no expectation of return of capital. Can also provide conditional funding(e.g. performance based) and seed grant funding

Institutional investors
Commercial Lenders
Private Sector Funds(PE and VC)

Farmers
Organisations

Source: Dalberg analysis

Life
Insurance,
TCX,
US Development Credit• Faso Jigi (Malawi)
Most national governments• Larger pooled vehicles: AATIF, AgriFI• Niche / local: Althelia, African Ag Fund
• Impact / frontier funds: LafCo• Multilaterals: AFDB, EIB, IFC• Bilateral: FMO, KfW, OPIC, Proparco, BIO,
CDC
• BMGF, Omidyar Network, Lundin
Foundation• USAID, DFID, DEG, SIDA

The landscape of finance tools is diverse; we focus on 3 main categories
Categories

Description• The most frequently used tools are guarantees, which
ensure that if a negative event occurs, the guarantor willtake action – within this, credit guarantees are the mostcommon. exist, but are less common in blended financefor agriculture

Risk
policies – especially weather and crop
mitigation • Insurance
insurance – are less common but growing. Currency
hedges and interest rate swaps also protect against
tools2
specific risks

Typical tools used

Guarantees
Insurance
Securitization
Derivatives• Often address generalcredit risk, especiallythrough credit
guarantees andsecuritization• Derivatives and specificinsurance andguarantee products
target specific risks suchas political, currency,
interest and commodity
price risk

Structured debt
capital and grants
Structured / longterm equity anddebtOther Direct Debt
instruments (e.g.
local currently,
contingent liquidity)
(Climate finance1)• Typically combine a
set of instruments ina pooled investment
vehicle to address abroad set of risks
required to catalyze
private sector finance• Seed / early stage &patient capital can
specifically target
business model risk
• Currency risk

• Securitization, especially in the form of warehousereceipts are also growing, and provide alternative sourcesof collateral to improve bankability

Directfunding• Provide capital for target enterprises, usually with a tiered
structure that allow more junior capital to support therealization of commercial risk-adjusted returns of senioror commercial investors• Addressing more fragmented, often smaller and higher
risk agri SMEs and farmers often requires using patientand highly concessional capital and/or grants, plus risk
mitigation tools and technical assistance• Addressing larger investment opportunities (often further
downstream to production, e.g. in logistics, warehousing,processing and international trading) may require
addressing real and perceived business model and market
dynamic risks, typically using mezzanine finance,
subordinate loans / long-tenor loans, and may include
guarantees

Main risks addressed

1. Climate adaptation finance cuts across other sources of direct funding, but typically also requires specific TA and capacity building to be able to ensure projects and/or funds can access such funding; 2. Some risk mitigation tools – especiallyhedging instruments such as swaps – are not necessarily blended finance themselves but form part of a blended finance intervention overall Source: OECD / WEF “A primer on blended finance” 2015; interviews; Dalberg analysis

AfDB Overview

32

AfDB IN NUMBERS

Source: AfDB Annual Report, 2016

33

AfDB STRATEGIC FRAMEWORK

34

AfDB STRATEGIC FRAMEWORK – OBJECTIVE & TARGETS BY 2025

approx.
USD 170
billion per
annum

35

Feed Africa: AfDB’s strategy for
Africa’s Agricultural Transformation
KEY OVERARCHING GOALSTARGET:
Achieve Self-Sufficiency & Market Surplus

18 Priority Commodity Value Chains
across 5 Agro-Ecological Zones (AEZs)
16 Key Flagship Initiatives

In

1. Contribute to the end of extreme poverty
2. Eliminate hunger and malnutrition
3. Become a net exporter of agricultural commodities
4. Move to the top of key agricultural value chains

BUSINESS DELIVERY MODEL
Move closer to our clientsto enhance delivery

Reconfigure HQ to support theregions to deliver better outcomes

Strengthen the performance culture
to attract and maintain talentStreamline business processes topromote efficiency and effectiveness

Vice Presidency Power, Energy, Climate
and Green Growth
Vice Presidency Agriculture and Social
Development
Vice Presidency Private Sector,
Infrastructure and Industrialization

Vice Presidency Agriculture and Social
Development

Chief Economist/Vice Presidency for Economic
Governance and Knowledge Management

Improve financial performance& increase development impact

Vice Presidency
Regional Development
and Business Delivery• Five Regional
Development & Business
Delivery Hubs (Central,
East, North, South andWest) led by Director
Generals• Fiduciary Safeguards,
Procurement Policy andInspection• Transition States
Coordination
37

FINANCING INSTRUMENTS & INITIATIVES

ADF

•
•
•
•

Performance-Based Allocation
Regional Operations Envelope
Transition Support Facility
Guaranty & credit enhancement
products

MAIN BANKGROUP’SFINANCING
WINDOWS

NTF

ADB• Sovereign• Non-Sovereign• Guaranty products,
Syndication
38

Agriculture Finance and Rural
Development Department

39

A Focused Approach on Integrated Commodity Value Chains
Wheat in North Africa
Maize, soybean,
livestock, and poultry
across the Guinea
Savannah

Sorghum, millet,
cowpea, and livestock
across the Sahel

Rice in West Africa

Cassava in humid andsub-humid zones

GUIDING PRINCIPLES•••

Prioritize agricultural value chains of highest potential
in each AEZ
Address all constraints (policy, infrastructure,inclusivity)
Ensure private sector participation to drive value
addition and marketing

Tree crops(including
cocoa,
coffee,cashew, andoil palm),horticulture
and fishfarmingacross all of
AfricaAgricultural commodity value chains and agro-ecological zones targeted by the Feed Africa

EXPECTED RESULTS

Food self-sufficiency(rice, wheat, maize, fish , soybean,palm oil)Creating a food secure Sahel(sorghum, millet, livestock)
Realizing the potential of the Guinea
savannah(maize, soybean, livestock)
Moving up the ladder of global
agricultural value chains (cocoa,
coffee, cotton, cashew, cassava)WHO WE ARE – Agricultural Finance and Rural Development
Agriculture is a major strategic priority for the AfDB.
The Agricultural Finance and Rural Development Division has the mandate to achieve the Feed
Africa Initiative’s goals by working with and providing financing to the public and private sector
to improve agricultural efficiency, output, and access to markets throughout value chains.
Feed Africa: a new way forward for food and agriculturei.

Contribute to eliminating extreme poverty in Africa by
2025

ii.

End hunger and malnutrition in Africa by 2025

iii. Make Africa a net food exporter

iv. Move Africa to the top of export-orientated global value
chains where it has comparative advantage
41

WHY AfDB – We blend financial clout with unique additionality
SectorExpertise

Country Risk
Mitigation

Unparalleled
Networks

Access to Full
Cycle Capital

Patient Capital••

We have extensive knowledge gained from long-term sector engagement
Our staff includes in-house agricultural experts and regulatory experts, all with years ofexperience in Africa, who provide technical advisory assistance and assess regulatory riskin order to structure deals accordingly•••

We have very strong government relations throughout Africa and beyond
We play an honest broker role
We actively pursue synergies with other divisions, departments, and regional offices of
the African Development Bank Group so that we can address risks holistically•With an unparalleled network of stakeholders throughout the region and across theglobe, we can introduce companies to co-investors, potential clients, and other strategic
partners•

As the African Development Bank’s Agricultural Finance solutions’ division, we canleverage AfDB funds and seamlessly deliver financial products according to a company’s
maturity or a project’s stage••

Long-term investment horizons do not scare us
Impact capital42

WHY AfDB – We have a wide range of deal-structuring options
Special Funds
Technical Assistance

EquityMezzanine

Senior Debt andStructured Products

43

•
•
•

Grants for early stage project development and capacity building support
SME linkages programs with advisory services
Climate finance facilities•••

Typically up to 25% stake for the African Development Bank’s accountUsually long-term investor with no board seat
AfDB currently holds $43.4 billion in assets and a committed portfolio of $1.1 billion in
equity investments.

••

Subordinated loans, income participating loans
Convertibles and other hybrid instruments

•
•
•
•
•

Fixed-spread loans in EUR, USD, ZAR, JPY, and in some approved local currencies
Long maturities (up to 15 years, with the possibility for longer terms if approved)
Grace periods up to 5-years
Commercial rates (base rate fixed or floating + credit spread)
Swap and risk management products

OUR TRACK RECORD – the AfDB is a seasoned partner
From 2007 to 2017, the AfDB invested about US$ 500 million in private-sector agribusinessPrivate-Sector AFDB Investments in agribusiness, 2007 - 2017 (US$)
600,000,000.00
500,000,000.00

400,000,000.00
300,000,000.00
200,000,000.00

100,000,000.00
2007

2009

2010

2011

Senior loans

2013

2014

2015

2016

Equity fundN.B. These figures only capture Non-Sovereign Operations (NSOs) in the agribusiness sector.
The AfDB also has Sovereign Operations in Agribusiness, which are not part of its Private Sector portfolio.

44

2017

Total

OUR TRACK RECORD – Case Study: Export Trading Group
Direct loan to Export Trading Group (ETG)2016•

US$ 100 million senior loan to finance part of ETG’s Agricultural Investment Program (AIP) in Africa topromote employment for youth and women, and to adopt an integrated value-chain approach thatemphasizes access to regional and global markets•

AIP consist of investments in: (i) Fertilizer projects; (ii) Processing Plants; (iii) Multi-commodity
warehouses; and (iv) Silos•

Enhancing the efficiency of agricultural value chains by increasing the infrastructure base and capacity forvalue addition•

Contributing to industrialization with new processing plants•

Contribution to smallholders access to inputs (seeds and fertilizers), mechanization and access tointernational markets thereby ensuring significant revenues to farmers
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OUR TRACK RECORD – Case Study: Olam Africa
Senior Loan to OLAM Africa Investment Program

2017

•

US$ 107 million corporate loan to finance a portion of OLAM’s operations in Africa•

Part of a USD 200 million investment program (OAIP II) that covers two sub-projects, one for creationof industrial scale palm oil refineries in Central and/or West Africa and another for development of
600,000 tons per annum of high quality poultry and fish feed and a million hatching eggs every week.

•

Creating better market access for smallholders and a more robust supply chain.

•

Improving macroeconomic resilience through import substitution in Nigeria and increased exports in
Gabon

•

Strengthening economies through diversification by increasing the manufacturing sector’s share ofGDP

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WORKING WITH AfDB – Eligibility Criteria• The Project Company must be incorporated in an African country;• The project must be environmentally sound and comply with AfDB's
environmental guidelines and the regulations of the respective country;• Sponsors must have satisfactory track-record and financial capacity;• Evidence of adequate management skills;• The project must be financially viable;• The project must aim to maximize development impact in line with the country’s
strategic priorities.

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WORKING WITH AfDB – Products for the Private Sector
Loans

•
•
•

Non-sovereign-guaranteed Loans (Private Sector)
Local Currency Loans
Syndicated Loans – Parallel co-financing and A/B structures

Guarantees••

Partial Risk Guarantee
Partial Credit Guarantee

Equity••EquityQuasi-Equity

Risk
Management••

Interest Rate Swaps
Currency Swaps

Trade Finance•••Risk Participation Agreement
Trade Finance Lines Of Credit
Soft Commodity Finance Facility

Others••Special Funds
Technical Assistance••Commodity / Index Swaps
Interest Rate Caps and Collars

48Origination• Business Development• Eligibility assessment
Exploratory review• Early-stage review; signature of Non-Disclosure Agreement, and reception of questionnaire from client• Departmental and complex clearance of Preliminary Evaluation Note (PEN)
Concept review• Preliminary analysis• Preparation of Project Concept Note (PCN) at Credit Risk Committee (CRC), Additionality and Development
Outcomes Assessment (ADOA) rating, Environmental and Social rating

PREPARATION PHASE

3 TO 6 MONTHSIDENTIFICATION PHASE

WORKING WITH AfDB – Investment Cycle

Final review• Project Appraisal: Due Diligence mission (DD) with Credit Risk Officer, Lawyer, ADOA Officer, Modeler, E&S
Officer and Procurement Officer• Clearance of Project Appraisal Report (PAR) at Credit Risk Committee (CRC), Operations Committee (OpsCom)
and Country Team (CT)Documentation, Closing, and First Disbursement• Conclude negotiations• Finalize Term Sheet• Conclude legal documentation• First disbursement and Handover to Portfolio Management
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Thank You
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