AFRICAN DEVELOPMENT BANK GROUPNON-SOVEREIGN OPERATIONS POLICY

We b i n a r fo r t h e J a p a n e s e P r i v at e S e c t o r o n D o i n g B u s i n e s s i nAfrica
S e p t e mb e r 2 0 2 0

1

Objectives and Guiding Principles

Objective of the Bank’s Non-Sovereign Operations
The Bank’s Non-Sovereign Operations (NSO) refer to financing and investment operations
that are not guaranteed by a state, covering mostly private sector transactions. They also
cover non-sovereign guaranteed financing of eligible public sector enterprises, as well as
financing of regional development finance institutions.

Objective 1• Improvement of the investment and businessclimate.

Objective 2• Development of social and economic
infrastructures and increasing access to reliable, quality
services.

Objective 3• Strengthening private sector enterprises

Nine (9) guiding principles

Ownership

1

2
Clientresponsibility

3

4Development
results &Additionality

5

Relevance toRMCs

Compliance withsafeguards

Effectivepartnerships

Selectivity

6
Reinforcementof markets

78
Financialstrength9

2Main conditions and types of financing

The “main conditions” for the Bank’s involvement in a NonSovereign Operation
1. The borrower is a
private enterprise oran eligible public
sector enterprise.
2. The operation isfinancially sound.

5. Host country has
No-Objection to theoperation.
4. The Bank brings
additionality,
which could beeither financial or
non-financial.

3. The operation
should result insatisfactory
development
outcomes.

Two (2) types of financing

Corporate financing
Eligible enterprises insupport of theirinvestment programs.

(instruments include: senior andsubordinated loans, lines of credit,
agency lines, equity or quasi equityparticipation,
credit or risk guarantees)

Project financing
Specific projects byeligible public orprivate sector
enterprises. (instruments
include: senior and subordinatedloans, credit or risk guarantees,
equity or quasi-equityparticipations)

3

Investment criteria

What we invest in
In principle, all economic sectors and subsectors are eligible for the Bank financing on
Non-sovereign operations terms, except those set out in the Bank exclusion list (e.g.
trade Production or trade in weapons and munitions, Production or trade in any product oractivity deemed illegal under host country laws or regulations or international conventions andagreements, etc.).

Light up andENERGIE, CLIMAT &Power Africa
CROISSANCE VERTEFeedAfrica &AGRICULTURE

AGRO-INDUSTRIES

Industrialize
INDUSTRIES &Africa
SERVICES

Integrate Africa
TRANSPORTImprove the quality
EDUCATION &of life
for theSANTE
people of Africa

FINANCIAL SECTORDEVELOPMENT
ENERGY, CLIMATE& GREEN GROWTHAGRICULTURE &AGRO-INDUSTRIESINDUSTRIES &SERVICESFINANCIAL SECTOR

TRANSPORTEDUCATION ,HEALTH, WATER &SANITATION

Investment Criteria
1. Strategicalignment with theBank and theRMC(s) priorities

The country's economic and social priorities
Bank strategy in the country/region

2. Creditworthiness,
Commercial
viability &Financial
sustainabilityIndustry outlook and market fundamentals
Financial structure
Background, experience and financial strength of the sponsor
Cash flow and rate of return (BP)3. Development
outcomesHousehold benefits and job creation
Governance and fiscal effects
Regional integration and economic resilience
Green growth, environmental, gender & social effects
Private sector development and demonstration effects

4. Additionality

Political risk mitigation
Financial additionality
Improved development outcomesOther key pre-requisites

01PROCUREMENT
The Bank shall agree with the nonsovereign borrower on acceptableprocurement procedures that are inline with well-established private
sector procurement methods orcommercial practices.

02
INTEGRITY & FIDUCIARYSAFEGUARDSThe Bank will not participate in atransaction when, upon integrity due
diligence, it finds that there aresignificant and unmitigated integrity
risks or ethical concerns, or adverse
reputational risks. The Bank will apply
eﬀective KYC due-diligenceprocedures and mechanisms.

03

ENVIRONMENTAL &SOCIAL SAFEGUARDSThe Bank is committed to making
economic growth and development
inclusive while ensuring that Bank
operations have no unintended
adverse direct or indirectenvironmental or social impact oncommunities.

Application procedure
1

Sponsor’s
managerial andfinancial track record

Description of theproject5

Feasibility indicators

Feasibility plan

Financing plan &cost estimates, inc.
amount requested
from the Bank

Governancestructure andmanagement team
76Key technical andenvironmentalfeatures

432Business plan

8Business climate
and market
prospects

Implementation plan,inc. Status ofrequired licenses,permits, offtakeagreements, etc.

Environmentaland social
impactassessment

Applications for funding are to be sent :By email to PrivateSectorHelpDesk@afdb.org (first screening and dispatching to operational teams) using the form available
on the Bank's website

4Some of our investments

Financing the education sector
Afe BabalolaUniversity(ABUAD)• Eight-year US $40-million corporate loan
to the Afe Babalola University (ABUAD)
in Ado Ekiti (Nigeria), to finance theuniversity’s expansion plan.
• Expansion plan consists in constructionof new facilities - including a 400-bed
teaching hospital, an industrial researchpark, a small hydro power (SHP)
installation (1.1 MW) and agribusinessfacilities.

Structuring
Corp. loan

$40 M eq (out of $100 M total
expansion program

Pioneer status

 First private sector transaction inthe education sector

Maturity

 8 years (incl. 3 years’ grace)

Strategicalignment

 Improve the quality of life for thepeople of Africa;
 Industrialize Africa; Power Africa; Feed Africa

Funding Mix of hard and local currency

Financing the water & sanitation sector
Kigali BulkWaterStructuring• The Project entails a 40,000 m3/day bulk
water production facility on Public Private
Partnership basis, located at Kanzenze,
Kigali, Rwanda.
• The Project will extract groundwater fromthe south bank of the Nyabarongo River,treat water to required water quality
standards and deliver water to service
reservoirs for the distribution into theKigali network of Water and Sanitation
Corporation (“WASAC”).

Senior loan

$19 M (total project cost $61M)

Pioneer status

First Bank’s PPP transaction in thewater sector

Maturity

18 years (39 months grace period)

Strategicalignement

 Improve the quality of life for thepeople of Africa

Expected
Development
outcomes

South-south investment
Significant demonstration effectClean potable water to the population
therefore contributing to improving publichealthTHANK YOU

Contact:
Non-Sovereign Operations & Private
Sector Support Department
PrivateSectorHelpDesk@AFDB.ORG