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Slide 1: IFC Agribusiness in Africa Cape Town, RSA – June 2009 Anup Jagwani Principal Investment Officer IFC Global Agribusiness Department
Slide 2: Agenda • Overview • IFC: Global expertise in agribusiness • IFC Agribusiness experience in Africa EMRC, Cape Town - June 2009 2
Slide 3: IFC is a Member of the World Bank Group IBRD International Bank for Reconstruction and Development Est. 1945 IDA International Development Association Est. 1960 To promote institutional, legal and regulatory reform Governments of poorest countries with per capita income of less than $1,025 - Technical assistance - Interest Free Loans - Policy Advice IFC International Finance Corporation Est. 1956 To promote private sector development MIGA Multilateral Investment and Guarantee Agency Est. 1988 To reduce political investment risk Role: To promote institutional, legal and regulatory reform Governments of member countries with per capita income between $1,025 and $6,055. - Technical assistance - Loans - Policy Advice Clients: Private companies in member countries Foreign investors in member countries Products: - Equity/Quasi-Equity - Long-term Loans - Risk Management - Advisory Services - Political Risk Insurance Shared Mission: To Promote Economic Development and Reduce Poverty EMRC, Cape Town - June 2009 3
Slide 4: IFC –$84 billion Invested in Emerging Markets since 1956 Largest multilateral source of loan/equity financing for the emerging markets private sector Founded in 1956 with 179 member countries AAA rated by S&P and Moody’s Equity, quasi-equity, loans, risk management and local currency products Takes market risk with no sovereign guarantees IFC FY08 Highlights Portfolio Committed Syndicated # of companies # of countries Sub-Saharan Africa 10% $32.4 billion $11.4 billion $4.8 billion 1,400 + 85 + Middle East & N.Africa 11% Global 1% South Asia 11% Promoter of environmental, social, and corporate governance standards Resources and know-how of a global development bank and flexibility of a merchant bank Holds equity in over 900 companies worldwide Europe & Central Asia 28% East Asia and the Pacific 14% Latin America 25% EMRC, Cape Town - June 2009 4
Slide 5: IFC’s Global Reach 100+ country and regional advisory services offices worldwide Drawing on our experience and lessons-learned, we share sector best practices to the benefit of our clients. EMRC, Cape Town - June 2009 5
Slide 6: IFC in Sub-saharan Africa Algiers Rabat Mediterranean Sea Beirut Jerusalem Cairo Amman Dubai Dakar Ouagadougou Lagos Accra N’Djamena Sana’a Monrovia Abidjan Douala Kigali Kinshasa Nairobi INDIAN OCEAN Dar es Saleem ATLANTIC OCEAN Lusaka Antananarivo Johannesburg IFC Hubs IFC Country Offices Maputo Cape Town EMRC, Cape Town - June 2009 6
Slide 7: IFC’s Products and Services Senior Debt • On-lending • Liquidity management Structured Finance • Partial credit guarantees • Securitization • Bond underwriting • Credit Enhancement Advisory Services • Corporate governance • Risk management • Small and medium business banking Sustainable Finance • Carbon finance Mezzanine Finance Private Equity • Common shares • Preferred shares • Convertible debt • Subordinated debt • Other Tier II instruments • Acquisition financing • Warehousing facilities • Syndicated loans Global Trade Finance Program • $1 billion program • Guarantees to issuing banks • 46 issuing banks in 24 countries • Renewable energy • Supply chain financing • Corporate governance • 92 confirming banks in 62 countries • $579 million of issued guarantees in first 12 months • Housing finance • Energy efficiency finance EMRC, Cape Town - June 2009 7
Slide 8: Agenda • Overview • IFC: Global expertise in agribusiness • IFC Agribusiness experience in Africa
Slide 9: IFC Value Add in Agribusiness Long-term Competitive Financing  Equity  Fixed/Floating Rates, Local Currencies Regional Knowledge Global Sector Expertise Country Risk Mitigation Environmental & Social Risk Management  Advice on Environmental and Social Best Practices  Energy and Water Use Management / Cleaner Technologies  Equator Principles Modeled after IFC Standards  Local Consultation and Disclosure Sustainability Toolkit  Extensive Local Office Network  Local Transaction Experience  Strong bank partnerships through client networks and B loan participants  World Bank Synergies  Joint Venture partnership management  40+ Years of Sector Expertise  Industry Specialist Advice and Benchmarks  Government Relations  Neutral broker Role  Reduced Risk of Expropriation, Breach of Contract, Convertibility  World Bank Synergies  Witholding Tax Benefit  Local Supplier Development  Environmental/ Social Advice  Corporate Governance  Local Economic Development  HIV/AIDS Prevention  Community Development Funding  Up to 15 year Loan Maturity  Flexible Amortization Profile  Catalyst for other Investors and Lenders  Equity Participation  Capital Mobilization  Greenfield  Expansion/ Modernization  Corporate Strategy  Access to International Investors EMRC, Cape Town - June 2009 9
Slide 10: IFC Investment in the Agribusiness Value Chain Exceeded US$1.4 Billion in FY 2008 IFC’s Goal: Deliver development impact along the global agri-supply chain, through investments and advisory services with the private sector, to create opportunities and improve peoples’ lives Fertilizers and other Chemicals Land Farm Production Project/Corporate Finance CIT – Access to Markets Collection Processing Marketing Distribution Inputs Retail Infrastructure/Logistics Financial Institutions Pre-Harvest Finance Market Infrastructure Trade Finance Risk Sharing Facilities EMRC, Cape Town - June 2009 Note: The aggregated amounts listed next to categories above denote potential IFC investment size, subject to approvals 10
Slide 11: Agribusiness Committed Portfolio $2.2 Billion Committed Portfolio As Of December, 2008 By Sector Other 9,5% Other Food 13,4% Animal Processing 20,8% By Region S. Europe/ Cent. Asia 8,1% Cent. & East. Europe 17,7% Beverages 9,5% Africa 7,1% East Asia 15,5% Sugar 15,2% Mid. East/ N. Africa 1,8% South Asia 7.7% Cent. America 7,2% South America 34,8% Veg Fats & Oils 14,2% Grains & Milling 7,6% Dairy Products Fruits & 4,6% Vegetables 5,3% EMRC, Cape Town - June 2009 11
Slide 12: Agenda • Overview • IFC: Global expertise in agribusiness • IFC Agribusiness experience in Africa EMRC, Cape Town - June 2009 12
Slide 13: IFC Agribusiness – Africa Portfolio $193 million Committed portfolio (December 31, 2008) Africa Portfolio by Sector EMRC, Cape Town - June 2009 13 13
Slide 14: Fighting the Food Crisis in Africa • Rising food prices may send 100 million people back into poverty, especially in Africa. • IFC responds by investing in African agribusiness. We build clients' supply and distribution systems, helping more food reach more people affordably. • The focus on Africa is part of a global IFC agribusiness portfolio that has tripled in recent years. EMRC, Cape Town - June 2009 14 14
Slide 15: Karsten Farms (Egypt/South Africa) Objective: Meet buyer demand for reduced year-round global suppliers of fresh fruit Approach: 1. Create scale and quality to compete internationally 2. Expand geographic diversity – grapes in Egypt 3. Decrease seasonality of South Africa operation - new products (berries, cherries) 4. Establish fruit trading, logistics and handling – remove outside parties to assure quality 5. Long term financial partner to achieve vision (possible future locations: Brazil, China, Turkey) IFC Investment: 1. $7.5m corporate loan; $15m project cost Development Impact: mitigation for the company 2. Provides political risk RSA 3. South-South FDI – addressing void in the market 4. Technical assistance: IFC against AIDS program EMRC, Cape Town - June 2009 15
Slide 16: Beverages: Sabco (E. Africa/S.E. Asia) IFC Investments: 1.(2002) $37 million in loan, equity, and guarantee 2.(2006) $70 million loans ($40 & $30 m tranches) 3. Provide long-term financing not available in markets 4. South-South FDI – regional company to global Approach: 1. Build from expertise and profits in South Africa Southeast Asia * Vietnam * Laos * Cambodia Eastern Africa 2. Expand/upgrade operations in East Africa * Kenya 3. Enter Frontier CountriesTanzania Asia * of SE * Uganda 4. Roll out Manual Distribution Centers –Development Impact: Eastern linkages “MDCs” – distribution Africa of local SME providers * Mozambique * Ethiopia South Africa EMRC, Cape Town - June 2009 16
Slide 17: Rubber sector: Salala Rubber (Liberia) •$29m project to rehabilitate plantation dilapidated during the civil war. •Increase productivity gains by new plantings and renovation of processing plant, •Rehabilitate social infrastructure (housing, schools, clinics) •$10m A loan • Provide loan with long tenor appropriate for plantation cycle and not available in post conflict environment • Political and country risk cover • Implement environmental and social policies and guidelines • Long term partnership with SocFin, one of the shareholders EMRC, Cape Town - June 2009 17
Slide 18: Palm Oil sector: GOPDC (Ghana) The Project • $12.5 m to ensure reliable supply of FFB through new plantings and replanting • Improve competiveness by diversifying into valueadded refined oil and improve financial structure • Financing: $12.5 m 9-yr A loan IFC Role • Provide long-term loans not available in local market • Develop long-term partnership with an emerging regional player • Institute environmental and social best practices and guidelines EMRC, Cape Town - June 2009 18
Slide 19: Logistics: Bakhresa (Mozambique-Tanzania-Malawi) The Project •$33.4m project with the Bakhresa Group, a leading Tanzania-based wheat miller. •Create grain handling port and storage facility in Mozambique •$20m investment package for three operating entities in Mozambique, Tanzania and Malawi • Long-term financing with tenors not available locally • Provide working capital needs following increase in wheat prices • Financial transparency • Technical assistance: corporate governance and HIV/AIDS EMRC, Cape Town - June 2009 19
Slide 20: Horticulture sector: Kongoni (Kenya) The Project •2 phase project to build greenhouses. •Expansion to enable geographic and product diversity. •US$2.0 m A loan IFC Role • Provide long-term loan and advice to emerging regional player • Technical advice for water management • Institute environmental and social best practices and guidelines • HIV/AIDS program support EMRC, Cape Town - June 2009 20
Slide 21: What IFC is Typically Looking for in Projects •Strong and experienced sponsors •Viable business plan that is fundamentally sound and does not rely on subsidies •Debt to Equity Ratio of 1:1 (though it varies by project) •Aggregate IFC lending amount of not less than US$510 million (this varies by country) •Willingness of company to work with IFC on acceptable E&S standards, financial reporting and good governance.
Slide 22: So How Does IFC Support SMEs? •Providing long term capital to the financial sector for on-lending to SMEs •Risk Sharing Facilities •Structured Finance •Private Equity Funds •Advisory Services
Slide 23: Thank You Contact info: Anup Jagwani Principal Investment Officer IFC Agribusiness Department AJagwani@ifc.org +1-202-458-7901 23