Investingin a sustainable future

2007-2008 Highlights

PROPARCOGroupe Agence Française de Développement

A NORTH/SOUTHCOMMUNITY OF INVESTORS

WORKING FORDEVELOPMENT

MEASURING DEVELOPMENTIMPACTS

GEOGRAPHICALLYTAILORED PRIORITIES

SUSTAINABLEDEVELOPMENT:SECTOR-WIDE

MAINSTREAMING

TAILORING AND EXTENDINGOUR RANGE OF FINANCIAL

PRODUCTS

OPERATIONAL ANDFINANCIAL RESULTS

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Key figures 2007

In 2007 PROPARCO contributed to

Supporting the growth of 315 companies

Creating or securing 47 000 jobs

Connecting 22.5 million peopleto telecommunications networks

Generating 250 MW of renewable energy

Saving 1.8 million tons of CO2

Financing access to microfinance for100 000 people

Increasing State revenues by €377 M

Commitments for the year €597.8 M

including :

Loans – 29 operations €464.2 M

Equity investments – 17 operations €77.9 M

Guarantees – 4 opération €55.7 M

Total risk €1.15 billion

Net income €23.7 M

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Investing in a sustainable futurePROPARCO is a Development FinanceInstitution jointly held by Agence Françaisede Développement (AFD) and privateshareholders from developed and develo-ping countries.

Its mission is to boost private investment inemerging and developing countries infavour of growth, sustainable developmentand reaching the Millennium DevelopmentGoals (MDGs).

PROPARCO was created thirty years ago onthe conviction that the private sector has acrucial role to play in development. Itscapital was tripled in 2008.

PROPARCO finances operations which areeconomically viable, socially equitable,environmentally sustainable and financiallyprofitable.

Its sectoral strategy is tailored to the levelof a country’s development and focuses onthe productive sector, financial systems,infrastructure and equity investment.

It invests in a geographical area rangingfrom major emerging countries to the lessdeveloped countries, in particular in Africa,and has high-level requirements in terms ofSocial and Environmental Responsibility.

PROPARCO has a wide range of financialproducts to meet the specific needs ofprivate investors in developing countries(loans, equity, guarantees and financialengineering).

In 2007 PROPARCO granted €600M forover fifty projects in more than thirtycountries.

A NORTH/SOUTH COMMUNITY OF INVESTORS WORKING FOR DEVELOPMENT

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PROPARCO’s Shareholders

[ 3 ]

A NORTH/SOUTH COMMUNITY OF INVESTORS WORKING FOR DEVELOPMENT

PROPARCO’s Board of Directors

P R O P A R C O ’ S S H A R E H O L D I N G

French financialinstitutions€109.6M

Internationalfinancialinstitutions€48.7M

Investors€18.5M

AFD€241.6M

Ethical fundsand foundations €1.6M

26,1 %

12 %57,5 %

4,4 %

0,4 %

MARTINIQUEBARBADE

GUADELOUPE

MAYOTTE

SEYCHE

R

JAMAICA

AMAPA

SENEGAL

CUBA

PARIS

TUNIS

LAGOS

NAIROBI

JOHANNESBURG

TURQUEY

COMOROS

BURUNDI

RWANDA

ALGERIA

BRAZIL

SUDAN

ETHIOPIA

KENYA

TANZANIA

ANGOLA

MOZAMBIQUE

SOUTH AFRICA

NAMIBIA

DEM. REP.OF CONGO

CENTRALAFRICAN REPUBLIC

OUGANDA

CONGO

CAMEROON

GABON

NIGER

EQUAT. GUINEA

GAMBIEGUINEA-BISSAU

SIERRA LEONE

LIBERIA

CÔTED'IVOIRE

SAO TOME-AND-PRINCIPE

DJIBOUTI

TUNISIA

MAROCCO

MAURITANIA

CAP-VERDE

LIBAN

SINAI

HAITI

BAHAMAS

REP.DOMINICAN

DOMINICA

TRINIDAD-AND-TOBAGO GUINEA

SURINAME

YEMEN

SOMALIA

TCHAD

GHANATOGO

BENIN

BURKINAFASO

MALI

ZAMBIA

MADAGASCAR

GUYANA

SAINT PIERRE& MIQUELON

ZIMBABWE

BOTSWANA

LESOTHO

SWAZILAND

SAO PAULO

EGYPT

JORDAN

NIGERIA

PALESTINIAN TERRITOTIESCASABLANCA

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TeamsH E A D Q U A R T E R S T E A M

Deputy CEO in charge of Investments: Laurent DEMEYBank and Financial Markets: Amélie JULY (november 2008)

Private Equity: Marie-Hélène LOISONInfrastructure and Mining: Jérôme BERTRAND-HARDY

Companies: Stéphanie LANFRANCHI

Deputy CEO in charge of the General Secretariat: Philippe BASSERYCredit and Portfolio: Hélène TEMPLIER

Finance and Administration Department: Marie SENNEQUIERLegal Department: Marianne SIVIGNON-LECOURT

Chief Executive Officer: Luc RIGOUZZO

Chairman: Jean-Michel SEVERINO

WALLIS-ET-FUTUNA

NEW CALEDONIA

FRENCH POLYNESIA

ELLES

MAURITUS

REUNION

SUMATRA

VANUATU

INDIA

CAMBODIA

AFGHANISTAN

PAKISTAN

THAILAND

SRI LANKA

CHINA

LAOS

VIETNAMN

A

INDONESIA

BANGKOK

NEW DELHI

BEIJING

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O U R N E T W O R K

New Delhi (Inde, Pakistan,Afghanistan)Jean-Pierre Barral1A Jan Path - Delhi 11001 - IndiaTel + 91 11 23 79 37 47Fax : + 91 11 23 79 37 38

Lagos (Nigeria, Benin, Economicand Monetary Community ofCentral Africa Countries)Charles-André Le PapeMelrose Office suitesPhoenix House Plot 26EAbdulrahman OkeneClose Off Ligali Ayorinde Street -Victoria Island - Lagos - NigeriaTel : + 234 12705740

Johannesburg (South Africa,Southern Africa)Sophie Le RoyBallywoods Office Park1st Floor Block I29 Ballyclare DriveBryanston 021 P.O. Box 786555Sandton 2146South AfricaTél (27 11) 540 7100Fax (27 11) 540 7117afdjohannesbourg@groupe-afd.org

Nairobi (East Africa)Ghislain de ValonRoyal Ngao House -Hospital RoadP.O Box 45995Nairobi, KenyaTel : (254 20) 271 84 52Fax : (254 20) 271 79 88afdnairobi@groupe-afd.org

TunisEmmanuel HayeImmeuble Miniar - Bloc B -3rd et 4th floorRue du Lac d'Ourmia1053 Les Berges du LacTel : 71 861 799Fax : 71 779 825afdtunis@tn.groupe-afd.org

Casablanca (January 2009)Amaury Mulliez15, avenue Mers-SultanCasablancaTel: 212 22 29 53 97Tel: 212 22 22 78 74Fax : 212 22 29 53 98afdprocasablanca@groupe-afd.org

Bangkok (Cambodia,Indonesia, Lao PDR, Thailandand Vietnam)Antoine Vigier14 F Abdulrahim Place990 Rama IV Road, Silom,Bangkok10500, ThailandTel : +662 636 12 35Fax : +662 636 12 47afdbangkok@groupe-afd.org

BeijingPaul de la Guérivière7 Floor, Block C, East Lake Villas,35 Dongzhimenwai Avenue,Dongcheng District,Beijing 100027Tél : (8610) 84 51 12 00Fax : (8610) 84 51 13 00afdpekin@groupe-afd.org

Sao Paulo (Brazil, Surinam)Christophe BlanchotEdificio Parque Cultural PaulistaAvenida Paulista, 37-4° endar01311-902 – Sao Paulo – BrasilTel : + 55 11 22 46 27 91Fax : + 55 11 22 46 27 99

PROPARCO intervention aera

PROPARCO offices

A NORTH/SOUTH COMMUNITY OF INVESTORS WORKING FOR DEVELOPMENT

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Systematic impact measurement

Developmental and environmental impactmeasurement is crucial in monitoring theevolution of quality of each project. It alsojustifies investments and assesses theircontribution to development.

PROPARCO has systematic impactmeasurement tools which are used topre-select project financing and thenthroughout the project life.

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Over the past three years PROPARCO has contributed to:

� creating or supporting 665 companies

� creating or securing 107 000 jobs

� connecting 29 million people totelecommunications networks

� generating 1 450 MW of renewableenergy

� saving 5.7 million tons of CO2

� financing access to microfinancefor 100 000 people

� training 14 000 professionals

� increasing State revenues by1 billion euros

MEASURING DEVELOPMENT IMPACTS

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Confirming the African continent as a priorityBetween 2003 and 2007 average annualgrowth in Africa stood at around 6%. Suchexceptional growth gives reason foroptimism, yet it is not enough to reachpoverty reduction targets.Supporting to African growth is more thanever before a priority to PROPARCO.PROPARCO has committed €330M on thecontinent, i.e. 60% of its allocations, with45% in Sub-Saharan Africa.

PROPARCO’s activities focus on five sectors:� financing companies and services,� supporting financial intermediation,� strengthening high-performance privateinfrastructure,

� preserving local and global environments,� supporting the creation of localentrepreneur groups..

Equity needs on the rise in Mediterranean countriesPROPARCO meets the financing needs ofMediterranean companies and provides analternative to excessive debt. It also providesexpert technical assistance, new partner-ships and access to new markets and newtechnologies.

In 2007 PROPARCO committed €140M inMediterranean countries.

Construction of a hydropower plant on the Nile inUganda (USM72.8M loan)

Gas-fired power plant in Pakistan (USD 27M loan)

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Enhancing energyefficiency in emerging countries

GEOGRAPHICALLY TAILORED PRIORIT IES

Development of a major equity investment player in theMaghreb (€12.5M of assets administrated)

Investment fund dedicated to renewable energies in India and China (€5M))

Over the coming years, climate change,loss of biodiversity and major pandemicswill be major challenges for the planet anda cornerstone for global public policyfocusing on the major emergingeconomies (Brazil, China, India, Indonesia,Pakistan, Thailand).

In 2007, 70% of PROPARCO’s financialcommitments in emerging countries werefor clean energy development projects.

Its strategy focuses on four sectors:

� energy,� support to “model” socially orenvironmentally responsible (SER)companies or banks,

� financial intermediation on linesallocated to projects with high socialor environmental impacts,

� investment funds dedicated to SERactions or renewable energy or energyefficiency projects.

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Creating high-performing infrastructureEffective infrastructure networks areessential for attracting foreign investors,building a local corporate fabric andproviding essential services to populations.

In 2007 PROPARCO committed €222M forbasic infrastructure in 13 countries andensured projects complied with environ-mental preservation.

Promoting and supporting efficient bankingand financial systemsPrivate companies in developingeconomies require long-term financingtailored to their needs.PROPARCO provides support to financialinstitutions and helps them tailor theirproducts to corporate requirements.

It also promotes financial markets whichdirect local savings towardsproductive activities.

Developing mobile phone networks in Ghana, Malawi, Uganda, Lao PDR (USD45.5M) and Chad (€11M)

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Participating in investment fundsdedicated to corporate financing

Supporting productiveand service sectorsPROPARCO provides long-term resources,which are often lacking on local bankingmarkets, directly to companies in local orforeign currency. Its main business sectorsinclude plantations and primary agri-businesses, livestock farming and sea-product packaging, modernisation andexpansion of heavy industries, transpor-tation, education and health.

SUSTAINABLE DEVELOPMENT: SECTOR -WIDE MAINSTREAMING

Extending a cement plant in Kirene, Senegal (€20M loan)

The Small and Medium-Sized Enterprises(SMEs) sector is key to the development ofa sustainable and dynamic economicfabric.In view of the apparent reluctance ofbanks in developing countries to finance

this sector, PROPARCO provides analternative to bank financing by acquiringstakes in local investment funds dedicatedto financing corporates in expansion.

Supporting banking intermediation in Nigeria (USD25M credit line)

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Strengthening corporate equityPROPARCO contributes to the deve-lopment of private companies or financialinstitutions by directly investing in theirequity or via equity investments in

investment funds which are generallymulti-country sectoral generalists in orderto diversify risk.

PROPARCO is positioned on high-risk areas with considerable market flaws and musttherefore be able to provide a range of financial products to meet three main types ofneeds expressed by private companies in developing countries: access to long-termfinancing, hedging or mitigation for certain risks, especially political, and solutionstailored to specific issues in developing countries.

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Providing loans tailored to each project

Working in local currency and providing a widerange of risk- hedging tools

TAILORING AND EXTENDING OUR RANGE OF FINANCIAL PRODUCTS

Supporting Morocco’s leading microfinance institution (€12.5M subordinated loan guarantee)

PROPARCO has a wide range of mediumand long-term loans (up to twenty years):

� senior loans,� junior loans,� mezzanine loans,� subordinated loans

Moreover, PROPARCO uses financialengineering tools tailored to the maincharacteristics of under-development(instability of raw material rates forinstance).

Through its signature, PROPARCO providesa guarantee of solvency and thereforefacilitates the mobilisation of ressource inlocal currencies by private sectorborrowers. It guarantees subscribers therepayment in capital and interest of therelevant loans.

In 2007 PROPARCO also developed a rangeof direct loans in local currency.

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The main features of 2007 include net income at €23.7M and a volume of commitments at€598M, an increase from FY 2006 of respectively 230% and 50%.The year also confirmed Africa as a priority for PROPARCO. 45% of commitments were madein Sub-Saharan Africa and 60% on the continent as a whole. PROPARCO also pursued itsreadjustment of allocations for infrastructure, equity and services to the poorest countriesand strengthened its volume of activities on behalf of AFD.

Equity

� 17 equity investments

� 11 investments madeand 4 disinvestments

� A portfolio equivalentto €135.2M in grossvalue, broken downinto 79 units

� paid-up investmentsstood at €95.7M atyear-end 2007

Equity investments: sectoral breakdown (outstanding amounts)

26 %

Financial sector

Companies

Infrastructureand mining

Investment funds

18 %

13 %

43 %

Equity investments: geographical breakdown(outstanding amounts)

Central andSouthern Africaand Indian Ocean

West AfricaAsiaOverseas

France

Mediterranean

Multi-country

30 %

26 %

15 %

11 %13 %

5 %

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Loans� 29 loans totalling

€464.2M approvedin 2007

� Outstanding amountsmade up of 162 loansgranted to 50 clients

� Total outstandingamounts stood at€736.5M

Guarantees� 4 guarantees totalling €55.7M were approved in 2007� Guarantees issued totalled €7.5M

Loans: sectoral breakdown(outstanding amounts)

Financialclients

Companies

Infrastructureand mining

35 %

16 %

49 %

Loans: geographical breakdown(outstanding amounts)

SouthernAfrica andIndian Ocean

WestAfrica

Asia andCaribbean

Mediterranean Central andEast Africa

20 %

31 %

14 %

13 %

22 %

OPERATIONAL RESULTS

Simplified balance sheet in net values (€M)

ASSETS LIABILITIES

Loans to financial institutions 425 Borrowings 723

Loans to companies 302 Unpaid capital 39

Other 8

Provisions 19

Equity investments 130 Equity 198

Short and long-term investments 127 - incl. capital subscribed 143

Other 3 - dincl. reserves andretained earnings 31,3

- incl. income 23,7

TOTAL 987 TOTAL 987

Main income statement items (M€)

Net banking income 34,7

Gross operating income 21,2

Cost of risk 1,8

Operating income 21

Net income 23,7

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OPERATIONAL RESULTS

A N N U A L R E P O R T 2 0 0 7

ISSN requestedCopyright deposit July 2008

Coordinated and drafted by: Benoît Verdeaux and Thibaut RoggebandDesigned and published by: MH Éditions - www.mh-editions.frPhoto credits: PROPARCO, Groupe AFD, Michel Hasson, GettyImages, ©IRDCover photo: Michel Dukhan ©IRD

This brochure respects the environment and was printed using vegetal ink onFSC certified paper (sustainable forest management)

PROPARCO5, rue Roland Barthes 75598 Paris Cedex 12

Tél. +33 1 53 44 37 37 - Fax +33 1 53 44 38 38

www.proparco.fr