AFD Missions & financial tools
November 4th 2011
VIENTIANE
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1. AFD at a glance
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What is the AFD Group?
An “EPIC” under French law, e.g. a public establishment that has industrial and commercial characteristics. Three French Ministries provide oversight: Foreign and European Affairs Economy, Finance and Industry Interior, Overseas France, Local Authorities and Immigration
AFD, a specialized financial institution subject to banking regulations. and a subsidiary dedicated to private-sector financing, PROPARCO, form the AFD Group
A development-finance and aid organization that implements France’s aid policies, drawing on: Cooperation framework agreements approved in November 2010 A ″means and objectives″ contract, defined with AFD’s supervisory ministries
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Funding growth continues1
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Operating regions and new offices opened in 2010
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AFD’s international “ecosystem”1
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AFD’s French partners and interlocutors1
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AFD optimizes public development-aid monies1
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Financial instruments1
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AFD’s funding by region (€ Million)1
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Sectors1
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Development results
In 2010, AFD approved funding for developing and emerging countries that will help :
Improve drinking-water supply for 33 million people
Provide primary schooling for 13.4 million children
Refurbish or build transportation systems that will be used by 85.8 million passengers per year
Abate 5 million tons of CO2 annually through energy efficiency
Connect 8.2 million people to the telecommunications network
Provide 3 million people access to traditional or renewable electricity systems
Grant €428 million worth of microloans, benefitting more than 700,000 people
Improve waste collection and disposal services for 2.4 million people
Support agricultural and irrigation projects that will benefit 1.4 million people
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2. AFD in LAOS
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AFD in LAOS
Presentation
Operates since 1994
4 sectors of interventionRural developmentInfrastructures : energy, water Urban development Health
120 M€ of overall commitment Subsidies : 100 M€, 34 projectsLoans : 20 M€
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AFD in Laos Recent evolutions
Since 2007 : Focus on 3 sectors
Rural development Health Urban development
Current financings 7 projects in activity 17,1M€ in disbursement process
AFD strategy for the future : development of non sovereign activity
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3. Non sovereign activity
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Non sovereign activity
General presentation
A development pushed by :AFD new context tending to reduce the amount of subsidiesImpossibility for AFD to lend money directly to the Laos State
3 available financial tools :LoanEquityGuarantee
Counterparts :Private sectorPublic companiesFinancial sector (banks and MFI)
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3Non sovereign activity
Project cycle - AFD
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Identification Feasibility Appraisal DecisionLegal
negotiationDisbursement
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Corruption, money laundering and terrorist financing
As part of the Financial Action Task Force (FATF), AFD needs
Specific due diligences – Legal documentation – Executive management and members of the board
» Of the beneficiary company» Of the owner’s companies (up to 10% of indirect ownership)
Undertakings to be part of the credit facility agreements– Business Relationships– Licit Origin of the Funds – No Corruption
31/3Non sovereign activity
Compulsory criteria of attribution
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Undertakings to be part of the credit facility agreements (extracts)
Business Relationships
The Borrower undertakes not to enter into a business relationship with any person, group or entity which is listed on any of the Financial Sanctions Lists (including in particular the fight against financing of terrorism).
Licit Origin of the Funds
In all circumstances, the Borrower undertakes to promptly notify the Lender in the event that information comes to its attention causing it to suspect that the funds may be of illicit origin.
No Corruption
The Borrower undertakes to ensure that the Project (including the negotiation, award and performance of contracts financed with the Facility) shall not give rise to any Corruption.
32/3Non sovereign activity
Compulsory criteria of attribution
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Environmental and social impacts
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Low risk (category C) Medium risk (category B) High Risk (category A)
Environmental and Social Impact
Environmental and social impacts are expected to be negligible (minimal or no adverse impacts)
Environmental and social impacts can be readily identified and standard preventative and/or remedial measures can be prescribed
There may be highly significant, negative and/or long-term environmental and social impacts, the magnitude of which are difficult to determine at the application stage
ExamplesSoftware development companies and consulting firms
General industrial companies and plants on existing sites, telecommunication infrastructures, Brownfield infrastructure project.
Infrastructure and extraction projects
Assessment No environmental appraisal required
Environmental and social compliance check as integrated part of the due diligence and site visit of a potential client
Environmental Impact Assessment or Environmental Audit by a qualified external consultant
Environmental and Social Requirements
Compliance with applicable local laws
Compliance with applicable local laws If necessary, remedial measures to be included into the loan contract
Compliance with applicable local laws Compliance with applicable Word Bank / IFC guidelines and safeguard policies If necessary, remedial measures to be included into the contract
3/3Non sovereign activity
Compulsory criteria of attribution
Thank you