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AFRICAN AGRI INVESTMENT INDABA

Cape Town, November 18, 2019

Overview

The Agribusiness Strategy

Products for Financing Private Sector in Agribusiness

Eligibility Criteria and Processing Cycle

Financing Agribusiness Value Chains, an important pillar of the Feed Africa strategy

Vision

Goals

Outcomes

Outputs

Enablers

Transformation of African Agriculture into a competitive and inclusive agribusiness sector that creates wealth, improves lives, and secures the environment

Contribute to the end of extreme poverty

Eliminate hunger and malnutrition Become a net exporter of agricultural

commodities Move to the top of key agricultural

value chains

Gain ‘fair share’ of export-oriented commodity value chains Achieve self-sufficiency in key staples

Create African capability to serve consumers demands and need for

nutrition

Leverage potential of un/under-tapped regions

Large-scale dissemination of productivity-increasing tech, inputs and capital

Increase realized productivity

Realize the value of increased production

Sufficient hard and market infrastructure to ensure competitiveness

Increase investment into enabling soft & hard infrastructure

Catalyze flow of agricultural finance

Well-funded private sector capable of scaling emergent agribusiness successes

Create an enabling agribusiness environment

Increased inclusivity, sustainability and

nutrition

Coordinate activities to kick start and scale transformation

1 2 3 4

Rural Infrastructure Development

Agriculture and Rural Finance AHFR

Approaches and targeted segments for Private Sector development

WORK/ INVEST

WITH THE

PRIVATE

SECTOR

TO

TRANSFORM

AGRIC VALUE

CHAINS

Support Non-Sovereign Operations

Targeting Large Agro-Companies,

Private Equity Funds and Impact

Funds

Support as enabling environment for

private sector development for de-

risking investment and lending to the

agricultural value chains

Lead strategic partnerships with key

private sector clients, financial institutions

and commercial banks to finance value

chain stakeholders along priority

agriculture value chains

Provide high-quality and innovative

debt/equity/ quasi-equity/ guarantee

investments for private sector

development for value chain

development and transformation

Catalyze capital flows, especially

commercial lending and private

investment to scale agribusiness

Mobilize resources and blended finance

initiatives to close the financing gap for

private sector led development of

agricultural value chains

Large International Corporates

Large and Mid-Sized Africa-Based Companies

Agriculture SME and Operators Engaged in Agriculture Support

Services

Agriculture Sector Specific Private Equity

Funds

The Bank’s Financial Products for Financing Private Sector in Agribusiness

The Bank’s products for financing Private Sector in Agribusiness

Risk Management

• Interest Rate Swaps • Currency Swaps

Loans

Guarantees

Equity

Trade Finance

• Non-sovereign-guaranteed Loans • Local Currency Loans • Syndicated Loans – Parallel co-financing and A/B structures

• Partial Risk Guarantee • Partial Credit Guarantee

• Equity • Quasi-Equity

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

Others • Special Funds • Technical Assistance

7

Investment and Eligibility Criteria

Investment Criteria

Only those non-sovereign operations adequately satisfying the investment criteria outlined below may qualify for Bank investments

Strategic fit on development priorities

Aligned with strategic orientations and priorities of the Bank Group outlined in its Ten Year Strategy, 2013-2022 or successor corporate strategies

Creditworthy

Capacity to meet their repayment obligations to the Bank and other financiers supporting their investments

Operate under competent management and good corporate governance

Track record or demonstrable capacity for environmental and social responsibility

Good standing, financially solvent, with realistic business strategies.

Commercial viable

Solid prospects of being financially profitable, generating adequate cashflow to service debt repayment and interest charge obligations in the case of loans.

In the case of equity investments, operations should have good prospects to support dividend payments and/or retained

earnings, yielding satisfactory expected internal rates of economic and financial return.

Investment Criteria

Development Outcomes and the Bank’s additionality.

The Bank will strive to bring a unique value added to its NSOs and ensure that they generate satisfactory development

outcomes in the RMCs where they are implemented.

Additionality and expected Development Outcomes address whether DFI’s intervention will

(i) bring additional value to the transaction that the market alone cannot provide, and

(ii) articulate whether the project will provide satisfactory development outcomes.

Household benefits and job creation; Infrastructure; Governance and fiscal effects; Regional integration

and economic resilience

Environmental effects and contribution to green growth; Gender and social effects; Private sector

development and demonstration effects

Eligibility Criteria

Private enterprises - individuals or private sector entities hold either (i) more than 50% of the voting stock (or voting rights), or (ii)

a percentage of the voting stock (or voting rights) enabling said persons to direct the policies and management of the enterprise (a

‘controlling interest).

Domicile – An enterprise must be incorporated, located or operating in a Regional Member Country (RMC) of the Bank.

Enterprises which have been incorporated in Non-Regional Member Countries but have a presence or operate in Africa may

subject to satisfaction of the other requirements be eligible for Bank investments. Enterprises incorporated in countries which are

not Member Countries of the Bank are not eligible.

Local Entrepreneurship - The Bank is committed to supporting the continued development of local entrepreneurship. When

considering proposals for financing or investment that are equally attractive, priority is given to African Enterprises. The Bank will

prioritize local entrepreneurship development in its effort to encourage the growth of domestic private sector.

Eligibility Criteria

The Bank's financial participation in any project shall not exceed:

(i) 33% of the total cost of the project or investment program or

(ii) 50% of shareholders’ equity at any time in the case of facilities to financial institutions.

Size of Equity Investments. The Bank’s participation shall not exceed 25% of the total share capital of the investee company

throughout the duration of its investment therein:

In no event shall the Bank seek to obtain a controlling interest in companies in which it invests.

Projects for establishment, expansion, diversification and modernization of productive enterprises (i.e. CAPEX);

Project/ Enterprise that have a Transformational impact on key commodity value chains to:

Contribute reducing food importation,

Present potential geographical or product diversification,

Capture more value domestically by processing on the African continent;

“Sweet spot” transactions of size is greater than USD 10 million.

12

Preliminary Information Request and Typical Processing Cycle

Preliminary Information Request

Feasibility study/ Market study;

Business Plan / Information Memorandum; which contains:

Description of the project (sector, location, production volumes, etc.);

Project cost estimates, including FX requirements, AfDB participation

Financing Plan, with debt to equity ratio, equity commitment, debt financiers involved;

Key technical and environmental features;

Business climate, market prospect, including proposed marketing arrangements;

Implementation plan, including the status of required licenses, permits, certificates, etc;

Overview of development impact (jobs created, community SME business linkages, Gender equality, etc);

Sponsors information, including Financial Statements of the last 3 years, and managerial background;

Excel based project financial model - audited;

Environmental and Social Impact Assessment (ESIA) in line with the AfDB’s Integrated Safeguard Systems (ISS) or IFC

Performance Standards;

Timeline for financial close and project implementation.

Investment Cycle

3 T

O 6

MO

NTH

S

IDEN

TIFI

CA

TIO

N P

HA

SE

PR

EPA

RA

TIO

N P

HA

SE

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

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

Variety of Projects Utilizing a Diverse Range of Instruments

Rappel du titre de la présentation par exemple | 15

A 7-year USD 600 medium term receivables backed loan to a cocoa corporate in Ghana to finance key

components of its Productivity Enhancement Program (PEP).

A Partial Credit Guarantee (“PCG”) of up to USD 100 million with a 15-

year tenor to catalyze the deployment of European pension and asset management funds into

Africa’s agriculture sector.

A 7-year senior loan of up to USD 75

million to finance part of the long-term

investment program of a corporate entity

in Sudan.

Variety of Projects Utilizing a Diverse Range of Instruments

Rappel du titre de la présentation par exemple | 16

A USD 75 million corporate loan with a 7-year tenor,

inclusive of a 2-year grace period to an entity in Nigeria

to finance part of its long term Investment Program.

An African Development Fund loan of UA10 million (circa USD 14

million) to support the guarantee book and working capital finance

requirements of the Ghana Incentive-Based Risk-Sharing

System for Agricultural Lending.

Equity investment of up to USD 15 million

in a Private Equity Fund with

an investment emphasis on food

value chain..

Equity investment of up to USD 20 million in an Agro-forestry Private Equity Fund. continent.

Thank You!