AfDB support to Egypt, Tunisia and Morocco
International Conference: After the Awakening, Euro-Mediterranean relations and business opportunities in Egypt, Jordan, Morocco and Tunisia Milan, Italy, June 3 2014
Thouraya Triki, North Africa department, African Development Bank
Outline of the presentation
Overview of AfDB group
Socio-economic context in Tunisia, Egypt and Morocco
AfDB support to Tunisia, Egypt and
Morocco
First Development Finance Institution dedicated to Africa.
Mission: Promote economic growth and alleviate poverty in all Regional Member Countries (RMCs)
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The AfDB group at a glance African Development Bank Established in1964 53 RMCs and 25 non-African countries Authorized capital : 103 billion USD
African Development Fund Established in1972 Subscription: 35 billion USD (donors)
Nigeria Trust Fund Creation: 1976 242 million USD
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Public window
Private window
Governments, public entities
Sovereign
Concessional
Private enterprises, SOE (independent)
Non-Sovereign
Commercial
Beneficiaries
Guaranty type
Financial terms
The AfDB group at a glance
Loans ◦ Loans with sovereign guaranty: Mat up to 20 years, up to
5 years grace period, JPY, USD, ZAR, Euro. Possibility to convert into local currency for total flexible loans. ◦ Loans with no sovereign guaranty Mat up to 15 years, up
to 5 years grace period, JPY, USD, ZAR, Euro and approved local currencies. ◦ NTF loans: Max 10 million USD, USD only, could
benefit public and private sector, Mat up to 27 years with 7 years grace period. ◦ Syndication: parallel co-financing & A/B loan structure
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The AfDB instruments at a glance
Guarantees ◦ Partial Risk Guarantee: default risk on commercial debt
service payment in a PSO triggered by adverse government actions. ◦ Partial Credit Guarantees: part of default risk on debt
service payment, regardless of the trigger. Lines of credit to financial institutions Equity & quasi-equity Risk management products ◦ Currency, interest rate and commodity swaps, caps et
collars.
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The AfDB instruments at a glance
Trade finance ◦ Risk participation agreements: Up to 50% coverage,
portfolio basis. ◦ Trade finance LOC: Mat up to 3.5 years. ◦ Commodity Finance Facilities: pre-export financing to
aggregators.
Technical assistance grants, Economic Sector Work and policy dialogue
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The AfDB instruments at a glance
Historical performance of Tunisia, Egypt and Morocco: hope was in the air!
• Sound macroeconomic performance during the years leading to 2011 popular uprisings.
• Significant progress in human development indicators.
Population (000)
GDP per Capita ( PPP valuation, $)
Annual real GDP growth
(2001-2010)
Inflation (2001-2010)
Egypt * 83 958 6 405 4.90 8.40 Morocco 32 599 5 244 4.20 0.50 Tunisia 10 705 9 754 4.50 3.40
Source: African Economic Outlook
Limited Job creation & Economic sophistication • Growth thru rise in capital & labor stock • Little TFP increase & income/capita growth
< ½ % • High Youth unemployment • Lack of econ sophistication & transformation • Myopic global & regional integration
Exclusion & Growing Disparities • Voice & accountability • Growing regional disparities • Deteriorating public social services
25 24 22 22 23
12 1420
1512
Egypt Tunisia Algeria Libya Morocco
20072010
Perceptions of wellbeing
In an international difficult context • Deficits and economic contraction in some
countries • Rising borrowing cost and decreasing FDI
1975 2005
Egypt Tunisia Indonesia Malaysia
Production Sophistication (1975-2005)
..but the devil was in the details
The 2011 uprisings: A reality check --- GDP growth (annual), -- inflation, -- cash deficit/surplus (as % GDP),
-15,00
-10,00
-5,00
0,00
5,00
10,00
15,00
20,00
Egypt
-6,00
-4,00
-2,00
0,00
2,00
4,00
6,00
8,00
10,00
20052006200720082009201020112012
Morocco
-6,00
-4,00
-2,00
0,00
2,00
4,00
6,00
8,00
Tunisia
Country outlook – 2014/2015
Tunisia • Fiscal financing to remain
elevated at about 11 billion U.S. dollars per year.
• Debt sustainability to be monitored,
• Strong growth and fiscal consolidation are needed
• Job creation is a priority • Reform Implementation
capacity and political stability to be followed
Egypt • Fiscal deficit should remain high and
domestic public debt should continue to rise (external financing gaps: $60 billion over 2014/15–2017/18 period).
• Gulf states financial support is difficult to support on the LT
• Fiscal consolidation is planned after new government takes over; this could foster fiscal sustainability and economic recovery.
Morocco • Fiscal financing needs and deficit, debt to
GDP ratio are expected to decline, inflation under control
• Declining growth (agriculture) • Stronger employment growth is needed • Reform implementation capacity to be
followed
AfDB historical engagement in Morocco, Tunisia and Egypt • Historically, Morocco
Tunisia and Egypt have borrowed the most from the Bank.
• However post 2011 the portfolio has seen an increase in grant-funded ESW and TA.
• This has allowed the Bank to remain relevant and ensure a value added approach based on sustained policy dialogue.
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10,3
20,5
2,7 37,3
29,3
Cumulative Loans and Grants approvals by Country (1968-
2013)
AlgeriaEgyptMauritaniaMoroccoTunisia
AfDB engagement in Morocco, Tunisia and Egypt
(UA millions): 1 UA= 1.55 USD
Approvals Active portfolio
1967-2013 As of April 2014
Egypt 3,763.5 1,278
Morocco 6,951.5 2,114 Tunisia 5,383.9 1,021
AfDB Cumulative Approvals in NA by sector
16
19
15,4
8,5
6
6,1 6 4
AfDB Approvals per Sector in NA 1968-2013 (share in %)
Multi-sector
Energy
Transport
Agriculture & rural develop
Social
Water sup/ Sanitation
Industry Mining &Quarrying
Other
AfDB selected projects in Morocco
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Project name Amount (million)
Public administration reform program 100 Euros
Extension and upgrade of 5 airports 240 Euros
Ouerzazate solar project CSP (phase I) 168 Euros
Industrial energy efficiency program 177 UA
Growth diagnostic 0.704 Euros
Argan Infrastructure Fund 13.78 UA
Support to financial sector development program (I&II) 162 & 200 Euros
OCP Investment program 250 USD
AfDB selected projects in Tunisia
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Project name Amount (million)
Gabes-Medenine-Ras jedir highway 118 UA
ETAP investment program (2009-2010) 150 USD
Enfidha airport 70 Euros
Apex facility to support SME lending 50 Euros
2 budget supports (2011, 2012) 500 USD each
Operationalization of the PPP law 4 USD
Support to the implementation of the E-government and open government
0.683 UA
Evaluation of the BTS microcredit system 0.140 UA
AfDB selected projects in Egypt
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Project name Amount (million)
Abu Qir thermal power plant 214.5 UA
Egyptian Refinery Company 225 USD
Support to the national franchising program 40 USD
Jabal Al Asfar waste water treatment plant 48.6 UA
Risk participation agreement with Commercial International Bank Egypt (CIBEG)
50 USD
Study on wind energy integration into the national grid 0.490 UA
Collaboration with the Deauville Partnership (DP)
A G8 Initiative for 6 eligible countries Egypt, Tunisia, Morocco, Libya, Jordan & Yemen.
4 main pillars: Governance; Social and Economic Inclusion; Private Sector Development; Regional Integration.
AfDB: ◦ Hosted the DP secretariat at launching ◦ Implementation Support Agency (ISA) under the MENA
Transition Fund (approved UA 8.8 million to date, as ISA for Egypt, Libya and Tunisia)
◦ Several collaboration with IFIs (PPP in Tunisia, Support to MSMEs in Organic Clusters and Industrial Waste Management and SMEs Entrepreneurship Hub in Egypt)
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