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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

AfDB support to Egypt T, unisia and Morocco · AfDB support to Egypt T, unisia and Morocco International Conference: After the Awakening, Euro-Mediterranean relations and business

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Page 1: AfDB support to Egypt T, unisia and Morocco · AfDB support to Egypt T, unisia and Morocco International Conference: After the Awakening, Euro-Mediterranean relations and business

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

Page 2: AfDB support to Egypt T, unisia and Morocco · AfDB support to Egypt T, unisia and Morocco International Conference: After the Awakening, Euro-Mediterranean relations and business

Outline of the presentation

Overview of AfDB group

Socio-economic context in Tunisia, Egypt and Morocco

AfDB support to Tunisia, Egypt and

Morocco

Page 3: AfDB support to Egypt T, unisia and Morocco · AfDB support to Egypt T, unisia and Morocco International Conference: After the Awakening, Euro-Mediterranean relations and business

First Development Finance Institution dedicated to Africa.

Mission: Promote economic growth and alleviate poverty in all Regional Member Countries (RMCs)

3

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

Page 4: AfDB support to Egypt T, unisia and Morocco · AfDB support to Egypt T, unisia and Morocco International Conference: After the Awakening, Euro-Mediterranean relations and business

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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

Page 5: AfDB support to Egypt T, unisia and Morocco · AfDB support to Egypt T, unisia and Morocco International Conference: After the Awakening, Euro-Mediterranean relations and business

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

Page 6: AfDB support to Egypt T, unisia and Morocco · AfDB support to Egypt T, unisia and Morocco International Conference: After the Awakening, Euro-Mediterranean relations and business

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

Page 7: AfDB support to Egypt T, unisia and Morocco · AfDB support to Egypt T, unisia and Morocco International Conference: After the Awakening, Euro-Mediterranean relations and business

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

Page 8: AfDB support to Egypt T, unisia and Morocco · AfDB support to Egypt T, unisia and Morocco International Conference: After the Awakening, Euro-Mediterranean relations and business

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

Page 9: AfDB support to Egypt T, unisia and Morocco · AfDB support to Egypt T, unisia and Morocco International Conference: After the Awakening, Euro-Mediterranean relations and business

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

Page 10: AfDB support to Egypt T, unisia and Morocco · AfDB support to Egypt T, unisia and Morocco International Conference: After the Awakening, Euro-Mediterranean relations and business

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

Page 11: AfDB support to Egypt T, unisia and Morocco · AfDB support to Egypt T, unisia and Morocco International Conference: After the Awakening, Euro-Mediterranean relations and business

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

Page 12: AfDB support to Egypt T, unisia and Morocco · AfDB support to Egypt T, unisia and Morocco International Conference: After the Awakening, Euro-Mediterranean relations and business

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

Page 13: AfDB support to Egypt T, unisia and Morocco · AfDB support to Egypt T, unisia and Morocco International Conference: After the Awakening, Euro-Mediterranean relations and business

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

Page 14: AfDB support to Egypt T, unisia and Morocco · AfDB support to Egypt T, unisia and Morocco International Conference: After the Awakening, Euro-Mediterranean relations and business

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

Page 15: AfDB support to Egypt T, unisia and Morocco · AfDB support to Egypt T, unisia and Morocco International Conference: After the Awakening, Euro-Mediterranean relations and business

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

Page 16: AfDB support to Egypt T, unisia and Morocco · AfDB support to Egypt T, unisia and Morocco International Conference: After the Awakening, Euro-Mediterranean relations and business

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

Page 17: AfDB support to Egypt T, unisia and Morocco · AfDB support to Egypt T, unisia and Morocco International Conference: After the Awakening, Euro-Mediterranean relations and business

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

Page 18: AfDB support to Egypt T, unisia and Morocco · AfDB support to Egypt T, unisia and Morocco International Conference: After the Awakening, Euro-Mediterranean relations and business

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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Page 19: AfDB support to Egypt T, unisia and Morocco · AfDB support to Egypt T, unisia and Morocco International Conference: After the Awakening, Euro-Mediterranean relations and business

THANK YOU [email protected]

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