African Development Bank Group

1

Accessing the Private

Sector Window

MOZAMBIQUE

2018-2022 CSP MID-TERM

REVIEW

Financing Windows

AfDB is able to address part of the financing needs of the African continent. With the

exception of the African Development Fund (ADF), the institution uses the leverage

afforded by its AAA credit rating to on-lend to its borrowers, at favorable terms,

resources raised in international capital markets.

ADF Financing Window

ADB Financing Window

Internal Trust Funds

External Facilities

Sovereign Clients

Mobilizes and deploysfunding on behalf of

donors…

Non-Sovereign

Clients

AfDB provides the following financial instruments to

Middle-Income Countries and Private Sector Entities.

Financial Instruments

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How to Access the Private Sector Window?

Best projects selected based on four

key dimensions

• Is the project in line with relevant AfDB, country and sector strategies and Hi5 priorities?

Strategic Alignment (SA)

• Does the project generate enough cash to cover debt service? Are risks manageable? Is sponsor financially sound?

Commercial Viability (CV)

• Does the project generate significant economic benefits for the country (job creation, Government revenues, diversification and trade, environmental benefits)?

Development Outcomes (DO)

• Does the AfDB’s participation add value (risk mitigation, enhanced DO, risk taking)? Is the AfDB working in partnership?

Additionality and Complementarity (AC)

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Application Procedures

✓ Description of the project (sector,

location, production volumes);

✓ The sponsors, including financial and

managerial background;

✓ Cost estimates, including foreign

exchange requirements;

✓ Financing plan, indicating the amount

of AfDB financing desired;

✓ Key technical and environmental

features;

✓ Feasibility indicators;

✓ Business climate, market prospect,

including proposed marketing

arrangements;

✓ Implementation plan, including the

status of required licenses, permits,

certificates.

Preliminary Application:

If eligible

Full Application

Review

✓ 1. Feasibility study;

✓ 2. Business plan;

✓ 3. Environmental

impact assessment

(depending on the

nature of the

project).

~6 – 9 months

to reach approval

from the Board

Leveraging Resources

Africa Investment Forum

« Closing a deal is not an event, it’s a process »

A multi-stakeholder, multi-disciplinary platform dedicated to:

• advancing projects to bankable stages

• raising capital

• accelerating the financial closure of deals

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Project Pipeline

Better Project

Structuring

Deal

Monitoring

AIF (2018 + 2019)#9 projects from MozambiqueTotal Project’s Value – USD 3,5 billionSectors: Agriculture, Infrastructure, Manufacturing

Better project structuring from the

Private Sector is the key for success

Lessons learnt:

AIF - Results and Lessons for

Mozambique

AFDB’s Climate Funds

• Enable Africa’s private sector participation in climate-related investments and support NDCs implementation in six pilot countries: Angola, Egypt, Morocco, Mozambique, Nigeria and South Africa in two assignments:

• Assignment 1: Identification of NDC investment opportunities for the private sector: – strengthen private sector capacity to take advantage of the abundant opportunities for green

investmentso Develop a climate change screening tool and toolkits for private sector and SMEs to mainstream climate

change in key sectors; o Develop a practical working material to support private sector and SMEs analyze climate change risks/

opportunities and generate strong adaptation strategies;o Raise awareness and strengthen the capacity of private sector and SMEs to identify incremental cost due to

climate change and identify climate finance and climate innovation opportunities;o Support the Bank to mainstream climate change through lines of credit and develop toolkits for Bank staff

and Investment Officers.

• Assignment 2: Scaling climate Action through Climate technology and Innovation by SMEs– design and develop climate change assessment tools for green investment for both private sectors

and SMEs to: o Support the Mozambique private sector and SMEs to assess climate risks and opportunities for green

investment.o Identify, assess and prioritize upstream opportunities based on country and sector strategies and the

potential to create markets;o Select bankable projects based on criteria and scope for integrating climate change and green growth

strategies, identify potential development impacts and align with national needso Out of the pipeline of 20 projects identified in each country, it is expected to package prepare and submit 5

compelling proposals to pursue GCF funding. o “Organize a 1-day investment networking and deal-making forum to pitch the 20 selected projects and to

explore potential co-financing from development finance institutions active in the target countries such as GCF ”

Private Sector Investment Initiatives for NDCS

SEFA in a nutshell

• Multi donor fund capitalized at $ 180 million

• Risk capital to unlock private investments

• Holistic approach / Ecosystem development

Individual Projects Investment Platforms Scale-up Programmes

Feasibility studiesTransaction advisoryFundraising support

Policy & RegulatoryCapacity-buildingAdvisory & structuring

Ex: Parque eolico

Namaacha (PEN) Wind

Project

Ex: Support to MIREME

for Mini-Grids and small

IPP policy work

Thematic Areas and Financing Windows

Technical Assistance

• Support in the form of Grants and Reimbursable Grants

• Project preparation and creation of an enabling environment

• Increase focus on activities that will directly unlock investments

Concessional Financing

• Catalytic risk capital and financing of viability gap

• Grants (including results-based financing for mini-grids), subordinated equity andconcessional debt

• Usually blended with AfDB resources

➢ Green mini-grids: focus on electricity access to underserved

populations in rural areas

➢ Green Baseload: focus on displacing/reducing the use of fossil fuel

generation

➢ Energy efficiency: focus on optimizing generation capacity and

reducing energy intensity

• To submit a funding request, complete the application form and submit it to sefa@afdb.org.

Technical Assistance Funds for MSME

and PSD Development

Trust Funds for Technical Assistance for SME’s Focus Amounts

Fund for African Private Sector Assistance

(FAPA)

Capacity Building, Linkages Programs, Trade

and Investment Promotion for SME’s for Job

Creation.

Up to 1 Million USD,

approved by the

Steering Committee/

/Technical Review

Committee, above to

be approved by the

Board.

Affirmative Finance Action for Women in

Africa (AFAWA)

Access to Finance, Technical Assistance and

Business Enabling Environment (BEE) for

Women led SME – Job Creation.

Youth and Entrepreneurship and Innovation

Multidonor Trust Fund (YEI MDTF)

Capacity Building for Youth Start UP”s ,

Micro, Women Led (MSME’s) - Job Creation.

Programs in Pipeline Project 1 - The LinKar Program: Creating Sustainable SME Supply Chain in the Oil and Gas Sector

Goal: Provide technical assistance and in dept advisory services to 150 SMEs, resulting in 75 SME’s reaching the required levels of competitiveness, 30 contracts worth $3 m will be facilitated, up to 40 SME’s are expected to access to finance of US$ 3.2 m from Financial Institutions and 120 jobs are expected to be created over a period of 3 years

Implementing Partner: Empresa Nacional de Hidrocarbonetos (ENH)

Expected Results (50% Women Led):✓ The create a minimum of 120 new Jobs for SME’s in the Oil and Gas Value Chain;✓ Identify 150 SME appropriate contract opportunities, including 25 partnership and/or JV opportunities, with a total of US$12 m;✓ Support 30 SMEs to win US$ 3 m worth of contracts in the oil & gas value chain.✓ Facilitate to 40 SME’s Access to finance of US$ 3.2 m from Financial Institutions.✓ Provide technical assistance and in dept advisory services for at least 150 SMEs, resulting in 75 SMEs reaching the required levels of

competitiveness;✓ Develop a Demand/Supply versus opportunities Matching framework in the oil and gas sector.✓ Establish a competitiveness framework to define the capacity requirements for SMEs to access target contracts in the oil & gas value chain.✓ Provide Institutional support to ENH to enable the Institution to engage with all stakeholders, manage and implement a high-quality program

in the country.Project 2 - Local Content Development Program for Youth and Women-led Start Ups and Micro

Goal: 100 Youth and Women-led Start UPS’ and Micro (MSME’s) are expected to create 50 jobs (50% women), and US$100,000 worth ofcontracts and US$100,000 in finance over a period of 3 years. .

Implementing Partner: Institute for the Promotion of Small and Medium Enterprises (IPEME)

Expected Results (50% Women Led):✓ The create a minimum of 50 new Jobs for MSME’s; ✓ Identify 50 MSME appropriate contract opportunities, including 25 partnership and/or JV opportunities, with a total of US$750,000; ✓ Support 10 MSMEs to win US$ 100,000 worth in contracts large companies and government entities; ✓ Facilitate to 10 MSME’s Access to finance of US$ 100,000 from Financial Institutions. ✓ Provide technical assistance and in dept advisory services for at least 100 MSMEs, resulting in 50 MSMEs reaching the required levels of

competitiveness; ✓ Develop a Demand/Supply versus opportunities Matching framework. ✓ Establish a competitiveness framework to define the capacity requirements for MSMEs to access target contracts with large multisector

private and public companies, government entities, as well Non-Governmental Organizations (NGO’s).✓ Provide Institutional support to IPEME to enable the Institution to engage with all stakeholders, manage and implement a high-quality

program in the country.

African Development Bank Group

14

MOZAMBIQUE

2018-2022 CSP MID-TERM

REVIEW

Discussion