AFD AND UGANDA

Bujagali Š BEL

AFD AND UGANDA

A growing partnership

MEETING THE STRUCTURAL NE AND SCALING UP ACCESS TO BAS

OUR STRATEGY FOR OPERATIONS AFD’s financing currently focuses on three sectors

IMPROVING WATER SUPPLY AND SANITATION SYSTEMS IN URBAN AREAS

Agence Française de Développement (French Development Agency - AFD) has been operating in Uganda for almost twenty years, initially via its subsidiary PROPARCO, then with AFD following the opening of an AFD regional agency in Nairobi in 1997. The increase in activity gave rise to the opening of a local office in Kampala in 2009.

Since 1998, AFD Group has committed over EUR 280m in investment projects in Uganda. PROPARCO’s financing mainly focuses on the energy sector (Bujagali dam), financial sector (credit lines to international and local banks) and enterprises (hotel industry, telephone services, agro-industry).

From 2009 to 2013, AFD’s financing totaled EUR 130m and was mainly allocated in the water and sanitation sector (EUR 75m), energy sector (EUR 19.6m) and financial sector (EUR 34.8m).

Over the past five years, 72% of the total volume of loans allocated

by AFD in Uganda have been highly concessional sovereign loans.

PROPARCO’s commitments over the same period stand at EUR 52.4m.

70,000 60,000 50,000 40,000 30,000 20,000 10,000 2009

2010

Water and sanitation Energy

2011

2012

Financial Other

In 2007, AFD co financed the run-of-river hydroelectric dam in Bujagali and its 250 MW power plant. With a total cost of USD 906m, the Group’s participation comprised a USD 60m loan from PROPARCO and a USD 12.8m soft loan from AFD, earmarked to finance the additional mitigation measures for the environmental and social impacts of the construction of the dam.

The power plant was commissioned in the summer of 2012.

AFD has also co-financed the Hoima-Nkenda power transmission line via a USD 23m loan allocated in 2012. The project has a total cost of USD 85m and is co-financed by the Governments of Norway (USD 54m grant) and Uganda.

In 2010, AFD allocated a EUR 7.7m market-rate credit line to Housing Finance Bank for the long-term refinancing of the bank’s housing finance activity. A EUR 30,000 grant was allocated at the same time, via a Management Capacity Building Fund (FRCG), for the updating and development of the bank’s in-house antimoney laundering and social responsibility policy.

(in thousands of EUR)

80,000

0

SUPPORTING THE ENERGY SECTOR

PROMOTING THE PRIVATE SECTOR

Commitments for 2009-2013 90,000

AFD has committed EUR 92m in this sector. After financing two water intakes in Lake Victoria (in Jinja and Gaba), in April 2010, AFD signed a EUR 75m financing agreement with the Government of Uganda for Kampala City’s drinking water supply and access project (WATSAN). This project has a total cost of EUR 212m and is being financed by AFD and EIB through EUR 75m of sovereign loans, KfW via a grant, and the Government of Uganda.

Due to its regional dimension, it also benefits from a grant from the EU-Africa Infrastructure Trust Fund, as well as from the synergies developed with similar projects financed by AFD around Lake Victoria in Kenya (Kisumu) and Tanzania (Bukoba, Musoma) (see box).

2013

EEDS OF UGANDA’S ECONOMY SIC SERVICES FOR COMMUNITIES

THE REGIONAL APPROACH FOR LAKE VICTORIA AFD has defined a regional strategic approach on the shores of Lake Victoria, where it supports water operators in the main cities (Kisumu in Kenya, Kampala and Jinja in Uganda, Bukoba, Musoma and Mwanza in Tanzania).

Solutions need to be implemented in a coordinated manner between the projects. The support provided by AFD via these regional projects on common topics is highly appreciated by its partners. It also offers the opportunity to call on France’s internationally recognized expertise in the sector.

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This regional approach is shared with the Lake Victoria Basin Commission and provides for experience-sharing and the implementation of common solutions approved for each project. The aim is to address water quality issues and optimize the selection of raw water treatment methods.

For example, each of these cities faces a problem of pollution and algal growth, which hampers the functioning of the traditional treatment systems in place.

OUTLOOK AFD’s strategy for operations in Uganda for 2013-2016 is based on an approach to scale up its volumes of financing, with an annual target of between EUR 30m and EUR 50m. This strategy aims to meet the structural needs of Uganda’s economy and promote essential services for communities in sectors in which AFD benefits from high added value. AFD’s objective is to draw on its experience in urban water and energy by scaling up its activity in the infrastructure sector.

In the energy sector, where AFD is a leading donor, it will continue its action for power generation and transmission, and will be extending its operations to the rural electrification segment.

Consequently, AFD will be continuing its partnership with the National Water and Sewerage Corporation (NWSC) in the water and sanitation sector, with a shift in focus towards secondary cities where investment needs are the highest for the coming years. AFD has also been requested by the Ugandan authorities to accompany investments for food security and is preparing a project to support irrigation infrastructure and the related agricultural activities.

Finally, given the vast biodiversity in Uganda and its impact on the national economy, AFD aims to focus its financing on projects that combine biodiversity conservation and support for the country’s tourism activities.

AFD is supporting the fight against climate change via a regional capacity building project for the implementation of national climate change strategies. Partnerships are currently being prepared with Kampala City Authority (KCCA), as well as with the Ministries of Water and Energy.

© AFD – C. Vidal de la Blache

AFD is present on four continents where it has an international network of seventy agencies and representation offices, including nine in the French Overseas Provinces and one in Brussels. It finances and supports projects that improve people’s living conditions, promote economic growth and protect Earth, such as schooling for children, maternal health, support for farmers and small businesses, water supply, tropical forest preservation, and the fight against climate change.

In 2012, AFD approved EUR 7 billion to finance activities in developing countries and the French Overseas Communities. Main outcomes of AFD’s funding are monitored every year. For instance, money delivered will help get 10 million children into primary school and 3 million into secondary school; they will also improve drinking water supply for 1.79 million people. Energy efficiency projects financed by AFD in 2012 will save nearly 3.6 million tons of carbon dioxide emissions annually.

www.proparco.fr

PROPARCO, AFD’s subsidiary dedicated to private investment, promotes private investment in emerging and developing countries in order to boost growth, promote sustainable development and reach the Millennium Development Goals. Its financing is tailored to the specific needs of investors in the productive sector, financial systems, infrastructure and private equity investment.

FFEM

www.ffem.fr

FFEM is a bilateral public facility set up by the French Government in 1994 following the Rio Summit. It aims at promoting global environmental protection via sustainable development projects in developing or transition countries. The French Global Environment Facility supports physical projects in recipient countries. Its operations are learning-based and support experimental, innovative or exemplary approaches.

This publication was printed in an environmentally responsible manner using vegetable-based ink and PEFC™ paper, chain of custody n° 19-32-319 (sustainable forest management).

AGENCE FRANÇAISE DE DÉVELOPPEMENT (AFD) 5 rue Roland Barthes 75598 Paris Cedex 12 – France Tél. : +33 1 53 44 31 31 Fax : +33 1 44 87 99 39 www.afd.fr AGENCE RÉGIONALE DE NAIROBI Top Plaza Building Kindaruma Road, Off Ngong Road P.O. Box 45955 00100 Nairobi – Kenya Tél. : (254.20) 259.29.07 / 259.29.09 Fax : (254.20) 259.29.08 kenya.afd.fr BUREAU DE KAMPALA Ambassade de France Plot 16 Lumumba Avenue, P.O. Box 7212 Kampala – Uganda Tél. : +256 414 304 533 ouganda.afd.fr Creation: Planet 7 – December 2013

Agence Française de Développement (French Development Agency – AFD) is a public development finance institution that has been working to fight poverty and foster economic growth in developing countries and the French Overseas Communities for seventy years. It executes the policy defined by the French Government.