Sustainable development report - 2018

#BusinessInCommon

SUSTAINABLE DEVELOPMENT REPORT ANALYSIS OF THE RESULTS AND IMPACTS OF PROJECTS FINANCED IN 2018

Business in Common Proparco has been working for the private sector and sustainable development for over 40 years. A subsidiary of Agence Française de DÊveloppement, Proparco invests to support the growth of private actors and funders mobilized to contribute to the economic, environmental and social development of developing and emerging countries. We finance companies and financial institutions whose activity contributes to the creation of decent jobs and incomes, the provision of essential goods and services, and the fight against climate change. Our operations thereby aim to strengthen the contribution that private actors make to the achievement of the Sustainable Development Goals.

CONTENTS

Sustainable Development Report Editorial

2

Strategy and ambitions

4

Main results in 2018

18

The direct impacts of funded projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 USD 3bn to reduce gender inequalities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Our operating methods

8

Our impacts on the transformation of stakeholders . . . . . . . . . . . 28 Our impact on mobilizing financing flows and unlocking investment in countries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Focus: Evaluation of the results of Proparco’s technical assistance services since 2010

Measuring and analyzing the impacts of projects. . . . . . . . . . . . . . . 8 Taking the environmental, social and governance risks into account and assisting our clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Building the capacities of clients and diversifying Proparco’s range of instruments via delegated resources. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

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SCALING UP THE IMPACTS OF OUR OPERATIONS Grégory Clemente, Chief Executive Officer of Proparco

In a world of challenges, which calls for more sustainable and inclusive societies, the role of private actors is increasingly essential to contribute to the achievement of the Sustainable Development Goals (SDG) and the implementation of the Paris Agreement. Mobilizing more private investments towards developing countries is a global challenge. Directing these investments to ensure they provide sustainable and innovative solutions is an issue for the transformation of our economies and our societies.

In 2017, Proparco adopted an ambitious strategy: to triple its impacts on the SDGs by 2020 while doubling its activity. The results are there to see. Proparco is

Our ambition to achieve environmental and social excellence demonstrates our commitment to support an effective, responsible and sustainable private sector.

well on track.  E UR 1.6bn of financing approvals in 2018, including EUR 578m in Africa and EUR 536m for the climate;

Proparco is also engaged in a strategy to strengthen

 1.5 million tons of CO2 equivalent avoided every year

partnerships with its counterparts (International Finance

thanks to 16 projects with climate co-benefits signed

Corporation, network of European development finance

in 2018;

institutions…) in order to provide the responsiveness and

 2 2.6 million people will have an improved access to

level of service expected by the companies it supports.

essential goods or services;  1 7 innovative projects signed in 2018 to support transitions;  82 clients supported since 2017 to improve their environmental and social performance.

Private investment is, even more than in the past, an essential need for developing countries. The products and services deployed by the private sector will produce benefits locally, while acting as major sources of innovation and inspiration for our societies. Proparco,

This strategy has been combined with organizational

as a responsible actor, will continue to support private

changes in response to the rapid growth in activity, and,

stakeholders towards an increasingly sustainable and

more importantly, to the changing needs of our clients.

inclusive development.

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Strategy and ambitions Over the years, the private sector has become one of the economic actors that influence the most the development paths of countries. It has therefore become a key component of the development assistance policy.

Private investment and enterprise have long

prosperity and biodiversity and the Paris Climate

been mainly regarded in terms of their positive

Agreement have all forced us to change our

impacts on economic growth

production and consumption

and employment. For a few

patterns and lifestyles. The

years now, their impacts on

private sector plays a key role in

the quality of life, the envi-

this field, through the volume

ronment and social life have

of its investments (new and

been highlighted via Corporate Social Responsibility (CSR) approaches. These approaches are also increasingly popular among professionals, regulators and clients.

1.53 Mt CO -eq

2 avoided every year thanks to projects financed

by Proparco in 2018

A universal transition towards more sustainable and more equitable models

renewal of its infrastructure stocks) and the dynamics of players who create organizations able to rapidly change practices.

The purpose of international aid is therefore no longer simply to protect and promote the

catching-up of the weakest, but also to redirect and regulate private investments so that they can support this transition. This new challenge

The Sustainable Development Goals, the

requires international aid actors to completely

major international negotiations on trade,

renew their mandate.

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The Wind Farm of Gul Ahmed Energy, in the Jhimpir corridor (Sindh Province, Pakistan), has been supported by Proparco since the start of the project in 2016. In addition to the financial support (loan of some USD 19m), Proparco has promoted CSR practices and the recruitment of a local labor force.

The private sector, a key driver of the transition AFD Group, and Proparco in particular through support to the private sector, promotes transitions towards sustainable and balanced growth models that are inclusive and carbon-free, in developing and emerging countries. Indeed, the private sector is a major driver for achieving these transformations: as an investor, it has the

The private sector is a key actor for achieving the international sustainable development objectives.

Ambitious objectives for a private sector conducive to transitions

capacity to take action on and direct most of the investment dynamics; as an employer and

To address these challenges, in December 2016,

increasingly an actor in the territorial fabric and

Proparco adopted a new strategy for 2017-2020.

public policies, it directly influences the quality

It is in line with the commitment of the French

of life and social well-being; as a producer of

Government and international community to

effective and innovative ranges of goods and

boost the international development and solida-

services, it is able to boost ecological, social

rity policy in order to support these transitions

and economic transitions.

through private initiatives.

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THREE AMBITIOUS OBJECTIVES OBJECTIVE 1

OBJECTIVE 2

OBJECTIVE 3

DIRECT IMPACTS ON DEVELOPMENT

TRANSFORMATION OF ACTORS

REDIRECTION OF INVESTMENTS

 To double its financial commitments in

 To help strengthen the environmental

 To scale up the mobilization effect that

order to triple its direct impacts on the

and social responsibility of private sector

Proparco has on financing flows, notably

development and transitions of countries

actors and their capacities to innovate,

private flows, and its capacity to unlock

implement and support the transitions

investments in targeted countries

The aim is to support the new sustainable economy by relying on operational

This objective is implemented via:

strategies that:

Proparco’s strategy towards this objective focuses on:

 A greater involvement of Proparco’s  promote projects with a potentially strong impact on transitions, in particu-

teams and experts in advising clients on CSR and governance;

lar energy and transport infrastructure,

 the deployment of instruments with strong leverage, with an increase in equity and guarantee instruments;

and the major industries and agribu-

 A deployment and strengthening of the

sinesses, while building Proparco’s

resources allocated to technical assis-

 the use of grant resources blended with

capacities to evaluate and manage the

tance and capacity building programs.

market instruments to diversify and

impacts created by these companies;

tailor Proparco’s instruments to the needs and level of risks of companies,

 support the actors most likely to boost the local entrepreneurial fabric and

while maximizing the impact of its action;

the economic activities of populations, in partnership with the various

 the support to innovations which have

stakeholders in local financial systems

an unlocking effect on investment:

(banks, microfinance institutions), but

new technologies, new processes, etc.

also international investment actors in Proparco’s areas of operation;  encourage the deployment of activities in social sectors (education, health…) and services (ecological, technological…), so that the private sector can contribute to the catching-up and emergence of the human and economic potential of the poorest countries.

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PROPARCO’S IMPACT OBJECTIVES 2017-2020 Proparco doubles its commitments

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A new department for a greater impact Clients triple their impacts

Proparco has overhauled its organization in order to support this strategy focused on the impact and added value of the institution.

The Sustainability and Corporate Governance Department (A2D) was set up on 1 January 2018. It

Number of direct and indirect jobs created and/or maintained

has increased resources and is at the same hierarchical level as the operational departments. This

Number of tons of CO2 equivalent avoided

department includes three teams of Proparco experts in environmental, social and governance issues

Theoretical number of people who will have access to an essential good or service Number of innovative projects offering solutions suited to the population

(ESG), impact measurement (IMP) and specialists in technical assistance to companies and blending (ATM). It has a threefold mission.

It deploys the assistance services for client companies projects. It assists Proparco’s teams in the

Number of companies assisted in their CSR process

appraisal of project financing to ensure they respect AFD Group’s commitments in terms of environmental, social and governance standards and impacts. Finally, it feeds into Proparco and AFD

A commitment to accountability and transparency

Group “sustainable development”

Proparco has decided to release an annual “Sustainable Development

and feedback, and promotes their

Report” in order to estimate the achievement of its objectives and the result

expertise and achievements both

of its strategies, and report on them. This document shows the progress

internally and externally.

and results in a transparent manner. A list of indicators which measure its contribution to the Sustainable Development Goals (SDGs) has been selected. Proparco is working on developing this list, based on the best practices deployed by its peers.

strategies through its reflection

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Our operating methods Proparco supports and advises its clients in order to improve the environmental and social management of their activities and the governance of their institutions. It is strengthening its own evaluation and impact measurement practices and developing its support tools to better assist the private sector.

Measuring and analyzing the impacts of projects As a development finance institution and to

Impact measurement in the project cycle

improve accountability, Proparco evaluates and reports on the impact of its action. An

Proparco focused its initial efforts on imple-

approach to measure the results and impacts

menting the approach and tools for ex ante

of its financing has therefore gradually been

impact assessment of projects. Progress is

developed. This leads to the development of

regularly made in monitoring the impacts of

tools and procedures in line with international

projects and in evaluating operations ex post.

practices and Proparco’s strategy.

The mechanism is integrated into the various stages of the project cycle.

The measurement of the results and impacts aims to:

Proparco measures its results and presents the

 A ssist the financing decision by assessing,

contribution made by its operations in terms of

during the appraisal of projects, their expected

its three main strategic objectives:

impacts on sustainable development;

 Tripling its direct impacts;

 Strengthen the impact of projects by identifying the drivers making it possible;  Serve Proparco’s strategies;  I mprove knowledge and capitalize on know-how.

 Supporting the transformation of stakeholders;  Strengthening its role in redirecting private investments and financing.

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THE MEASUREMENT OF IMPACTS IN THE PROJECT CYCLE AT PROPARCO from identification to ex post evaluation

1 IDENTIFICATION

2 APPRAISAL

3 DECISION

4 MONITORING

5 EVALUATION

Pre-identification of impacts

Analysis of the contribution to the impact objectives and to sustainable development

Presentation of the results of the analysis to the project committee and investment advisory committee

Annual reporting on the main results indicators

Ex post study of the results and impacts of projects

For the sake of accountability, this analysis is presented from the broader perspective of

Evolutions in the impact measurement approach

consistency with the SDGs (see p. 19).

Estimate of the results and impacts

A full review of the impact analysis and measurement approach was conducted in 2017. It led to the implementation of work focusing on

The main indicators and expected impacts of each

four aspects.

project are assessed in relation to the collection of a certain amount of data grouped together in a

ď Ą Stabilize and strengthen results and impact

database called GPR. The assessment is based on

measurement and monitoring indicators.

taking into account quantitative and qualitative indicators provided by the investment officer

This subproject is expected to be finalized in

with support from the Impact Measurement

the course of 2019. The aim is to more effec-

(IMP) team, thanks to project studies and

tively harmonize our practices with those of

exchanges with the client. The analysis is

other financial institutions and AFD, and to

subsequently conducted by the experts from

simplify the list of results/impacts indicators

the IMP Unit, working with the project team.

in order to make the monitoring more accurate

The GPR also produces an aggregated rating

and more exhaustive. The objective is also to

(score), which is provided in the analysis and,

improve data collection and the monitoring

in theory, allows the impacts of projects to be

of indicators during the implementation and

compared with each other.

throughout projects.

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RENEW IMPACT MEASUREMENT

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 Make the analysis of projects more effective

New dimension for analysis: 100% Paris Agreement

 Facilitate the collection of reliable data

2018 was marked by the empowerment and

 Improve quality control

responsibilities include assisting operational

 M ore easily monitor what our clients have achieved

teams in the analysis of the impacts of funded

In line with AFD Group’s Climate and

operations. Its positioning has been strengthened

Development Strategy for 2017-2022,

and stabilized. It aims to:

Proparco has committed to ensuring

 Provide the project team with methodolo-

that its financing is compatible with

gical and benchmark elements upstream on

the expectations of the Paris Agreement

impact issues, using sectoral methodologies

and, in particular, promoting a path

and documentation;

reducing the carbon intensity and

Current method 4 specific GPR models per project, depending on the type of client (banks, funds, companies, infrastructure) 141 indicators collected on average

Development envisaged A common list for all projects of key results indicators related to Proparco’s strategic objectives A few additional relevant sectoral indicators adapted to the sector

strengthening of the Impacts Unit, whose

 Adapt its level of analysis and involvement to

strengthening the resilience of coun-

the type of potential impacts of the project,

tries and economies. In 2018, Proparco

while aligning the methods with those of other

consequently adopted a procedure

financial institutions and AFD;

to operationalize the “100% Paris

 Strengthen the monitoring of project imple-

Agreement” commitment in two

mentation and capitalization (sectoral ana-

phases. The first phase implemented

lysis), in order to respond to the increasingly

involves a systematic analysis of any

important demand for accountability.

potential inconsistency of Proparco’s direct financing and investments

D evelop assessment and analysis tools and processes

(excluding intermediation) with the Paris Agreement. In a second phase, the levels of the positive contribution to the

The data collection and processing tool needs to

lower carbon intensity and resilience

be made more ergonomic and easier to use and

path made by funded projects will be

the current project rating methodology will be

analyzed and valued, beyond being

more suited to needs.

simply counted as a “project with a climate co-benefit”.

 Phase in additional support before and after the appraisal

AFD Group has also pledged to finance projects with a strong impact in terms

The aim is to help the regional departments

of the social link, support for fragile

and operational teams have a better forward-

countries, and all aspects of sustai-

looking understanding of the impacts by sector

nable development: the evaluation

and by type of operation and more effectively

process and indicators are currently

capitalize on the ex post evaluations of the

being considered. Proparco examines

results of operations.

the indicators and processes adapted to its activity in order to monitor the contributions its projects make to these objectives.

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Taking the environmental, social and governance risks into account and assisting our clients with their CSR and governance processes Development operations by nature involve risks in relation to the environment and populations. Proparco’s approach aims to manage the environmental and social (E&S) risks, as well as the governance (G) risks. The objective? To avoid, mitigate or offset the negative impacts of funded projects.

Our ESG approach

Working with Proparco is a real challenge. It has extremely high social and environmental requirements.

Katrina Diaz, CSR Manager at Proteak, a client of Proparco

E&S-G as added value for all projects

Our approach is similar to AFD’s and to the best practices of international financial institutions.

A project/client that manages all these ESG

It is based on the performance standards of the

risks in accordance with the best standards is

International Finance Corporation (IFC), the

a more financially viable project/client. This

international labor standards of the International

statement is a matter of common sense and

Labour Organization (ILO), the guidelines

has now been proved by crosscutting studies

of the United Nations Food and Agriculture

on the consequences of the application of the

Organization (FAO) on tenure and the Universal

best environmental, social and governance

Declaration of Human Rights. It involves asses-

practices in companies.

sing the environmental and social risks and impacts of each project submitted to Proparco’s decision-making bodies and the measures planned by the recipients of financing to remedy

Environmental and social issues of projects financed by Proparco

them. We propose additional measures to clients to implement in order to limit these risks or

It involves all subjects that concern or may have an impact on the envi-

offset their impacts. During the execution of the

ronment and populations. Based on the IFC performance standards,

operation, we monitor the implementation of

E&S issues include the following main themes:

these measures before ensuring the project has

 Assessment and management of E&S risks and impacts;

properly managed unforeseen situations with

 Labor force and working conditions;

negative environmental and/or social impacts.

 Rational use of natural resources and prevention of pollution;

Finally, where appropriate, it involves helping

 Health, safety and security of communities;

the client to build its capacities to manage

 Acquisition of land and involuntary resettlement;

and implement its environmental, social and

 Biodiversity conservation and sustainable management of living

governance performance.

natural resources;  Indigenous peoples;  C ultural heritage.

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By financing the development of the Pontifical Catholic University Madre y Maestra (PUCMM) in the Dominican Republic, AFD Group, including Proparco, is contributing to access to higher education for young people from disadvantaged backgrounds who benefit from scholarships.

360° visit of PUCMM University: bit.ly/PUCMM360 Beyond a better management of risks, the pro-

provide more specific support to the project. This

ject creates additional value. This added value

E&S and/or G support is specific to each project

leads to coherent decision-making, access

and depends on each client. It may comprise a

to new markets via certifications, increased

technical assistance component.

attractiveness by obtaining new financing, improved productivity and competitiveness and, ultimately, a contribution to improving people’s living conditions and environmental protection.

Monitoring ESG performance throughout the project life The monitoring of the implementation of ESG recommendations is crucial to respecting best practices in the long term. It is subject to the

A project/client that manages all these ESG risks in accordance with the best standards is a more financially viable project/client.

calculation of indicators, which are produced and regularly managed by Proparco’s teams. It

Proparco has strengthened its Environment,

thereby materializes the development of the ESG

Social and Governance (ESG) Division: in early

performance and of the levels of residual risks

2019, a team of 16 people was ensuring the effec-

throughout the life of each project.

tive implementation of these ESG approaches.

Depending on the issues (risks and support), as

In some cases, in view of the indicators and

defined in a standardized and shared approach,

the relationship with the client, it is decided to

the ESG team is involved to varying degrees

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

in the appraisal and monitoring phases in all

or long-term assistance program, by conducting

funded projects.

a diagnostic using the best practices available, in particular the OECD standards.

Proparco works closely with IFC and the other development finance institutions, in particular

Proparco has several diagnostic and assistance

the European Development Finance Institutions

tools for its clients. This mainly involves Rapid

(EDFIs), on the development of tools specific to

Risk Screening (pre-analysis rating tool), a pro-

the sectors, the types of companies, the contexts,

gression matrix (measurement of the maturity

etc. These harmonized tools give everyone

of governance), ad hoc questionnaires, a results

greater ownership of these reference standards.

matrix (rating tool for the results of due dili-

The specific risk management tools for governance

gence), and model documents for companies (bylaws of a Board of Directors, for example).

A vademecum of good practices has also been prepared for entrepreneurs, among others.

Good corporate governance contributes to strengthening and streamlining the exercise of power in companies. It is an engine of growth and limits the risk.

We assess the corporate governance of our clients (equity investment, except investment funds, debt above EUR 10m, family-owned business) and monitor the implementation of the improvement measures negotiated with the client. Our teams develop appropriate recommendations and, where necessary, a specific short, medium

Corporate governance in projects financed by Proparco Corporate governance refers to all the relations between the management of a company, its Board of Directors, its shareholders and the other stakeholders. It is also the framework in which the company’s objectives are set, the means to achieve them are defined and performance is monitored. Its evaluation is based on the analysis of five main components:  The structure and operation of the Board of Directors;  The control environment and procedures;  The transparency and dissemination of information;  Shareholders’ rights, conflicts of interest and related party transactions;  The company’s commitment to good governance.

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The Guatemalan company Kingo has designed an innovative prepaid solar energy service, well-suited to inhabitants. In addition to its equity investment, Proparco has financed technical assistance to support the start-up for the training of its employees and securing of its client data.

To find out more about Kingo: bit.ly/proparco-kingo-ENG

Building the capacities of clients and diversifying Proparco’s range of instruments via delegated resources In the context of its strategy for 2017-2020, Proparco is developing and diversifying its range

Supporting the development of clients

of assistance in order to increase the impact of its operations. This involves deploying technical

Alongside its financing operations (debt,

assistance projects and mobilizing delegated

guarantees or equity investments), Proparco

financing from several sources external to

offers a range of technical assistance services:

Proparco and combined with our own ins-

this allows it to build its clients’ capacities to

truments according to blending methods. At

implement projects and improve their prac-

Proparco, these two activities are managed by

tices. The technical assistance may be delivered

the Technical Assistance & Blending Unit (ATM).

directly to Proparco’s clients or delegated to the investment funds in which Proparco invests.

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

Indeed, in addition to financing which they

This need is especially seen in developing coun-

may be lacking, SMEs express the need to be

tries: SMEs work in these countries in contexts

supported in order to increase their capacity

often marked by a lack of training, information

for innovation, to be assisted in their adoption

or know-how, which holds back their expan-

of best practices and their ownership of CSR

sion and, consequently, their contribution to

approaches, or to increase their positive impact.

economic and social development.

APPRAISAL CYCLE FOR TECHNICAL ASSISTANCE PROJECTS

IDENTIFICATION

APPRAISAL

DECISION

MONITORING

Definition of the client’s need during the appraisal or monitoring of financial operations

Clarification of the content of the technical assistance and of the most appropriate expertise to meet the need

Agreement on the content of the technical assistance and the maximum amount cofinanced

by Proparco

Support for the recruitment of the service provider, monitoring of the quality of the service and the impact that the technical assistance has in the company

Technical assistance, a complementary tool to financing The technical assistance aims to provide added value and increase the positive impact of financial operations, by building the capacities of clients or improving the environment in which they work. Various forms of assistance can be cofinanced by Proparco:  consultant missions;  implementation of internal projects conducted by an expert/experts;  training (thematic workshops, university courses, external training, etc.);  exchange visits between companies and practitioners;  studies (feasibility studies, market studies, product and diversification studies, audits, etc.);  seminars and crosscutting events.

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Providing support to assist local development Technical assistance proves essential for companies which:  develop products that are less common or are at a very recent development stage (venture capital/digital technology or start-up);  offer products or services with a strong social impact (social or inclusive enterprises);  work in countries where the support ecosystem is particularly weak (priority poor countries or fragile countries).

Access to Green Climate Fund financing is a driver for action to support private sector involvement in the emergence of development models that are more resilient to the impacts of climate change.

These operations are cofinanced by the beneficiary company. They allow companies to adapt

Grégory Clemente, Chief Executive Officer of Proparco

to an increasingly competitive local and international environment and to develop responsible

Commission (EC). Several operations have been

practices in line with their values and those of

launched and Proparco is managing four fund

AFD Group. They are financed via Proparco’s

delegations, directly or in partnership with other

operating budget (EUR 3m planned from 2017 to

European actors.

2020) and by the governance capacity building facility (FRCG) managed by AFD.

Managing delegated funds and developing Proparco’s range of instruments

In addition, Proparco has also been accredited to mobilize the Green Climate Fund since 2016.

The Framework Agreement with the Fund was approved by Proparco’s Board of Directors on 5 October 2018 and was signed in April 2019.

This partnership is a strategic opportunity for

Access (direct or intermediated) to highly

Proparco to further strengthen its support to

concessional resources for the private sector and

the private sector in the low-carbon transition.

investors in order to speed up transitions is being

Access to the Green Climate Fund financing gives

increasingly integrated into the strategies of

it the opportunity to manage grants or benefit

international donors: their resources earmarked

from guarantees, as permitted by the European

for these blending activities are growing. For

Commission, but also to become a manager of

a few years now, Proparco has been taking up

subsidized loans or equity investments with high

this opportunity to use concessional resources

risk profiles. These tools are complementary and

combined with market instruments to diversify

increase the incentive effect of Proparco’s own

its instruments and tailor them to the needs

financing through resource blending.

and levels of risk of the projects or companies it wants to finance.

The accreditations from these institutions are a recognition for Proparco. They demonstrate an

Since 2015, it has been accredited “7 pillars” and

effective capacity to appraise, implement and

can manage funds delegated by the European

manage financing by third parties for a potentially

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The 800 employees of Proteak, a leading Mexican company in the agroforestry industry financed by Proparco, are included in the company development project to implement a sustainable forestry model.

wide range of operations (in terms of types of

its overall, thematic and geographical expertise.

instrument, risk-sharing and amounts). They

Finally, they provide great opportunities for addi-

promote its institutional capacities (banking

tionality on operations and for the development

institution, manager of international mandates),

of Proparco’s range of services and instruments,

technical capacities (capacities in terms of trust

while development finance institutions are

funds, control, human and logistical capacities) and

increasingly taking positions on these resources.

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Main results in 2018 Proparco has adopted a new strategy for 2017-2020, which aims to double its financing, while tripling the direct impacts of funded projects in terms of sustainable development.

The direct impacts of funded projects The impact of each project is evaluated on the

61 projects signed in 2018 were subject to an

basis of an assessment of the project’s effect using

ex ante assessment of the results and impacts.

three key indicators: job creation, greenhouse

The impacts of ICCF projects, financing comple-

gas emissions avoided and access for people to

mentary to projects signed in 2016 and 2018 and

essential goods and services. For each strategic

the refinancing of a loan allocated by Proparco

objective, the analyses of the results highlight

in 2007 have not been analyzed and counted.

the key indicator, secondary indicators and quantitative and qualitative assessments, in relation to the SDGs.

61 PROJECTS ANALYZED EX ANTE out of 68 projects financed in 2018

24

financial institutions

6

investment funds

21

business plans

10

infrastructure projects

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RESULTS OF THE IMPACTS OF PROJECTS FINANCED BY PROPARCO IN 2017 AND 2018 Ex ante analysis Direct and indirect JOBS created and/or maintained 896,400 1,405,200

TONS of CO2 equivalent avoided

2017

2017

1,600,000

2018

2018

1,529,000

ANNUAL OBJECTIVE 2020

1,700,000

ANNUAL OBJECTIVE 2020

5,000,000

Theoretical number of PEOPLE who will have access to an essential good or service 2017

COMPANIES supported on CSR matters 44 82 180

2018 ANNUAL OBJECTIVE 2020

2017 2018 CUMULATIVE GOAL 2020

Innovative PROJECTS 2017 2018 ANNUAL OBJECTIVE 2020

14 17 45

5,150,000 22,638,000 12,000,000

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OBJECTIVE

EMPLOYMENT AND GENDER EQUALITY

IMPACT TARGETED Number of direct and indirect jobs created and/or maintained

ACHIEVED IN 2015

560,000 jobs

ACHIEVED IN 2017

896,400 jobs

ACHIEVED IN 2018

1,405,200 direct and indirect jobs

2020 OBJECTIVE

1,700,000 direct and indirect jobs

Ensuring the development of quality jobs and access to a decent job for the entire working age population is a major challenge. Proparco focuses on its role in terms of employment dynamics.

1. Helping create and maintain direct and indirect jobs  196,700 jobs directly created or maintained by our clients in 2018 (77,400 in 2017)  1,208,500 indirect jobs created or maintained in 2018 (819,000 in 2017)

In 2018, the majority of direct jobs created or

institutions generated 45% of these indirect

maintained with our clients were from financial

jobs in 2018, against 83% in 2017. Companies in

institutions (55%, against 64% in 2017), with

the MAS sector created 38% of indirect jobs: the

a rise in companies from the manufacturing,

agribusiness activities financed this year (SIFCA,

agribusiness and service (MAS) sectors, which

Golden Rice, KTDA) play a key role in supporting

accounted for 44% of direct jobs (against 34%

the activity of smallholders. Investment funds

in 2017). In 2018, EUR 1m of commitments

account for 12% of these indirect jobs created or

signed will create or maintain 202 direct jobs

maintained (13% in 2017). In 2018, indirect jobs

in financial institutions and 256 in MAS com-

amounted to six times the direct jobs created or

panies. These figures, which have increased

maintained, a lower ratio than in 2017, when it

significantly compared to 2017, are due to the

stood at 10.6 to 1. These indirect jobs were par-

size of the counterparties supported in 2018.

ticularly numerous in Central Europe and Asia

Furthermore, 26.4% of these direct jobs will be

Minor (almost one indirect job for one direct job)

created or maintained in low-income and lower

and in Sub-Saharan Africa (the ratio is 2 to 1). In

middle-income countries, and 43% in Sub-

terms of job creation, Proparco’s investments in

Saharan Africa and Latin America. Proparco is

2018 should support the creation of over 40,000

very well positioned to support the catching-up

direct jobs and 911,000 indirect jobs among our

of the poorest countries.

counterparties and their value chain over the next five years.

“Indirect” jobs, meaning they are supported among suppliers, subcontractors and clients of Proparco’s counterparties, are taken into account in the indicators. In this context, financial

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

21

2. Promoting equality and economic empowerment of women  35.7% of direct jobs created or maintained held by women  Women account for over 50% of employees with a quarter of our clients

SAWARI VENTURES employment and training

To contribute to sustainable growth and a

of these financial institutions also offer

resilient economy, Proparco helps strengthen

financial products and services tailored to

The Sawari Ventures

the financial inclusion of women and their

women customers, thereby strengthening

Dutch Fund project targets

access to job opportunities, as well as the

the financial inclusion of women, while

innovative companies in

development of women entrepreneurship.

they account for 80% of the clients of MFIs

Egypt, Morocco and Tunisia.

supported by Proparco (excluding Jumo). The

It will support over 91,000

The operations signed by Proparco in

projects located in Europe and Asia Minor

direct and indirect jobs. The

2018 contribute to female employment:

recruited the most women, with 57.2% of

fund attaches importance to

women account for 36% of employees in

direct jobs. In Sub-Saharan Africa, 50.2% of

training and improving skills:

the companies financed or invested in by

direct jobs benefited women, in the Maghreb

all the fund’s employees will

Proparco. Over 40% of female jobs are in

region, 49.6% of direct jobs are occupied

be trained, in particular on

Sub-Saharan Africa. 54% of the jobs created

by women, and 46.9% in Latin America.

environmental and social

or maintained in the financial institutions

issues. Efforts are also

supported in 2018 are held by women. Half

planned to train employees in the investee companies.

An annual budget of EUR

Promoting decent employment

800,000 will be earmarked for them and will mainly be implemented by the Flat Labs,

Four social and working conditions indicators assess the quality of the direct jobs

which are present in each of

created or supported: the social protection offered to employees and their families,

the three countries.

the existence of a non-discrimination policy, the implementation of measures for the prevention of infectious diseases (HIV, malaria, tuberculosis) and a salary level higher than the legal minimum wage in the country (or the customary level in the relevant area and business sector).  In all banks, in 76% of companies in the MAS sector (“business” projects) and in 50% of the infrastructure financed by Proparco in 2018, employees benefit from social protection for themselves and their families.  Salaries are higher than the market average in 62.5% of banks, in 47.6% of “business” projects and 30% of the infrastructure projects financed in 2018.  Non-discrimination policies have been defined in 87.5% of banks, 81% in “business” projects and 70% in infrastructure projects financed in 2018.  Measures for the prevention of infectious diseases are proposed in 17% of banks, 67% of “business” projects and 80% of infrastructure projects, in relation to the prevalence of diseases in the country concerned.

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P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

USD 3bn to reduce gender inequalities

AFD Group’s Strategic Orientation Plan for 2017-2022 is also more ambitious in terms of reducing gender inequality, as it gives AFD Group a greater role in strengthening the social link and reducing inequalities in developing countries.

Identifying projects that strengthen gender equality A working group made up of DFI members of the 2X Challenge has defined the eligibility criteria for projects that contribute to reducing gender inequalities. Criteria and thresholds have been defined on the basis of four components: women leadership, women entrepreneurship, women employment and access to essential goods and services for women.

In this context, Proparco has become involved

In early 2019, Proparco reviewed projects

in a large-scale initiative to promote gender

signed in 2018 in order to identify operations

equality. During the G7 summit on 9 June

that contribute to the 2X Challenge. There is a

2018, development finance institution (DFI)

priori a significant contribution to reducing

members of the G7, which include Proparco,

gender inequalities. The final list of Proparco

launched the 2X Challenge. This commitment

projects counted under the 2X Challenge is

aims to invest USD 3bn by 2020 in companies,

currently being drawn up for a communication

financial institutions and investment funds

to the group of DFI members and to be counted

that contribute to reducing gender inequali-

with the collective objective of mobilizing USD

ties. This objective means that Proparco has

3bn by 2020.

to mobilize private capital in an innovative manner (including by using blended products)

In addition, since April 2018, Proparco has

in order to unlock financing which would not

been participating in the Gender Finance

otherwise be used to promote the equality and

Collaborative, a network of 15 DFIs aiming at

economic empowerment of women.

sharing experiences, practices, tools and studies on the theme of reducing gender inequalities. It also aims to seek opportunities for partnerships and co-investments between DFIs in order to increase the impact of funded projects.

In June 2018, Proparco and the development finance institutions of the G7 countries committed to mobilize USD 3bn

EX A M PLES OF PROJ ECTS FI N A NCED BY PROPA RCO TO SU PPORT WOM EN ENTR EPR EN EU R SH I P

Supporting an E&S plan for equality

in companies and funds that benefit women by 2020.

Financing women entrepreneurs

A USD 150m loan (Proparco, AFD and DEG) has been

EUR 50m have been subscribed to the social bond issue

allocated to Mauritius Commercial Bank Ltd (MCB).

led by Atlantic Business International to finance social

This Mauritian bank employs over 45% of women

projects in West Africa. 30% of the social bond products

and conducts activities to promote gender equality

will be exclusively earmarked to finance or refinance

in-house, but also in its lending operations. These

small and medium-sized enterprises owned by women.

activities are set out in an E&S action plan set up by AFD and Proparco. Technical assistance is ongoing to help MCB define better products for female clients and better initiatives for its female employees.

Supporting women’s empowerment A EUR 6.6m loan has been allocated to MCE Social

Strengthening the financial inclusion of women

Capital, a company which finances microfinance institutions (MFIs). Its social mission concerns, in particular, women’s empowerment and financial

Proparco has made an equity investment in Sonata

inclusion in rural areas. MCE has a gender equality

in Indian rupees, equivalent to USD 2.65m. Sonata

strategy and a strategy focused on women’s

is an Indian microfinance institution dedicated to

empowerment via its financial and non-financial

the financial inclusion of populations excluded from

services. It supports institutions which are managed by

the financial system. 100% of its clients are women.

women and/or in which the majority of borrowers are

Proparco’s operation is thereby contributing to women’s

women, and/or which develop products and services

empowerment by providing some 37,000 women clients

dedicated to women. 79% of the ultimate borrowers of

with access to Sonata’s microfinance products.

the MFIs are women.

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P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

OBJECTIVE

CLIMATE ACTION AND ENERGY TRANSITION

IMPACT TARGETED

Number of tons of CO2 equivalent avoided

ACHIEVED IN 2015

ACHIEVED IN 2017

1,650,000

1,600,000

t CO2-eq avoided

The promotion of low-carbon growth is one of

t CO2-eq avoided

ACHIEVED IN 2018

2020 OBJECTIVE

1,529,000

t CO2-eq avoided

5,000,000

t CO2-eq avoided

water distribution (EUR 41m of co-benefits)

the strategic objectives of Proparco and, more generally, of AFD Group. In 2018, the “climate”

In terms of approvals, 16 projects were autho-

financing signed by Proparco corresponds to 16

rized in 2018 (4 dedicated credit lines and 12

projects amounting to EUR 521m.

infrastructure, energy efficiency and water and sanitation projects) for EUR 536m (33.2% of

 Seven projects for energy and energy efficiency

total authorization). There has been an increase

infrastructure with climate co-benefits (EUR

in “climate” signatures compared to 2017, both

249m of co-benefits)

in the number of projects (11 infrastructure

 Six credit lines dedicated to the climate in

and 5 dedicated credit lines financed in 2017)

financial institutions in Honduras, Ghana,

and in volume (EUR 365m signed in 2017).

Turkey, Bangladesh and India (EUR 151m of

There has, however, been a downward trend in

co-benefits)

terms of approvals: 26 projects for EUR 646.7m

 A project by an investment fund specialized in green bonds (EUR 80m of co-benefits)  Two “business” projects for agroforestry and

The 92,000 solar panels of the Ten Merina power plant (Senegal), financed by Proparco, meet the energy needs of over 225,000 inhabitants and avoid the emission of 33,300 tCO2-eq every year.

allocated in 2017.

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

Supporting adaptation and mitigation strategies  Proparco’s investments in 2018 avoid the emission of 1.53 Mt CO2-eq every year (- 4% compared to 2017)  An installed renewable energy capacity of 886 MW (1,059 MW in 2017) once the projects are operational

The projects with climate co-benefits financed

Jamaica and India. They have a future installed

by Proparco in 2018 are expected to avoid the

capacity of 885.5 MW and an expected annual

emission of some 1.53 Mt CO2-eq on average

power generation of 3,870 GWh.

every year. Proparco uses AFD Group’s procedure and tools to establish this estimate. These tools

Finally, in 2018, Proparco also financed an

are aligned with the international standards

adaptation project by engaging with China

used by the majority of international financial

Water Affairs Group Ltd (CWA), one of the main

institutions in the transport, renewable energy

operators in the water and sanitation sector in

and energy efficiency sectors.

China. The loan will contribute to financing the rehabilitation of infrastructure, increasing

These climate change mitigation projects are

the production capacity of existing concessions

mainly renewable energy infrastructure projects.

and acquiring four pre-identified BOO and BOT

Proparco supports the energy transition, while

concessions in Jiangxi, Hubei and Hunan.

improving access to energy for companies and people. The five energy infrastructure projects signed by Proparco in 2018 concern solar, hydropower, wind and biomass energy facilities in Cameroon, Namibia, Uganda, El Salvador,

BURAPHA: Supporting the development of sustainable agroforestry practices in Laos By supporting Burapha Ltd, Proparco is contributing to the extension of agroforestry activities and the construction of a plywood manufacturing factory. The company is FSC certified and uses waste wood to produce energy. The installation of solar panels on the factory is under study. The company currently has 3,000 hectares of eucalyptus plantations and is targeting 7,000 hectares by 2019. These plantations are only established in degraded or modified areas.

The carbon assessment established using the AFD tool indicates a reduction in emissions of 2.1 Mt CO2-eq throughout the duration of the project. It is mainly related to the sequestration of carbon in the biomass and soil. The emissions from the saw mill and factory have been estimated to be negligible. The project is also in line with the objective of Laos to reforest 70% of the country’s surface area by 2020.

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P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

OBJECTIVE

CLIMATE ACTION AND ENERGY TRANSITION

IMPACT TARGETED

ACHIEVED IN 2015

Theoretical number of people who will have access to an essential good or service

ACHIEVED IN 2017

ACHIEVED IN 2018

2020 OBJECTIVE

22,638,000

5,150,000 4,100,000

people

people

theoretical number 12,000,000 of people who will theoretical number of have access to an people who will have essential good or access to an essential service good or service

Proparco works to reduce inequalities in countries

According to the current criteria, these projects

through projects that provide people with access

will benefit 22.6 million people over the next

to essential goods and services. These projects are

five years. However, this indicator only reflects

implemented in the sectors of health, education,

a potential impact and there is considerable

water and sanitation, infrastructure (energy

variability. Indeed, two operations – China

and communication) and financial inclusion. 19

Water (10 million beneficiaries) and Nachtigal

projects financed in 2018 are improving access

(9.4 million beneficiaries) – make a very signi-

to essential services for people:

ficant contribution to this result. Theoretically,

 three hospital and medical analysis services

over 10 million people living in low-income and

(415 additional beds installed for 2.1 million

lower middle-income countries (in particular

consultations a year);

Bangladesh, Cambodia, Cameroon, Georgia,

 a producer of biosimilar medicines;

Ghana, Honduras, India, Morocco and Uganda)

 six energy infrastructure projects;

will eventually gain access to an essential good or

 a water distribution project;

service thanks to the projects signed in 2018.

 seven microfinance institutions.

NACHTIGAL, a hydropower plant in Cameroon AFD Group has allocated a EUR 150m loan to Nachtigal Hydro Power Company, including EUR 60m

by Proparco, for the design, construction, operation and maintenance of a 420 MW run-of-river power plant in Cameroon. The expected impacts are:  the annual generation of 2,900 GWh of electricity using a renewable source, which is equivalent to 30% of the generation of Cameroon’s interconnected grid and to the electricity consumption of over 9 million inhabitants;  the contribution to reducing the cost of electricity;  the maintenance or creation of 23,000 local jobs over the next five years;  the strengthening of local expertise (O&M);  the contribution of an annual average of EUR 9.7m to the country’s GDP;  845,000 tons of CO2 equivalent avoided every year.

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27

OUR IMPACTS IN THE FIELD

BY SECTOR

10

million people

will theoretically have access to a renewable source of electricity

1.47

million people

will benefit from basic financial services and products

22.6

million people

will benefit from improved access to an essential service or good

10

million people

will have improved access to water

1.16

million patients

will have access to health services and/or to drugs

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P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

Our impacts on the transformation of stakeholders In its 2017-2020 strategy, Proparco has set the

them to meet the expectations of their

objective of stepping up its activity to stren-

investors, access international markets and

gthen the CSR of its clients, their governance

be more competitive, while maintaining

capacities, as well as their capacities to innovate,

decent working conditions, by establishing

implement and support transitions.

peaceful relations with local communities and not degrading the environment. It is

Our experts’ support to our clients’ CSR approach

for this purpose that Proparco helps its clients improve their environmental and social practices.

The implementation of sustainable consumption and production patterns is a real opportunity for companies. It allows

 82 clients of Proparco have benefited from an Environmental and Social Action Plan (ESAP) and/or governance plan (CGAP) – including 38 signed in 2018 – since 2017

Proparco set up environmental and social (E&S)

these action plans.

performance indicators in 2014. Generally speaking, we can see:

In view of these various factors, Proparco

 a significant improvement in the resources

supports the implementation of action plans

implemented by our clients, especially during

(ESAP) and the achievement of better results in

the first three years;

the field, by providing its clients with advice,

 an E&S organization and management system

networking, tools…

comparatively better in equity investment projects (mainly investment funds);  E&S management systems for infrastructure and energy projects less mature than those for projects in other sectors for signing: this is due to the fact that Proparco arrived prior to the construction of a number of greenfield projects, and not all the procedures are available yet;  the active negotiation of an E&S action plan for some 60% of projects signed in 2018 and in the portfolio (40%);  a n increase in the actual implementation of

Our risk management is improving thanks to Proparco’s technical assistance.

Roshaneh Zafar, founder of the Kashf Foundation, a client of Proparco

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29

In the hotel industry, there are many impacts in terms of sustainable development. Proparco has been financing the sector for over 20 years.

The seven projects financed since 2015 will create some 1,120 direct jobs and some 3,500 indirect jobs.

They comply with the E&S criteria in line with IFC standards. Here, we can see Azalaï Group’s Chiaka Sidibé hotel apprenticeship school, which opened in 2015 in Bamako. Proparco has lent the group EUR 16.4m to refurbish and expand the Salam hotel which hosts the school.

Supporting an actor of the hotel industry in Niger, CHAIN HOTEL NIAMEY Proparco has helped Chain Hotel Niamey (Teyliom Group) strengthen its security system in order to provide better protection to its employees and clients in the context of deteriorated security in Niger. A consultant has been mandated to conduct a diagnostic of the design of the hotel and the technical safety measures, followed by a diagnostic of the organizational measures, before recommending procedures. This work has led to a modification in the design and specifications of the surveillance systems. CHN has since been working on integrating recommendations. A twoday training course on emergency procedures has also been planned for the hotel’s employees.

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P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

Our experts’ support to our clients’ governance

This framework agreement supports the implementation of a common policy and methodology for good governance, based, for example, on the

Proparco assesses the corporate governance of

work of the International Finance Corporation

part of its clients, negotiates action plans and

(IFC) on its performance standards.

monitors the implementation of improvement of contractualized measures. Beyond an approach

In 2018, 35 projects were subject to an in-depth

focusing on risks (nevertheless very real), this

evaluation of corporate governance. Nine

process fits in with the search for added value for

corporate governance action plans have been

Proparco’s clients, by offering them a diagnostic

prepared: Proparco is monitoring their proper

and personalized support, which can be com-

implementation. While it is difficult to draw

bined with technical assistance (TA) services.

general lessons, the main highlights of the diagnostics and monitoring conducted are worth noting:  for family-owned businesses, the issues of succession and the employment arrangements for the family are recurrent;  t he diversification of skills in Boards of

35

Directors remains a sensitive subject, related to the business manager feeling he/she has

PROJECTS ASSESSED on corporate governance in 2018

been dispossessed;  the committees of Boards of Directors (audit, risks, appointments and remunerations, or E&S) are not always set up;  B oards of Directors often function with no

Proparco committed to this approach back

bylaws, no Board secretary and almost always

in 2011, alongside 33 banks and development

with no self-assessment procedure;

finance institutions, by ratifying the Corporate

 The internal control is often too small.

Governance Development Framework (CGDF).

FOCUS Good governance, a framework for the functioning of a company Corporate governance provides the decision-making framework in which the company’s objectives are defined, as well as the means to achieve them, and the monitoring of performance. Today, good corporate governance is also understood as respecting business ethics and its E&S commitments. It also contributes to strengthening and streamlining the exercise of power in the company and is thereby an instrument to limit risks and an engine of growth.

Similarly, it promotes transparency and aims to establish a climate of confidence, which is essential to attract investors and lenders. Good governance is a key factor for access to financing and is therefore essential to wealth creation and the development of employment.

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

Good governance and responsible growth, the example of AZALAÏ Group

Improving the governance of ONCOLOGIE DU MAROC The diagnostic conducted by Proparco

The Azalaï Hotels Group develops hotels in

showed that the governance of Oncologie

strategic cities in West Africa. In 2017, the

du Maroc (ODM) was relatively basic, in

Group set two major objectives: proceed with

particular concerning the structuring of the

an initial public offering in 2019 and become

Board of Directors, the control environment

a major hotel group in Africa, with a growth

and transactions between related parties.

plan of 130% in the number of hotels in five

Indeed, while the involvement of the founder

years.

seemed to guarantee the company’s vitality, the checks and balances and the internal

In the context of the Group’s financing

control system were inadequate.

request for the construction of a hotel in Dakar, Proparco has asked it to strengthen

An action plan comprising a dozen or so

and rationalize its governance practices to

measures has been negotiated, approved by

ensure they meet the highest international

ODM and integrated into the shareholders’

standards. The objective? To offer a

agreement. It has allowed an autonomous

“governance” roadmap to allow the Group

and functional Board of Directors to be set

to achieve its objectives in the best possible

up, the establishment of an audit committee

conditions. Azalaï has committed to

and the control of transactions between

follow the two-year action plan proposed

related parties by the Board of Directors.

by Proparco with ad hoc support. This plan provided for: the formalization of a succession plan for the shareholder, the drafting of bylaws and a charter for the Board of Directors, the creation of specialized committees, including an audit committee, the updating of accounting and financial procedures in order to strengthen internal control, the gradual alignment with international transparency requirements, the adoption of procedures to handle conflicts of interest and transactions between related parties.

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P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

Results in terms of financing technical assistance for our clients

EUR 3m over four years on its own resources in order to be able to deploy technical assistance.

In 2018, EUR 583,000 were disbursed to cofi-

In addition to the support provided by its

nance external services and capacity building

experts, Proparco finances technical assistance

activities for 19 clients. Furthermore, 11 new

programs and thereby facilitates access for its

technical assistance projects were signed in

clients to the external expertise required to

2018 for EUR 596,000.

improve their performance. By supporting the

Growth and diversification of technical assistance financing

implementation of a geographical information system (GIS), by strengthening human resources, by

€ 3m

for technical assistance over four years

developing marketing and commu-

In 2018, there was significant growth in the

nication strategies or through staff

number of technical assistance projects. Indeed,

training programs, Proparco allows

the volume of activities (financed with Proparco’s

companies to better adapt to their

budget, as well as with AFD’s Support Fund for

environment.

Governance Capacity Building) saw a fourfold increase between 2017 and 2018, with signifi-

In the context of its strategy for

cant growth in the volumes of disbursements.

2017-2020, Proparco has allocated

This growth should be confirmed in 2019. The

EUR 596,000 FOR 11 NEW TECHNICAL ASSISTANCE PROJECTS CLIENT

COUNTRY

TYPE OF SUPPORT

Kingo

Guatemala

Innovation

Duopharm

Senegal

Performance

Promerica

Costa Rica

Performance

Credo

Georgia

Performance

Pakistan Microfinance Network

Pakistan

Innovation

Union internationale de banques (UIB)

Tunisia

Performance

BNI

Madagascar

Responsibility

Kash Foundation

Pakistan

Performance

Multi-country

Performance and responsibility

Esrom 2

Bangladesh

Responsibility

Akuo Energy

Multi-country

Responsibility

AgTAF

(delegated budget)

EUR 30,000 MOBILIZED VIA THE FRCG* NSIA Bank

Côte d’Ivoire

Responsibility

* AFD’s Support Fund for Governance Capacity Building (FRCG), which has financed the mobilization of an expert for the implementation of an E&S management system.

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

In Burkina Faso, supporting the development of the activities of the agribusiness BARIKA Barika was launched in March 2014 by Onyx Développement, a company in Nutriset Group.

33

Helping the bank PROMERICA develop services for SMEs

It is a distribution retail brand which is seeking to improve access to quality food products for disadvantaged households. Following a study showing the low level of mobility of low-

In 2018, Proparco decided

income residents, particularly in precarious neighborhoods, Barika wanted to adapt its

to help the bank Promerica

distribution strategy and requested technical assistance from Proparco.

strengthen and deploy its services for SMEs in

The project implemented has developed and tested a new strategy that meets the objectives

Costa Rica in order to

of improving access to essential goods and services, strengthening the reputation and

better meet their needs.

attractiveness of the brand, and improving the situation of mobile and fixed vendors.

Dedicated events will build

It has also contributed to creating an observatory of the consumption patterns of local

the capacities of SMEs in

communities, the launch of new products with high nutritional value, and the search for

order to promote their

distribution methods adapted to the target.

competitiveness and their access to appropriate and responsible sources of financing. The financial

improved clarity in the technical assistance

the start-up and growth phases). Finally,

inclusion of the country’s

services accounts for the provisional flow of

Proparco made a significant contribution to the

SMEs will be strengthened.

projects for 2019. In December 2018, eight new

allocation of EUR 5m by the European Union

The project will also

projects had already been submitted to the

to the successor fund to FISEA, FISEA+. The

promote existing support

identification committee for a total estimated

signing of this guarantee is expected to take

programs.

at EUR 418,000.

place in the course of 2019.

Proparco is also continuing its efforts to

Finally, new technical assistance facilities for

mobilize and deploy additional financing,

financial inclusion have been partly delegated

which is partly intended to scale up its tech-

to Proparco by AFD and should be deployed

nical assistance activities. In addition to the

in the coming years. It concerns, for example,

TA projects financed with its own funds,

the technical assistance budget mobilized in

since 2016, Proparco has had EUR 700,000

the context of the Transforming Financial

made available by the European Union and

Systems for Climate projects (financed by the

earmarked to support African companies

Green Climate Fund), the MENA Facility and

in the sector of access to energy. It has also

EURIZ (financed by the European Union).

worked on establishing a contract for a budget of EUR 6.5m of technical assistance financed by the European Union and which could be deployed for fund management teams and companies invested in by the funds launched

by IPDEV2 (fund sponsor) in West Africa (in

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FOCUS Defining innovation

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

Our impact on mobilizing financing flows and unlocking investment in countries

A project is currently defined as being inno-

To take action on the redirection of investments for transitions, Proparco aims to increase its mobi-

vative when it provides

lization impact on the private sector and support innovation which unlocks investments.

a solution that is not available on the market and mobilizes future

Our support for innovation to serve transitions

investors. The innovation may concern

Proparco is committed to supporting innovative private initiatives with a strong impact via a clear

the product or ser-

objective for a number of innovative projects financed each year.

vice, the process or the technology. It may also concern the financial vehicle proposed to the counterparty

ď‚Š 17 innovative projects for a total amount of EUR 449m

by Proparco. Finally, a game changer project may also be considered as innovative.

In 2018, Proparco financed 17 innovative

by supporting Burapha Agroforestry for the

projects for EUR 449m signed, a figure which

development of its eucalyptus forest.

has increased considerably compared to the EURÂ 233m signed in 2017. Over half concerns

Furthermore, part of the financing provided for

projects for energy infrastructure, transport

technical assistance by Proparco aims to support

and telecommunications developing innovative

clients who wish to launch innovative products

technologies (non-CSP storage component,

and services. For example, in 2018, Proparco

data centers in frontier countries, urban BRT),

approved the allocation of technical assistance

using innovative and customized financial

to Kingo, a Guatemalan start-up which offers

instruments in certain countries (first Unlock

a pre-paid off-grid solar solution, to provide

guarantee, first PPP financing in the country,

it with new ideas in terms of technologies and

first financing in local currency) or making a

solutions to meet the needs of its market. This

significant contribution to the climate objectives

assistance should lead to the adoption of new

(first adaptation project in China for Proparco,

technical solutions and an increase in its market

rooftop solar panels on public and administrative

share, once these solutions have been adopted

buildings in India).

and deployed. The project will thereby increase and improve access to energy for a growing

Six of these projects support investment funds,

number of people, thanks to the design and

banks and microfinance institutions, which

development of new solar and off-grid tech-

are particularly innovative due to the financial

nologies. Kingo’s objective is to reach a million

instruments on offer and/or the clients targe-

households by 2021.

ted. Two health projects providing innovative and/or new solutions have also been supported through EUR 10m of equity investments. Finally, Proparco has signed its first biodiversity project

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

35

Proparco’s support to the TLcom Tide Africa fund has paved the way for new fundraising opportunities and allows it to invest at an early stage in innovative companies such as Andela.

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P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

Our impact on the mobilization of third parties and the knock-on effect of finance Contributing to the development of green and social bond markets alongside investors

 Proparco syndicated EUR 291.6m in EDFI cofinancing for projects signed in 2018.

Through its operations to support develop-

and the OECD, Proparco and AFD are working

Building on its

ment, Proparco seeks to act as a catalyst

on the implementation of robust and shared

commitment with the

in mobilizing additional external financial

methodologies to measure the effect of donor

Moroccan group Banque

resources (private and public), required to

financing on private finance mobilization.

Centrale Populaire (BCP)

finance investments for transitions. It also

in 2017, Proparco has

seeks to work in synergy and in partnership

become actively involved

with AFD and the other development finance

in the development

institutions, in particular in Europe, to increase

of the global green

its impact via strengthened partnership and

bond market, with the

quasi-syndication mechanisms.

Our results in the deployment of blending instruments using delegated financial resources Proparco is increasingly using external financing, in the form of subsidies or risk-sharing

signing of a USD 100m equity investment in

Out of the approvals for 2018, EUR 201.5m

tools. They allow it to diversify and adapt its

the Amundi Planet fund

provided by FMO (Dutch development bank)

range of instruments to the needs and level

and the subscription of

and DEG (subsidiary of KfW, the German

of risk of projects and companies. This mobi-

EUR 50m of social bonds

development bank) were mobilized and

lization of external financing is governed by

with Atlantic Business

syndicated by Proparco in the context of five

the principles of blending currently applied in

International in 2018.

projects. Four were also signed in 2018: an

development finance institutions and is forma-

energy infrastructure In 2018, Proparco also

project in Cameroon,

authorized support for

airport infrastructure in

the first green bond

Serbia and two support

issue in Ecuador and will

projects for banks in

conduct further work on

Mauritius and Ecuador

the construction of this

for EUR 174.6m. In terms

new bond market in 2019,

of the signings in 2018,

particularly in Eastern

there are also EUR 117m

Europe.

mobilized with FMO, which were approved in 2016 and 2017.

COFINANCING PROPARCO - FMO - DEG Amounts signed by Proparco

€ 611m € 440m

lized in an internal note on the mobilization of delegated funds, approved by Proparco’s Board of Directors (December 2016).

Proparco has received three financial delega-

€ 323m

tions since its accreditation by the European

€ 202m

Union in 2016 and has worked closely with AFD on the mobilization

Finally, in cooperation with the international financial institutions

2015

2016

2017

2018

of a European Fund for Sustainable Development

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

(EFSD). These delegated funds allow it to:

to support investment in impact funds and in

 i ncrease its investments in companies deve-

venture capital in fragile countries or SMEs in

loping solutions for access to energy in Africa

Africa (via first-loss guarantees and a technical

(guarantee tools and ARE Scale-Up technical

assistance budget with FISEA+).

assistance budget);  contribute to the stability and soundness of renewable energy projects in countries where there may be risks of non-convertibility or non-transferability of local currency into foreign currency (risk-sharing tools from the T&C Facility);  s upport private equity investment and the development of SMEs in West Africa (guarantees, start-up grants and technical assistance budget made available from the IPDEV2 fund);  promote the mobilization of the private sector

An EFSD guarantee for FISEA + Proparco has provided considerable support to AFD for its work on the mobilization of a new European Union guarantee tool to benefit the successor of the FISEA vehicle (FISEA+). In November 2018, EFSD approved a EUR 35m guarantee to cover the first losses of part of the investment funds that may be financed by FISEA+.

This guarantee is made available to all the investors in these funds. It should, in particular, increase the size of the investments of FISEA+, while attracting other investors in the digital and social entrepreneurship sectors or in companies working in fragile African countries. The request also comprises a major technical assistance component: EUR 5m have been allocated by the European Union and EUR 16m are currently being appraised with AFD’s supervisory authorities.

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P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

THEMATIC FOCUS

Evaluation of the results of Proparco’s technical assistance services since 2010 Alongside its investment activities, Proparco provides technical assistance services to the private sector targeting three thematic areas: responsibility, performance and innovation. This chapter sets out the results and impacts of these services (operations from 2010 to 2018) evaluated between June 2018 and January 2019.

Services being scaled up

for these activities for 2017-2020. This will allow the dedicated budget to be considerably increased, alongside the technical assistance

Since 2010, some EUR 6m have been committed

facility of the Investment and Support Fund for

by Proparco to implement 65 technical assistance

Businesses in Africa (FISEA, budget of EUR 6m)

operations (completed or ongoing) with various

and the Support Fund for Governance Capacity

types of clients (banks, investment funds,

Building (FRCG).

microfinance institutions, small and medium enterprises). The average annual budget stands at some EUR 700,000 committed. And it has been scaling up: it rose from EUR 500,000 in

Different typologies and methods for technical assistance to meet the needs of clients

2010 to EUR 1.4m in 2016, then EUR 600,000 in 2017.

Technical assistance was initially based on strengthening the responsibility of clients

Using technical assistance as a driver to increase its impacts.

Proparco has a strong

(support in environmental and social matters,

strategic will to use

in governance, and in obtaining certifications).

technical assistance

It has been diversified to cover new issues, such

as a driver to increase

as the improvement in performance (technical,

its impacts. EUR 3m

financial and cross-functional) and support for

from Proparco’s own

innovation (development of markets and/or

budget are earmarked

activities, impacts, innovative projects).

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

A new form of assistance on climate issues has

The direct technical assistance projects are

recently come into being. Its objective is to build

also mainly located in Africa, although Asia

the capacities of beneficiaries in terms of the

also accounts for a significant share of activity

reduction of greenhouse gas emissions, energy

(20% of direct projects).

management and adaptation to the effects of

Added value recognized by our clients

climate change.

Technical assistance operations focused on Africa

39

Proparco’s clients particularly appreciate our broad and flexible understanding of technical

With 75% of projects and 85% of the budget

assistance, which allows us to provide a response

committed on the continent, Africa predomi-

to a wide range of needs.

nates in Proparco’s technical assistance activity, in line with the investments made by Proparco.

Indeed, the technical assistance provides access to external expertise, which is deemed relevant

The delegated technical

and necessary. It speeds up

assistance projects (mainly

growth or upgrading and often

financed from the FISEA

proves to be decisive financing

budget) are also almost

in the implementation of

exclusively focused on Africa

clients’ projects.

75%

and primarily concern multi-country projects. This is mainly due to the type of client supported (investment funds covering several countries).

of technical assistance projects conducted in Africa

Central Europe 1 TA project € 22,000 Asia 10 TA projects € 447,000 Latin America and Caribbean 2 TA projects

€ 66,000

Africa 48 TA projects € 5.12m

Multi-country 4 TA projects € 419,000

Source: Ernst & Young

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P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

BREAKDOWN OF TECHNICAL ASSISTANCE OPERATIONS € 1.04m

17% € 3.81m

63%

DELEGATED TECHNICAL ASSISTANCE 17 operations

Positive results for delegated technical assistance projects reported by investment funds

13% 7%

RESPONSIBILITY 28 operations

€ 792,000

INNOVATION 11 operations

€ 431,000

PERFORMANCE 9 operations

Following the implementation of information and management systems and, more generally, following the strengthening of the financial management and improvement in the social

Between 2010 and 2018, Proparco committed

performance of beneficiaries, the development of

EUR 3.8m (mainly from FISEA) for 17 delegated

the performance of clients is generally positive. By

operations. They were almost exclusively dele-

contributing to building the capacities of clients

gated to investment funds and aim to support

of funds in various components (management,

their clients (SMEs/microenterprises, producers’

HR, finance, marketing), the credit lines for

organizations, MFIs…), with budgets ranging

delegated technical assistance contribute to

from EUR 100,000 to over EUR 420,000.

strengthening the environmental and social impact of the investments of these funds in local communities.

The FEFISOL experience The European Solidarity Financing Fund for Africa (Fefisol) has obtained two financial allocations for delegated assistance from Proparco for a total amount of EUR 330,000. Since 2012, these budgets have supported 40 projects to assist microfinance institutions and producers organizations.

Fefisol has thereby been able to support and strengthen the financial and commercial sustainability of its clients, even the most fragile ones. Reduction in the portfolio at risk at 30 days, growth in net income, increase in the number of clients… There has been an overall improvement in the financial performance indicators for client microfinance institutions (MFIs) of the fund. The producers’ organizations supported have, for their part, seen an improvement in their commercial performance: rise in sales and increase in the number of small producers.

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

Promoting the development of financial inclusion in Cambodia with AMK In Cambodia, the microfinance institution AMK has benefited from EUR 55,000 of technical assistance from Proparco. This has allowed it, for example, to make in-house organizational changes to optimize its network of officers. AMK reports a marked improvement in its coverage rate in Cambodian rural areas: 92% of villages were covered in 2017, against 86% in 2014. The marked increase in the number of clients in the portfolio (+ 213,000 clients between 2014 and 2017 and tripling the number of depositories) also contributes to improving the financial inclusion of rural communities.

The assistance also included support for the development of an application for the automation of credit scoring. This support will improve the assessment of clients’ profiles and will allow AMK to offer them products more in line with their long-term expectations.

Overall improvement in performance

These operations have brought about an overall improvement in the financial, operational and technical performance of the clients supported,

There has been an overall improvement in the

as well as positive commercial impacts for the

performance of clients, in particular thanks to

MFIs supported. Their client portfolios have been

specific support to MFIs to allow them to improve

extended and they have penetrated new areas

their loan allocation procedures and to increase

in rural and remote regions.

access to financing for vulnerable groups.

These technical assistance operations also have Over EUR 430,000 were committed between

social impacts: the improvement in the perfor-

2010 and the first half of 2018 to support nine

mance of microfinance institutions leads to a

projects of financial institutions (mainly MFIs)

better internal organization and an optimiza-

and companies:

tion of the coverage of the geographical area of

 four operations to support targeted “business”

operation. It thereby contributes to improving

projects: advisory services for the development

access to financing for vulnerable communities.

of a financial model, online training on securing computer data, etc.;  five operations to support financial institutions, including four for support and advice to MFIs, in improving allocation procedures and credit management, and in optimizing their internal organization.

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P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

Results in upgrading the E&S standards of our clients Financing the development of the environmental and social management system of BCP

Support for innovation, mainly leading to the development and launch of products

28 ESG technical assistance projects have been supported, with an average budget of some

EUR 790,000 were committed between 2010

EUR 40,000 between 2010 and the first half of

and the first half of 2018 to help 11 companies

2018, for a total commitment of EUR 1m. 15 of

achieve innovative initiatives. It is mainly

these projects came from financial institutions.

SMEs which benefited from financing for

Proparco assists its clients in upgrading envi-

studies and consulting services, with budgets

ronmental and social standards, in most cases

ranging from EUR 40,000 to EUR 135,000. A

in the context of an investment operation. To

total of eight support operations (launch of a

In Morocco, Banque

do so, it sets up training and tools to provide

brand, communication plan, monitoring of

Centrale Populaire

a better understanding of these issues. The 28

impacts, etc.) and three studies (sources of

(BCP) has obtained

upgrading projects have supported:

renewable energies, energy diagnostic, model

EUR 50,000 of

 17 support operations (advice and training)

of a foundation) were conducted.

financing to set up an ESMS. This financing is backed to a Proparco loan. It has increased the proportion of loans submitted to the ESMS assessment committee

for the implementation of environmental and social management systems (ESMS);  4 specific studies (gender, soil bioremediation, waste management, etc.);  3 crosscutting support operations for good governance;  4 support operations to obtain certifications.

(137 out of 138 in the

The results can mainly be seen via the growth in the volume of sales and in the number of outlets. The impacts also concern the improvement in the economic and financial performance of companies such as Esprit, which has managed to attract additional investors and mobilize new partners. The improvement in the

first half of 2018),

The technical assistance projects have allowed

commercial performance can also be seen with

and has also trained

clients to make progress in E&S risk management

the reputational gains: Onyx in Burkina Faso

officers from the bank

and improve their governance practices. The

gained 200 new clients after having received

in how to use the

main impacts concern the increase in corporate

support during the launch phase of the retail

system (200 officers

social responsibility. Commercial benefits have

brand Barika (see page 33). Finally, there are

trained in 2016).

also been reported, particularly in terms of

significant final impacts in terms of financial

the reputation of clients. Finally, a knock-on

inclusion, for both the students benefiting

effect has been observed: following the support

from additional Esprit scholarships and the five

proposed to BCP in Morocco, the ESMS has been

stable and permanent jobs created by Onyx in

deployed in other group subsidiaries in Africa.

the groundnut sector.

Esprit trains 15% of Tunisian engineers. The school does not wish to train exclusively the wealthiest. It is

Supporting ESPRIT, a solution to finance studies in Tunisia

for this reason that its foundation allocates grants to young people

Esprit has received two financial allocations from Proparco for a total amount of EUR 225,000 to

with strong potential

support the creation of a foundation to finance higher education for the most deserving students in

which can cover the

Tunisia. This support has brought about significant results: the number of loan beneficiaries has risen

enrolment fees. In 2012,

from 16 to 100 and the loan amounts from TND 75,000 in 2016-2017 to TND 230,000 in 2017-2018.

Proparco made a EUR 2m equity investment in the institution.

Coordination Proparco: Valérie Blanchard, Anne-Gaël Chapuis Edited by: Proparco Editorial and graphic design, drafting, creation and printing: Iconographic credits:

Cover: Yashas Chandra 2nd cover: Sanergy p. 1: Oriane Zerah, Eduardo Muñoz, Yosr Hmam p. 3: Alain Goulard p. 5: Oriane Zerah p. 12: Eduardo Muñoz p. 14: Sarah Caroline Muller pour Proparco

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ISSN: pending. Copyright: June 2019

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