PROPARCO's activity Report 2017

2017 | ACTIVIT Y REPORT

#BusinessInCommon

Business in common Proparco has been working in favor of both the private sector and sustainable development for 40 years. As a subsidiary of the Agence Française de DÊveloppement (AFD), Proparco invests to strengthen privatesector organizations, with the aim of contributing to the social, economic and environmental development of emerging and developing countries. We finance companies and financial institutions whose main activities help create decent jobs, provide essential goods and services, and fight climate change. Our work thus strives to bolster the private sector’s contribution to achieving the Sustainable Development Goals (SDGs).

Panorama ACTIVIT Y REPORT 2017

Editorials

4

“Proparco, a core component of AFD”

by Rémy Rioux. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Business in common

8

PROPARCO’S WORK

“Meeting our targets by 2020”

by Grégory Clemente. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Key events

6

1977-2017: 40 years of development with the private sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

In the field

Supporting the private sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

16

FOCUS REPORTS

A global footprint. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Our contribution to development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Proparco at work

54

ORGANIZATION

PALESTINE

A fruitful tomorrow. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 MEXICO

Mexico’s pioneering planters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 EGYPT

Under the Benban sun. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 PAKISTAN

Microfinance: a boost for women entrepreneurs. . . . . . . . . . . . . . . . 34 KENYA

Start-ups: development challenges 2.0. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 AFRICA

Combining financing with support. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Adapting to new challenges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 .

“Increase the impact of Proparco’s operations” - Pierre Forestier. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 .

Meaningful work. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 ..

Our financial results. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Private Sector & Development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

4

Editorials

“Proparco, a core com­ponent of AFD” Rémy Rioux, President of Proparco and AFD CEO

O

full spectrum, from financial intermediation to small- and medium-sized enterprises as well as to larger, more established companies. And it has the constant goal of creating value and encouraging responsible practices. Meanwhile, AFD works with its partners, especially in the public sector, to improve the regulatory framework and business environment.

In its private-sector work, Proparco contributes greatly to the AFD Group’s signature work: not only through its non-sovereign activity, but

ver the past 40 years, Proparco

also via climate investment (environmental and

has kept pace with shifts in

social performance) and its contribution to social

development policy. It has

inclusion (access to basic services, job creation and

always tended to “think big,”

promotion of gender equality). And it does so in a

venturing off the beaten path

spirit of partnership with our counterparts (such

and into new sectors. Proparco has often moved

as the International Finance Corporation and

before AFD into new countries, and it maintains

the network of European Development Finance

this pioneering spirit today more than ever.

Institutions), as well as with local businesses in developing and emerging countries and with

A new world is currently taking shape. Developing

French companies. Innovative, responsible, and

and emerging countries have become significant

ambitious, Proparco is a core component of AFD,

sources of growth and innovation. It’s a world of

platform serving the cause of development.

challenges, for more sustainable and inclusive societies. But also a world of opportunities, especially as the South will inspire the North.

The AFD Group pursues a consistent and bold strategy targeting the private sector. Channeling more private investment toward developing countries has emerged as a global issue. Businesses and entrepreneurs have a crucial role to play in achieving the UN’s Sustainable Development Goals (SDGs). Proparco has set itself the target of tripling its SDG impact between 2015 and 2020.

Our annual results speak for themselves; we are well on our way.

Synergy with AFD remains strong. The investment and support that Proparco provides to the private sector covers the

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A consistent strategy geared to the private sector.

“Meeting our targets by 2020” G r é g o r y C l e m e n t e, Proparco CEO

I

n 2017, Proparco celebrated its 40th anniversary. That’s the age to look back on past achievements and to set future goals. And that’s what we have done, with an ambitious new

strategy focusing on five impact targets that we’re strongly committed to reaching by 2020. These are quantified targets on the number of jobs created and/ or supported, both directly and indirectly; the volume of CO2 emissions avoided; the

We had a successful first year implementing our strategy for 2017–2020.

number of people who have gained access to essential goods and services; the number of innovative projects supported; and the number

44 additional businesses have been supported

of businesses assisted with environmental,

in improving their environmental and social

social and governance performance.

performance. We have also substantially increased our equity and quasi-equity financing

Our new strategy will also be accompanied by

activity, with €283 million approved (equal to

organizational changes so that we can keep

20% of our activity).

up with the fast-paced expansion of our activity—and above all, with our clients’ needs.

What this confirms is that we are well on track to meeting our targets for 2020. However,

We had a successful first year implementing

huge challenges still lie ahead. Proparco has

our strategy for 2017–2020, with €1.386 billion

never shied away from bold action, and our

in financing approved, including €728 million

history is testament to such an approach. Our

going to Africa and €655 million to climate

institution has to be open to change, while

projects. Through 16 investment projects with

maintaining an unwavering focus on boosting

climate-change co-benefits, 1.6 million tons

the developmental impact of our work and

of CO2 will be avoided. Similarly, 2.3 million

actively contributing to the achievement of

people will gain access to electricity. And

the Sustainable Development Goals.

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Key events

1977-2017 40 years of development with the private sector A new visual identity In 2017, Proparco adopted a new logo. More styl ish, with more

Proparco was founded in 1977 to help the private sector contribute to development. The year 2017 was thus our 40th anniversary: a perfect occasion to review our achievements and present our goals for the future.

Bearing witness to 40 years of action to promote development

up-to-date colors and

An exhibition is being held to mark this anniversary

and Strategic Reflection at AFD, and published by

typefaces, our new

and to highlight the impact of our efforts around the

Karthala, recounts our history: Dans les labora-

visual identity seeks

world. To present Proparco’s objectives, it showcases

toires du développement : Proparco et le secteur

to convey Proparco’s

projects relevant to development assistance that

privé, 40 ans d’histoire (In the Testing Grounds for

proactive and open-

are carried out with private-sector entities. Photos,

Development. Proparco and the Private Sector:

minded approach. It

descriptions and key figures together illustrate the

40 Years of History – in French only).

also reflects our new

wide geographic and thematic range of our work.

strategic goals for 2020

And with the help of our overseas regional offices,

and underlines the fact

the exhibition has acquired international scope.

that we belong to the Agence Française de

In 2017, two publications on our work came out.

Développement (AFD)

40 Years of Action for Development is an anniver-

Group.

sary book combining strategic insights into major development issues with a review of 40 noteworthy projects. The second book, written by François Pacquement, Project Manager in charge of History

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7

A year of celebrations in Paris On September 19, 2017, a special Proparco Investors’ Club conference was held at the

The business leaders

Centre Pompidou in Paris on the topic “The

and investors were

private sector and cross-sector innovation

welcomed by Rémy Rioux,

as sustainable development accelerators”.

Proparco’s President,

Sponsored by the President of France, the event

and Grégory Clemente,

brought together over 400 business leaders

its Chief Executive

from the Global South and North, as well as

Officer, who outlined the

representatives from French and European

institution’s new strategy

development institutions.

and objectives.

Around the world

Johannesburg office

Proparco’s offices around the world also took part in celebrating our 40th anniversary with our leading clients, counterparts and partners abroad. Together, these events have highlighted the impact of our work over the past four decades.

Douala office (in Yaoundé) Nairobi office

Our 40th anniversary was celebrated by our São Paulo office

offices in Abidjan, São Paulo, Johannesburg, Nairobi, Douala (in Yaoundé), New Delhi, Bangkok (in Singapore), Istanbul and Casablanca (in Rabat).

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Business in The private sector has an essential part to play in efforts to achieve the UN’s Sustainable Development Goals in the Global South. For over 40 years, Proparco has been assisting the private sector in developing and emerging countries.

W

hat all projects sup-

those projects, we contribute to the supply

ported by Proparco

of essential goods and services to as many

have in common is that

people as possible and help our clients adopt

they contribute to local

the best environmental, social and governance

economic development,

practices. Our strong commitment has made

stimulate job creation and promote more

Proparco one of Europe’s leading development

sustainable forms of development. Through

finance institutions.

We encourage

We finance

private initiative to bolster economic growth and job creation.

private-sector initiatives so that we can together achieve the Sustainable Development Goals (SDGs) set by the United Nations.

Sustainable Development Goals We are committed

We take action

to promoting responsible privatesector organizations wherever we operate.

to favor investment in climate-friendly projects.

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common

PROPARCO’S WORK

Our added value

Our areas of involvement

• Multi-sector expertise spanning the globe • An international footprint • Financial strength (as part of the AFD Group) • Advice on organizing complex projects • Third-party financing • Risk control

• Agriculture and agribusiness • Banks and financial markets • Climate • Education • Industry • Infrastructure (energy, telecommunications, transport, water and sanitation) • Microfinance • Healthcare • Tourism

Our tools • Loans • Equity • Quasi-equity • Investment funds • Guarantees • Technical assistance • Delegated funds

€1.4 billion in financing approved in 2017 Loans

76% 18%

Breakdown by instrument

5% 1%

Equity investments

Guarantees

Energy infrastructure

Financial institutions

35%

39%

Breakdown by sector

Other securities

5% 2%

3% 1%

15%

Industry Microfinance Agriculture and agribusiness Healthcare and education Miscellaneous and multi-sector

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P r o p a r c o’ s w o r k

Supporting

the private sector

To further the goals of sustainable development, job creation and access to essential goods and services, we encourage the emergence of a vibrant, innovative, responsible private sector.

Six principles underlying responsible investment For Proparco, a “good project” is a profitable project, one that is in line with our mandate and strategic direction, that is led by a sound client and that will have positive social and environmental impacts on local development.

How we choose counterparts

Our principles of action

Our goals

Client reliability

Project profitability

Knock-on effect

All financing decisions are based on an in-depth analysis of the various risk factors related to the client and its projects. To ensure the viability of our financing, we also examine the client’s capacity to withstand and recover from possible shocks.

Targets

We support companies and financial institutions that are active in areas of key importance to development. These are both local businesses and French companies that have set up operations in developing countries or that want to do so.

Return on investment is essential for the long-term sustainability of a lender such as Proparco, which doesn’t have access to government funding. It’s also crucial for the businesses and financial institutions we support.

Additionality

Our financing rounds out the offer of local and international commercial banks, and we are careful not to interfere with financial market competition.

We focus on sectors where our assistance is most needed and where our added value is the strongest.

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Our financing aims to demonstrate the economic and financial viability of private enterprise in businesses and/ or regions that investors tend to shy away from. Our goal is to attract public- and private-sector funding for our clients’ projects.

Development impact

The contribution that the companies we finance make to local development is central to Proparco’s approach to investment.

11

Encourage responsible practices In addition to financing, Proparco offers its clients support and advice on governance and the environmental and social management of their businesses.

Managing environmental and social risks

Create value Certifications for companies (e.g., ISO 14001, OHSAS 18001, Forest Stewardship Council)

Compliance with local regulations

Compliance with international environmental and social standards (e.g., World Bank, International Finance Corporation, International Labour Organization)

Limit financial, legal and reputational risk

Increase business gains

Improving clients’ environmental and social performance

Incorporate sustainability into company strategic policy and governance

Sustainable consumption and production

44 The adoption of environmental and social best practices helps our clients act more responsibly and achieve sustainable, shared growth.

additional companies assisted in 2017 in their adoption of better practices

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P r o p a r c o’ s w o r k

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Istanbul | Turkey

A global

Paris | France

Turkey, Middle East, Central Asia, Caucasus, Eastern and Southern Europe

footprint

over 110 target countries and 80 covered in 2017

Proparco carries out its work with the help of a staff of 220, divided up between Paris and its 12 offices abroad. Proparco can also rely on AFD’s network of 72 agencies and offices around the world.

Santo Domingo

Beijing

Dominican Republic and Haiti

China

Casablanca | Morocco Mexico City | Mexico

New Delhi | India

North Africa

South Asia

Central America and the Caribbean

Bangkok | Thailand Abidjan | Côte d’Ivoire Bogotá | Colombia

Nairobi | Kenya East Africa

West Africa

Local branch of São Paulo (opening in September 2018)

Headquarters

Lagos | Nigeria

Offices and areas they cover Douala | Cameroon São Paulo | Brazil

69 new commitments in 2017 worth €1.112 BN

Central Africa Johannesburg | South Africa

South America

Financing approvals in 2017 Middle East, Eastern Europe, Central Asia Multi-country

North and Southeast Asia

Southern Africa and Indian Ocean

Local branch and area it covers Correspondent offices

Constant progression

€1.386 BN

Financing approvals, in € BN

€51 M (4%)

1.279

€129 M (9%)

Asia Latin America and the Caribbean Africa

1.386

In 2017, Proparco maintained its growth momentum, approving financing of

1.054

close to €1.4 billion for businesses and financial institutions operating in

€175 M (13%)

developing and emerging countries.

We are thus well on our way to meeting

€302 M (22%)

the target we set ourselves in 2016: reaching €2 billion in annual

€728 M (53%)

commitments in 2020.

Percentages may not add up to 100% due to rounding.

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2015

2016

2017 PA NOR A M A – ACTIVITY REPORT 2017

in financing approvals in 2017, including €276 M in the

least advanced countries and fragile States

€655 M for climate projects

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SDGs targeted

P r o p a r c o’ s w o r k

Our contribution

to development

Proparco’s aim for 2020 is to triple its impact by doubling its financial commitments. Our primary focus is on impact that enhances the private sector’s contribution to meeting the Sustainable Development Goals (SDGs).

Jobs

Access to essential goods and services

Guarantee equal access to productive

Reduce inequalities in developing and emerging

employment and decent work • SDGs 5, 8

countries • SDGs 3, 4, 7, 8, 9, 10

We lay special emphasis on creating and

We finance projects which bolster sectors that

maintaining jobs, both directly and indirectly.

meet people’s needs for essential goods and

Because female employment is a core concern

services, including financial services.

for us, we fund projects that aim to promote gender equality.

Climate and energy

Innovation Encourage innovative, responsible business models • SDG 9

Contribute to the fight against climate change

We support projects offering novel solutions

• SDGs 7, 13

that benefit vulnerable population groups in

In 2017, 47% of our commitments were made

particular.

to help private-sector organizations develop projects in renewable energy and energy effi-

Assistance to businesses

ciency. Every year we estimate the future impact

Strengthen the technical and governance capacities

of projects we finance, from the standpoint of

of businesses and their dedication to social and

greenhouse gas emissions avoided.

environmental responsibility • SDG 12 We help our clients enhance their performance in order to ensure the sustainability of their business models and their positive impact on local development.

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The impact of our financing Assistance to businesses

Jobs 77,400 jobs directly created or maintained

44 new businesses assisted in 2017

at Proparco-financed entities

34 % of those jobs are held by women 819,000 jobs indirectly created or maintained

to enhance their environmental and social practices

5 technical assistance projects

at those entities’ suppliers, customers and self-employed providers

totaling €161,700 signed in 2017

73% of the workforce are women at businesses that are beneficiaries of Proparco investment funds or that receive financing from microfinance institutions that are Proparco clients

€310 million

Access to essential goods and services

generated in the form of wages and benefits in the countries where we work

€180 million in net contribution to tax revenue

5.1 million end beneficiaries

Climate and energy 1.6 million tons of CO2 equivalent per year will be prevented thanks to 16 climate projects approved in 2017

1,059 megawatts in future power capacity entirely from renewable energy sources

ELECTRICITY

2.3 million people will have access to electricity HEALTHCARE

Innovation €233 million to finance 14 new projects providing technical solutions or innovative financing

1,355 additional beds at hospitals 2.2 million patients per year FINANCIAL INCLUSION

620,000 beneficiaries of basic financial services and products

We measure the outcomes and impacts of our financing using evaluation tools geared to the constraints specific to privatesector financing. The indicators presented here show in consolidated form the expected outcomes for 64 projects that were approved in 2017 and for which impact analyses were conducted.

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In the field

FOCUS REPORTS PALESTINE

Proparco assists the private sector in over 110 developing and emerging countries, with the aim of making a greater contribution to achieving the Sustainable Development Goals.

A fruitful tomorrow

KENYA

EGYPT MEXICO

18

22 Under the Benban sun

30

44

Start-ups: development challenges 2.0

AFRICA

Mexico’s pioneering planters Combining financing with support

PAKISTAN 50 Microfinance: a boost for women entrepreneurs

34

18

Focus report – Palestine

JOBS

A fruitful

tomorrow In the area around Jericho on the West Bank of the Jordan, the climate and soil make for excellent farming. Nakheel Palestine has been growing date palms there since 2010. As the leading Palestinian producer of Medjool dates, the company plays a key role in the local labor market.

FOCUS

85%

of the Jordan Valley’s inhabitants earn their living from agriculture

27%

of people in Palestine are unemployed

P

alestine’s private sector has a hard

and brisk business, Nakheel Palestine has created

time maintaining the economic

jobs and bolstered Palestine’s highly vulnerable

growth momentum needed to

farming sector.

create jobs, particularly in agribusiness. That difficulty can be

In the words of Jean-Baptiste Jouve, a Proparco

attributed to both geopolitics in the region and

Investment Officer: “Nakheel Palestine and its

Palestine’s inadequate infrastructure and public

stakeholders have demonstrated their ability to

services. But even so, some

develop a profitable company

companies have managed to

in a complex business envi-

turn the situation around.

ronment. The upshot is that the sector has become more

For example, Nakheel Palestine

structured and that sustainable

has demonstrated its compe-

employment has been provided

38%

titive strength in just a few years’ time. The company has built itself into the number-one domestic producer of Medjool dates and exports 60% of its output. Through a

of Nakheel Palestine’s 600 employees are women

combination of investment

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to local communities.”

Boosting Palestine’s private sector T h e $ 10 -m i l l i o n l o a n extended by Proparco in 2017

19

Before packaging, the dates are hand-sorted by Nakheel Palestine employees, and then processed according to international food-hygiene standards.

Our goal has always been to be a market leader. We couldn’t have achieved that without Proparco.

Mustafa Hasan, General Manager, Nakheel Palestine

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$10 M loaned by Proparco to Nakheel Palestine

Focus report – Palestine

enabled the company to buy a farm, purchase

workers—many of them women—in its fac-

more effective equipment (for packaging and

tory and on its farms. Nakheel Palestine has

cold storage, for example) and achieve signifi-

also indirectly generated hundreds of jobs at

cant economies of scale. Nakheel Palestine can

businesses that distribute its products. The

now harvest dates from 45,000 trees planted

financing provided by Proparco will make

on several hundred hectares of land in Jericho.

it possible to create nearly 350 additional farming jobs.

The loan represents Proparco’s first project in support of the Palestinian private sector,

As Mr. Hasan also notes, “We contribute to

making it the first development finance insti-

income growth for Palestinian workers,

tution to assist Palestine’s agricultural sector.

which also enhances the well-being of their families.”

“Proparco is a strategic partner that has helped our company step up its pace of growth,” states Mustafa Hasan, the company’s General Manager. The resulting increase in exports will build brand recognition and make additional foreign currency available to the Palestinian economy.

Major social and economic impact Whether directly or indirectly, Nakheel Palestine has created hundreds of jobs. In addition to a permanent staff of 80, the

350 jobs directly created thanks to Proparco financing

company employs more than 500 seasonal

A powerful signal about the bankability of Palestine’s private sector This project marks Proparco’s first collaboration with two key institutions in the Palestinian economy: Padico Holding and Massar International (via its private equity fund Siraj Palestine), which are leading shareholders in Nakheel Palestine. This first investment by a major financial institution like Proparco sends a powerful positive signal to the market, about the potential and bankability of the Palestinian private sector, where long-term capital investment is still inadequate.

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A responsible company Nakheel Palestine currently farms over 400 hectares of date palm groves using the most advanced irrigation techniques, which are vital to optimizing the use of water—an all-too-rare resource in Jericho. Out of a commitment to environmental responsibility, Nakheel Palestine complies with the most stringent international standards throughout the production cycle, from planting to fruit packaging. Moreover, the company has received Global G.A.P. Certification, an international standard that guarantees good agricultural practices, and has been recognized as compliant with the BRC Food and ISO 22000 food safety standards.

The Proparco loan has enabled Nakheel Palestine to purchase a farm.

The company now grows more than 45,000 date palms in the Jericho region.

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Focus report – Mexico

EMPLOYMENT

MEXICO’S

pioneering planters In southeast Mexico, the oil crisis has plunged an entire region into unprecedented social crisis. Trees—at the heart of a both profitable and sustainable strategy—may now become the new green gold of the state of Tabasco.

T

he majestic silhouette of a cente-

of sensitivity,” explains Ana Lorenza, a shy

narian tree marks the entrance

smile spreading across her face. Ana, age 27,

to this verdant sanctuary. It is

was born and raised in the area. “I live in a

a Ceiba pentandra or kapok,

nearby village. A lot of us have found work

the most sacred of trees for the

at the tree nursery.”

Maya. Like countless other plant species, it flourishes on the soils of Tabasco.

She has an important role in the company, being responsible for weeding, watering and

It is here, 700 kilometers from Mexico City,

transplanting many of the young saplings that

that Proteak, Mexico’s leading agroforestry

are destined to become the forests of the future.

company, has established its tree nursery.

With her first child on the way, this represents

Thousands of eucalyptus saplings are carefully

job security. Above all, it means she can plan

tended by some fifty employees, most of whom

for the future with confidence, knowing that

are women. “This work requires a great deal

she will be able to provide for her family.

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23

FOCUS

- 68%

The fall in Mexico’s oil export revenues since 2011

800

direct jobs created by Proteak since it was set up in 2001

In the state of Tabasco, most employment used to be connected to the oil industry. Today, this young eucalyptus shoot represents the future of the region.

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Focus report – Mexico

Tabasco has generated nearly 800 steady jobs.

The company’s move to start up operations there was considered by some to be a risky bet in light of the region’s economic situation.

10,000 hectares of eucalyptus and teak will be planted in the next ten years

Green shoots become trees “When we started out, a lot of politicians and bankers thought we were crazy,” laughs Gastón Mauvezin, Proteak’s Chief Executive Officer.

“The first investors to join us were all friends and acquaintances. Their reasons for investing were mostly about respect for the environment and a desire to see job opportunities created for the local population. They weren’t in it for

A new era for the region

the money. They were thinking along the lines of, ‘I want my children and grandchildren to be proud of me one day’,” he says.

For decades, the state of Tabasco was largely dependent on the oil industry. It used to be

But thanks to the talent of these young entre-

nicknamed the “Texas of Mexico”. The oil

preneurs, the plantations rapidly became

industry once provided plentiful employ-

profitable, and larger investors wanted a piece

ment, making this state in southeast Mexico

of the action. The company is growing and is

one of the most prosperous in the country.

structuring itself according to the same set

But the golden age didn’t last. Tabasco was

of principles: responsible and sustainable

devastated by the 2010 oil crisis, which generated an unprecedented social crisis.

Hundreds of thousands of families lost their source of income overnight.

Every evening, the bus that takes Ana Lorenza back to her village passes in front of an abandoned factory—a reminder of the region’s oil-rich past. But today that sad sight pales in comparison to the thousands of teak and eucalyptus trees that have been planted by Proteak, offering the inhabitants of Tabasco a vision of a brighter future.

We are pioneers.

We are educating the generations that will build the future of our country.

Including the wood processing and trans-

Omar Nacif, Proteak Industrial

formation plant, Proteak’s presence in

Manager

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25

Over the last 20 years, Proteak has planted 20,000 hectares of teak and eucalyptus in the state of Tabasco. 4,000 of those trees are intended for environmental conservation and will not be commercially exploited.

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Focus report – Mexico

26

entrepreneurship. “It’s a new concept in Mexico,” says Gastón Mauvezin.

A long-term vision Proteak’s approach goes beyond job creation.

It also involves designing a business model that corresponds to the environmental challenges facing the planet—and particularly Mexico—today.

Tabasco suffered massive deforestation during the second half of the 20th century. The state policy of forest clearance was considered progressive at the time.

10 schools Proteak partners in the state of Tabasco

Since the early 2000s, Proteak has replanted about 20,000 hectares of forest, generating 250,000 carbon credits. It’s a first in Mexico.

“Every time you plant a tree, by definition it’s with a view to the long term. It’s an investment that goes beyond the current economic situation. We are the exact opposite of what the oil

industry represented here. Our approach is all about investing in the fundamentals, establishing principles that aren’t going to change and which have the resilience to withstand future political and economic crises,” Gastón Mauvezin proudly explains.

The innovative vision of the Proteak teams has enabled them to inject new life into the region. From the ruins of a business model entirely dependent on oil, new seeds of hope are being sown in Tabasco.

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27

It’s very important for us to maintain good relations with local communities.

Proteak employee Kristina Díaz hands out snacks at a Tabasco elementary school.

Schools are strategic locations for making new generations aware of the need for environmental protection.

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28

INTERVIEW

“A sustainable model of forest management” K R I S T I N A D Í A Z, C S R M a n a g e r a t Proteak

In 2006, Proteak obtained FSC certification. What does achieving this mean to you?

KD: We’re very proud. It’s a certification that requires you to meet

Working with Proparco is a fantastic challenge.

Their social and environmental standards are very high.

very high standards, and this is of great importance to us as Mexicans.

Unfortunately, our country has a major problem with illegal logging.

For every cubic meter of timber that is felled legally, there is probably another cubic meter being felled illegally. Not only does this damage the environment; it also affects the people whose livelihoods depend

on these resources. Developing a sustainable model of forest management and offering local populations steady jobs is fundamental.

Why did you choose to set up your company in the State of Tabasco?

KD: Tabasco has excellent climatic conditions for growing teak and eucalyptus. It’s also one of the poorest states in Mexico. It’s a prime example of what happens when an economic

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29

model is reliant on a single resource. When the oil industry collapsed a few years ago, people found themselves without any alternative employment. By developing the agroforestry industry, we’re helping to diversify the region’s economy. And it’s a long-term project: a tree takes 30 years to grow. This offers significant prospects for the future.

We’ve also created a program to ensure that the local inhabitants retain ownership of their land and become foresters alongside us. We

$28 M loaned by Proparco to support Proteak’s growth

offer them the opportunity to progress toward entrepreneurship.

How do you reconcile profitability and corporate responsibility?

How would you evaluate your collaboration with Proparco?

KD: Whenever we talk about sustainable deve-

KD: Working with Proparco is a fantastic

lopment, social and environmental issues

challenge. Their social and environmental

are discussed but the business aspect is often

standards are very high. Coming from a

sidelined. For me, business is not a dirty word.

financial institution, that’s quite something.

What’s important today is to create smart

When we began working with Proparco, we

business models that are both cost-effective and

said to ourselves: “Okay, now this is serious.”

inclusive. We need to integrate local populations

Since then, we have learned to set ourselves

into economic development and respect the

increasingly high standards. We’ve matured

environment at the same time. If we maintain

and become more aware of our responsibilities

that balance, everyone will be a winner.

toward our country.

A certification with very high standards The FSC label is an environmental certification awarded by the Forest Stewardship Council. Created in 1993, the label certifies that the wood or timber-based products sold by a company are manufactured according to a set of criteria that ensure sustainable forest management. These high standards—which include verifying the legality of timber exploitations, an absence of links with deforestation, sustainable biodiversity management, respect for workers’ rights and the well-being of local communities—are considered by many observers to be the most demanding in the world.

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30

Focus report – Egypt

CLI M ATE

Under

the Benban sun

Egypt is counting on renewable energy sources to meet increasing domestic demand for electricity and reduce the country’s dependence on fossil fuels. The world’s biggest solar park is now under construction in the middle of the desert.

B

enban, near Aswan, is located in southeast Egypt. For seve-

Targeting energy independence

ral months now, the Egyptian government has been building

Construction of the Benban Solar Park began in

technical infrastructure that

2017, marking a turning point in Egyptian energy

will become the largest solar installation in

policy. Although fossil fuels still account for

the world. Destined to cover

more than 90% of domes-

some 40 square kilo­­meters,

tic electricity production

the facility is designed to

(compared to just 1% of elec-

accommodate 32 autono-

tricity generated from solar

mous photovoltaic plants.

power), renewable energy

Interconnected by a high-

development is now a major

voltage grid, they will achieve

component of the govern-

a combined generation capacity of as much as 1.8 gigawatts by 2019. The cheap, clean electricity produced will benefit 350,000 households and stimulate economic development throughout the region.

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$136 M loaned by Proparco to support the Benban solar program

ment’s energy strategy.

Egypt aims to produce 20% of its electricity from renewables by 2022. It’s a major challenge, not only for the country’s development but also for its energy

31

FOCUS

90%

Electricity in Egypt produced from fossil fuels

1%

Electricity in Egypt produced from solar energy

Benban solar park is the biggest photovoltaic complex under construction in the world. self-sufficiency, given that electric power

private capital has proven vital to building the

demand in Egypt exceeds national production

Benban Solar Park, whose final cost is estimated

capacity by 20%.

at US $4 billion. International financing and

Supporting the first private sector initiative

development banks are also playing an essential role. In 2017, Proparco provided $136 million to support the Benban program. These funds will finance the installation of five photovoltaic plants

Abundant sunshine in Egypt has made solar energy

with a total capacity of 288 megawatts. Their

a key component of the government’s strategy

construction has been assigned to three French

for meeting the nation’s energy needs. However,

energy firms: Voltalia, EDF and EREN.

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32

Focus report – Egypt

INTERVIEW

“Renewable energy, a key focus for Proparco” E M M A N U E L L E M AT Z, H e a d o f P r o p a r c o’s E n e r g y and Infrastructure Division

Why did Proparco decide to finance a solar energy program in Egypt?

EM: The AFD Group has built a relationship of trust with all the stakeholders in the Egyptian electricity sector in order to facilitate the country’s energy transition. The Group supports national distribution investments

Does the financing of these projects represent a new approach for Proparco?

that are designed to strengthen intermittent electricity reception, and public-sector

EM: This is the first time that Proparco has

projects related to renewable energy. It

invested so heavily in a programmatic

also provides the Egyptian

approach. But we have

authorities with technical

already performed this

support to assist them in

role in several other coun-

issuing calls for tenders in

tries to support the launch

the renewable energy sector.

of their first renewable

It was a natural move for

energy projects, parti-

Proparco to support the first private initiatives launched in this field, resulting in the financing of five projects of the Benban solar program, which is the first feed-in tariff program in Egypt.

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350,000 Egyptian homes will be powered by solar energy by 2019

cularly in Honduras in the wind energy sector, in Peru and in Uruguay.

The advantage of th is type of approach is that it optimizes costs and due d i l igence t i mes. That

33

ensures a high level of electricity availability

strategic developments point in this direction:

in a very short period of time.

ongoing programmatic approaches in some African countries, support for new initia-

What is Proparco’s strategy in the solar energy sector?

tives implemented through B-to-B or B-to-C approaches, and the expectations of investors interested in subscribing to green bonds in the

EM: Solar energy is developing very rapidly

regions where we are active, where a partial

around the world. It offers the dual advantages

contribution from other development finance

of simple technology and competitive costs.

institutions can be envisaged.

For that reason, Proparco has been thinking hard about how best to deploy its efforts in

The 16 climate projects that we committed to

this sector over the next three years.

in 2017 should amount to 1,059 megawatts of renewable energy capacity in the future. They

The impacts produced by the projects we

will help reduce CO2 emissions by around 1.6

finance should be visible in 2020. Several

million tons per year.

Solar energy is developing very rapidly around the world.

It offers the dual advantages of simple technology and competitive costs.

Besides the Benban solar program, Proparco has also recently supported the construction of two solar-power plants in Senegal. With a nominal capacity of 30 MW, these plants cater to the energy needs of 450,000 people.

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34

Focus report – Pakistan

ACCESS TO ESSENTIAL SERVICES

Microfinance:

a boost for women entrepreneurs

Pakistan remains a deeply patriarchal society where it is difficult for women to assert themselves. A fundamental transformation in attitudes is necessary, both within families and in society as a whole. This goal has been driving the Kashf Foundation’s actions for over twenty years.

FOCUS

40%

of Pakistanis live on less than €2.60 per day

7%

of Pakistani women

have a bank account

T

Supporting women entrepreneurs

he Fou nda­ tion’s primary object ive i s empowering women to

become agents of social

and economic change in Pakistan. By lending money to Pakistan’s women entrepreneurs, the Foundation reveals their potential and enables them to grow their

50%

The dairy sector provides a

of the Kashf Foundation’s 2,074 employees are women

for taking care of the family

businesses. This in turn

livelihood for nearly 8 million Pakistani households.

Women are often responsible livestock. But despite their economic significance, they don’t have access to formal financial services.

benefits them and their families. Kashf is the

Another 13.3 million working Pakistani women

first microfinance institution to demonstrate

could benefit from customized financing

that a women-centered model can be successful

that is flexible, practical and doesn’t lead to

in Pakistan.

over-indebtedness.

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35

A working woman can hold her head high with dignity. Anyone who says otherwise knows nothing about life.

Iram Hafiz was able to launch her retail used clothing business with help from the Kashf Foundation.

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Focus report – Pakistan

36

encourages other women to follow in

A husband and wife are like two wheels of the same car: for the car to move forward, they have to be equally balanced.

Hina Kausar, Kashf Foundation client

their footsteps.

Of the women micro-entrepreneurs whose projects are financed by Kashf, 20% go on to employ other women from their community.

In 2015, 8.5% of women microentrepreneurs created three jobs on average. By 2021, the project will have created and sustained 104,040 indirect jobs, a third of which will be directly attributable to Proparco financing. It’s a significant contribution to the country’s develop­ment.

The model adopted by the Kashf Foundation is that of progressive loans. The system is simple: clients who have repaid their initial loan of around 45,000 rupees (about 340 euros) are then eligible for a repeat loan of a higher amount, creating a virtuous cycle where renewed investment capacity contributes to the sustainable growth and stability of their business. Repeat loans are requested by 70% of the Foundation’s microfinance clients.

365,000 women have received Kashf Foundation loans

Giving women a new social role By financing their business ventures, Kashf provides women entrepreneurs with official recognition of their success. Their community looks at them in a different way, as positive role models. And that

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Kashf Foundation clients take small-group financial education workshops, where they learn how to run a business and gain self-confidence.

37

Enhancing women’s social well-being In addition to providing microfinance services, the

women are able to read and write—one of the lowest

Kashf Foundation has also rolled out a number of

literacy rates in South Asia.

capacity-building programs to improve the social and economic well-being of women and their community.

The Kashf Foundation also carries out actions to raise awareness about women’s rights. For example, it orga-

1.5 million women entrepreneurs have benefited from the

nizes street theater performances to broach sensitive

financial education program set up by the Foundation to

issues such as pedophilia and child marriage. These

improve their practices. They are taught how to produce

explore the issues underlying domestic violence and the

savings, establish a budget, and separate business and

marginalization of women, all the while communicating

household income. The Kashf Foundation also supports

messages of hope.

children—those of women entrepreneurs and the poorest families in their communities—by extending loans to

Involvement of men in this struggle is essential. Gender

low-cost private schools. It then disburses loans to

training targeting men and adolescent boys specifically

students, enabling them to enroll. This commitment is

is organized to raise their awareness of women’s rights

particularly significant in Pakistan, where only 52% of

and gender equality.

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38

Focus report – Pakistan

Becoming financially independent Over the last 15 years, Hina Kausar, age 35, has received three loans from the Kashf Foundation to expand her seamstress business. She’s well on the way to opening her own workshop and is dedicated to helping her children succeed in their studies.

People said that I shouldn’t work like a man and warned me my husband would become lazy.

I always replied that women are just as capable as men.

Women who have been confined to the home and tied to their chores must take charge of their lives.

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39

My father stopped talking to me for a month when I told him I wanted to work before getting married. But that didn’t put me off.

Providing better educational opportunities Rahim Bibi, age 40, opened her first beauty salon 20 years ago with a 15,000-rupee (110-euro) loan from the Kashf Foundation. She now runs three salons and has already paid off her third loan. She is proud of her ability to provide her children with a good education.

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40

Focus report – Pakistan

Improving living standards Irshad Bibi, age 45, is the mother of five children.

Her husband works alongside her. An initial loan of 50,000 rupees (approximately 360 euros) enabled her to purchase a few cows.

Her life has improved markedly since then: her children now go to school and she and her husband have built their own house. They now own seven cows and hope one day to have a full herd of around fifty.

After meeting some of the women who had received Kashf Foundation loans, I decided that I also wanted to take up this opportunity.

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41

My husband and children have been supportive from the outset, but other family members tried to discourage me, saying that it’s not appropriate for a woman to start her own business. But better to work than to beg!

Supporting her family When the husband of Iram Hafiz (age 38) fell ill and had to stop working, she came up with the idea of buying clothes at the market and reselling them door-to-door. On the advice of a friend, she contacted the Kashf Foundation and applied for a loan. An initial 50,000 rupees (about 360 euros) enabled her to set up and develop her own business. Her earnings have paid for her husband’s medical care, and she has been able to enroll her children in a good school.

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42

Focus report – Pakistan

The first thing a woman does when she earns money is to invest in her family’s future.

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43

INTERVIEW

“2.6 million women sup­ ported in the past 20 years” ROS H A N E H Z A FA R, Founder of the Kashf Foundation

How has Kashf impacted economic and social development?

RZ: Since we began in November 1996, we’ve helped 2.6 million women entrepreneurs set up businesses across Pakistan. Our work has both an economic and a social impact. On the economic front, we’ve seen a more than 50% increase in our clients’ incomes. We’ve also found that the majority of our clients are able to save up and that many go on to create jobs.

Nearly 20% of the women entrepreneurs that we finance employ women from within their own community. So, we’re really an economic catalyst.

$5 M

After studying finance and development eco-

In social terms, the majority of women

nomics in the United States, Roshaneh Zafar

tell us that, after a year of working with

worked for the World Bank. When she met

Kashf, their self-confidence has impro-

Dr. Yunus from the Grameen Bank in 1992, it

ved and with it their confidence in their

was a turning point. She quit the World Bank

own ability to make financial decisions

and flew to Bangladesh to learn more about

within the household. Relations with

microfinance. A few years later, she founded

their husbands are also better and, in

the Kashf Foundation in Pakistan, her home

some cases, domestic violence decreases. These

country, to provide access to financial services

women explain that the majority of conflicts

for women entrepreneurs and empower them

within the home are related to money problems.

loaned by Proparco to the Kashf Foundation in 2017

economically.

How do you see the future of Kashf?

When women become financially independent, how do their lives change?

RZ: Our goal is to have a million clients in business three years from now!

RZ: The first thing a woman does when she earns money is to invest in her family’s future. In households where women work and bring home

What has been Proparco’s most important contribution to Kashf?

their own pay, nutritional intake is higher and children are two to three times more likely to

RZ: Our financial risk management is improving

go to school. The overall health of the family

thanks to the technical assistance that Proparco

also improves. Women who work are also more

has financed. The $5 million Proparco loan

involved in everyday decision-making, not only

enables us to make affordable financial services

in terms of one-off purchases and investments,

available to the very poorest women in Pakistan.

but also in relation to education for their child-

It will directly support 50,000 businesses run

ren, particularly for girls.

by women.

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44

Focus report – Kenya

I N NOVATION

START-UPS:

development challenges 2.0 From off-grid solar power to mobile money solutions for the unbanked, technology is helping to solve many development challenges in sub-Saharan Africa. This focus report comes from Kenya, in the heart of “Silicon Savannah”.

N

airobi is a cosmopolitan city

companies at the cutting edge of innovation,

and the nerve center of East

and it has taken steps to introduce ICT into

Africa. When walking its

school curriculums.

streets, it’s impossible not to notice the droves of young

people busy on their phones. Communicating.

Transacting. Amusing themselves. Mobile technology now regulates everyday life.

Uncovering talent in Africa Upon arrival at Andela’s head office nestled in Nairobi, you’re greeted by the soft murmur of fin-

Cell phone penetration is at an all-time high

gers tapping away on keyboards. The airy open-

in Kenya, with an ownership rate of over

space room is filled with software developers

87%. The government sees this as an oppor-

of all ages, ethnicities and social backgrounds.

tunity for boosting the country’s social and

Despite their many differences, they are unified

economic development. It’s thus preparing a

by their love for tech and their desire to change

number of trade agreements with international

people’s lives through innovative software.

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45

FOCUS

43 M people,

or 90% of the population, have internet access in Kenya

83%

of web traffic is accounted for by cell phones

600 M Africans

are forecast to use smartphones by 2020

In just four years’ time, Andela has hired over 900 software developers throughout Africa.

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46

Focus report – Kenya

Founded in 2014, Andela is at the vanguard

Lagos and Nairobi. It has also launched the

of the technological revolution Africa is

“She Loves Code” initiative, through which

currently experiencing. The company is

women in the program mentor young women

fighting the global shortage in technological

in the community and host local events.

talent by investing in Africa’s most talented software developers. With tech campuses in Nigeria, Kenya and Uganda, Andela is today helping around 100 partner companies establish decentralized engineering teams.

Software development careers for women too

23% of Andela developers are women

An unprecedented role for venture capital The African tech revolution exemplified by Andela is dramatically increasing the pace of economic transformation. After having explored the functionalities of mobile and cloud technologies, many African start-ups

To become an Andela develo-

are now building differentiated business

per, applicants first go through a

models suited to their markets. With existing

strict selection process. On ave-

infrastructure as a springboard, they have

rage, 10 out of 2,000 applicants

created new and uniquely African techno-

get to join Andela as full-time

logies that speak to the continent’s lifestyles

employees on four-year contracts.

and complexities.

For their first six months, the new employees work side by side with

Shortage of funding often prevents these

senior engineers and work within

young start-ups from scaling up beyond

internal product teams. Once

their local markets. But now venture capital

they’ve developed their skills in

funds are beginning to play an unprecedented

both technology and team-working,

role. In Kenya, Andela managed to take off

they can then join one of Andela’s

thanks to support from TIDE Africa, a fund

100 partner companies: “Even

created in 2013 by the company TLcom.

though I’ve been working here less than two years, I’ve already had the opportunity to work with really amazing global tech companies,” explains Mbithe Nzomo, a young Kenyan software developer.

Andela has received nearly 100,000 applications to date and has accepted over 900 developers, half of whom have been placed with the company’s partner firms. Currently, women developers at Andela make up 23%, compared to a world average of 5.8%. To promote gender equality in its teams, Andela holds numerous female-only recruitment campaigns and training seminars in both

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€4.3 M invested by Proparco in the TIDE Africa Fund to support African start-ups

47

Backed by Proparco, the African Development

Africa across all stages of the venture capi-

Bank and the European Investment Bank,

tal cycle. This is undeniably a bold move,

TIDE Africa is the first international venture

but a much-needed one, as technology could

capital fund focused exclusively on innovation

well be the key to sustainable development

and technology-based services for sub-Saharan

in Africa.

Technology is our passion.

I work here with some of the most brilliant minds in Andela.

Penina Wanjiru joined Andela in 2015. To promote gender equality in a male-dominated sector, the Kenyan company has held several female-only recruitment campaigns.

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48

INTERVIEW

“Investing early in innovative companies�

M A U R I Z I O C A I O, F o u n d e r a n d M a n a g i n g Par tner of TLcom

Where does TLCom see tech opportunities in Africa today?

MC: New Information and Communication Technology (NITC) has gained considerable traction in Africa since the 1990s.

In particular, cell phone penetration rates have reached 70% to 80% across the continent. The

Our investment opportunities are increasing thanks to the speed of change in the African ecosystem.

challenge today is how to use these technologies to provide services that meet the needs and desires of Africans. For instance, access to basic services in the financial, energy, education or healthcare sectors is fairly low compared to connectivity rates.

So NITC offers entrepreneurs ways to develop innovative

business models for making their services more accessible at competitive prices.

Our investment opportunities are increasing thanks to the speed of change in the African ecosystem. In our deal flow database we have over 1,200 companies that apply promising technology-based models. About 70% of our

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49

deal flow originates in Nigeria, Kenya and South Africa. But we’re also seeing increasing momentum in smaller markets such as Uganda, Ghana, Senegal or even Rwanda, where the governments are supportive of innovation

3

and entrepreneurial initiative.

How many investment agreements have been signed so far?

MC: Besides Andela, we’ve entered into agreements with Terragon in Nigeria and Msurvey

African start-ups already supported via the TIDE Africa fund

in Kenya. These companies help entrepreneurs across Africa gain a better understanding of their consumers through innovative techno-

many opportunities in the tech and start-up

logical solutions.

ecosystem.

Why is Andela such an attractive investment?

How would you assess your cooperation with Proparco?

MC: Andela started out with a social calling, but

MC: TIDE Africa was Proparco’s first-ever

our support helped to make it a fully-fledged

investment in a venture capital fund. We were

company. Since then, Andela has proved

very impressed with how fast they decided to

that its business model is relevant. There are

support us. It took about six months to carry

now nearly 900 Andela software developers

out all the studies, which compares quite

working at offices in Nairobi, Lagos and

favorably with the parallel negotiations we

Kampala. The company also understood early

were conducting with other investors.

on that you don’t only compete in terms of the products and services you sell; you also

Development finance institutions partners

compete in the labor market. Andela has

are essential to us, as they help us engage

proved its ability to attract the best managers

more actively with other institutional funding

and developers in Africa.

sources such as family offices. Proparco helped pave the way for future rounds of capital-raising

How easy was it to convince investors to support TIDE Africa?

at TIDE Africa.

MC: Traditional global venture capital investors know little about Africa. It’s good that develop­ ment finance institutions like Proparco are placing themselves at the forefront of funds like TIDE Africa to invest early in innovative companies. These institutions have unlocked

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50

Focus report – Africa

SUPPORT FOR BUSINESSES

Combining

financing with support

The European Solidarity Financing Fund for Africa (FEFISOL in French) supports agricultural investments across the continent.

It aims to meet the financing needs of poor rural households and help them improve their practices.

FOCUS

10%

of worldwide microfinance investment originates in Africa

20%

Bank account penetration rate in Africa

O

nly 36% of the 227 million

smallholder farmers. This adds real social

bank accounts in Africa are

value to its financial activities. To make its

used to make mobile money

activities sustainable and to meet client needs

payments, even though

most effectively, Musoni’s management has

mobile finance is particularly

developed a sound client strategy and started

well-suited to isolated population groups,

strengthening its capacities.

above all in rural areas.

In Kenya as elsewhere The Kenyan microfinance

in sub-Saharan Africa,

institution Musoni has taken

FEFISOL combines support

up the challenge of mobile

for rural microfinance

banking and financial ser-

with technical support.

vices in rural areas. It offers payment, savings, and loan products tailored to vulnerable people who lack access to conventional financial services, many of them

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2,213,072 FEFISOL end beneficiaries

By financing microfinance institutions that provide access to financial services suited to vulnerable rural inhabitants, it encourages the expansion of a real

51

70% of FEFISOL investments are made in local currency

Malawi: the Mzuzu Coffee Planters Cooperative Union is funded by FEFISOL. Its 3,000 farmers, 25% of whom are women, are assisted in obtaining fair trade and organic farming certification. economic and social fabric. FEFISOL has accordingly invested €1.1 million in Musoni

Improving financial inclusion in rural areas

so that the organization can expand its loan portfolio and continue to grow. This financing

FEFISOL is the first rural microfinance fund to

is supplemented by a technical support pro-

focus on supporting fair trade and small-scale

gram totaling €33,331, designed to improve

organic farming enterprises in Africa. It targets

customer relationship management, especially

not only microfinance institutions with high

through staff training.

growth potential that make financial services

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52

Focus report – Africa

“FEFISOL’s technical support facility is

FEFISOL’s technical support facility is an unquestionable advantage. More than half of the fund’s beneficiaries have already made use of it.

Anne-Sophie Bougouin, FEFISOL Manager for the social enterprise SIDI

unquestionably an advantage. More than half of the fund’s beneficiaries have already made use of it. FEFISOL has been highly successful from the start, and so we should go further with our technical support approach in order to reach the most vulnerable population groups,” explains Anne-Sophie Bougouin, a fund manager for FEFISOL, which is ma naged by t he socia l enter pr ise SIDI (which stands for International Solidarity for Development and Investment). Over 50% of FEFISOL’s 84 beneficiaries have made use of the technical support facility at least once.

Responding to all needs In order to offer tailored technical support,

available to unbanked country-dwellers, but

FEFISOL identifies the needs of the organiza-

also producers’ organizations and agricultural

tions it finances and, where necessary, calls in

SMEs with only limited opportunities for

outside independent consultants or consulting

refinancing through the mainstream financial

firms. The goals pursued range from capacity

system. FEFISOL’s work ultimately contri-

building in management or finance to support

butes to greater financial inclusion for local

for new product development. The facility

communities and small businesses

thus makes a genuine contribution to risk

in African rural areas.

consolidation and mitigation for the fund’s

Supporting local economies

€4.8 M

clients. “Technical support also enables us to build client loyalty and win over new clients,” Ms. Bougouin points out.

FEFISOL also seeks to have an

FEFISOL targets microfinance institutions

i mpact on m a n agement a nd

with a relatively high-risk profile. Its sup-

governance of the organizations

port helps them respond as best as pos-

it finances. A technical support

sible to their clients’ needs and to be more

facility has therefore been establi-

in line with their actual capacity for imple-

shed to help the fund’s beneficiaries

mentation. FEFISOL is also equipped to train

develop to the point where their

members of producers’ organizations in

medium- and long-term economic

such areas as planning and enhancing the

and social viability are assured. The

status and quality of produce through cer-

ultimate goal is to enable them to access stable

tification, better farming techniques and

and sustainable financing in the local market.

the like.

invested in FEFISOL via the FISEA fund owned by AFD and managed by Proparco

PA NOR A M A - ACTIVITY REPORT 2017

53

Partnership between FEFISOL and FISEA The FEFISOL fund was created in 2011, from

€330,000 for FEFISOL’s technical support facility

Kenya: Vert Ltd markets

collaboration between three European social

in a co-financing arrangement with the European

farm produce,

investment organizations involved with developing

Investment Bank, the Norwegian Microfinance

chiefly green beans.

countries. One of the investors was International

Initiative and the Government of Luxembourg.

The company works

Solidarity for Development and Investment (SIDI

directly with local

in French), a subsidiary of the NGO CCFD-Terre

Owned by AFD and advised by Proparco, FISEA aims

smallholder farmers and

Solidaire (Catholic Committee Against Hunger

to promote the growth of businesses and financial

offers them technical

and for Development). SIDI is the management

institutions that create jobs in sub-Saharan Africa

support. Vert Ltd handles

company for FEFISOL and is also in charge of its

by offering them access to equity financing as well

getting them fair trade

technical support facility.

as support in managing their investments. On

and GLOBALG.A.P.

AFD’s behalf, Proparco monitors and manages the

certification, which the

The Investment and Support Fund for Businesses

fund and the dedicated technical support facility.

farmers need to be able

in Africa (FISEA in French) has invested €4.4 mil-

Proparco is also a member of the FEFISOL Advisory

to export to Europe.

lion in the FEFISOL fund. FISEA also provided

Committee, where it represents FISEA.

PA NOR A M A – ACTIVITY REPORT 2017

54

Organization

Adapting to new challenges Proparco plans to double its annual financial commitments and triple the impact of its actions to promote sustainable development. To achieve this aim, we’ve established a new organizational structure, with extra human resources for our teams.

S

ustainable development is central

Aiming for efficiency

to Proparco’s work, which is fully in line with the UN Development

Driven by a commitment to optimization and

Agenda. Our aim is to double our

efficiency, Proparco has also created a Special

annual financial commitments to

Operations Division devoted to debt restructu-

€2 billion by 2020 and to triple our impact.

ring. This new function allows our operational

To manage the growth in our business and

investment officers to strengthen their client

workforce, we set up a new organizational

service through careful monitoring of a healthy

structure in 2017.

portfolio. And, as greater specialization implies, we have made our teams leaner and increased

Gearing up for expansion Those organizational changes have been

the “hands-on” character of management.

Tripling impact by 2020

shaped by four basic principles: investing time and resources in new markets in order to

Proparco has also pledged to double its annual

leverage innovation; expanding our equity

financial commitments and triple the develop-

investing; promoting greater staff speciali­

ment impact of that financing by 2020. That goal

zation; and giving priority to achieving

is reflected in our organizational structure. We

greater impact and added value in our work.

have created a client-focused Sustainability and

In concrete terms, those defining issues have

Corporate Governance Department that brings

led us to set up a Debt Department and an

together the teams in charge of environmental,

Equity Department.

social, governance and impact issues.

PA NOR A M A - ACTIVITY REPORT 2017

55

Left to right: Hélène Templier, Deputy Chief Executive Officer • Grégory Clemente, Chief Executive Officer • Amaury Mulliez, Deputy Chief Executive Officer

The new organizational structure has been designed to reflect our roadmap and is equipped to handle the growth of our business in the coming years.

Grégory Clemente, Chief Executive Officer, Proparco

PA NOR A M A – ACTIVITY REPORT 2017

56

Organization

An organizational structure that can rise to the challenge Proparco now has six departments, including a recently added Sustainability and Corporate Governance Department, which now works alongside the two operations departments, Debt and Equity.

EXECUTIVE MANAGEMENT

RISK

OPERATIONAL STEERING, NETWORK & PARTNERSHIPS

Credit & Second Opinion Risk Monitoring

department Division Unit

Communication & Marketing (CMP)

SUSTAINABILITY AND CORPORATE GOVERNANCE

DEBT

EQUITY

GENERAL SECRETARIAT

Financial Institutions & Inclusion

Private Equity Africa & Middle East

Special Operations & Restructuring

Environment, Social & Governance

Manufacturing, Agribusiness & Services

Private Equity Latin America & Asia

Administration & Finance

Impact Measurement

Energy & Infrastructure

Equity Financial Institutions & Venture Capital

Legal

Investment Advisory

Project & Business

Technical Assistance & Blending

Equity Middle Office

PA NOR A M A - ACTIVITY REPORT 2017

57

INTERVIEW

“Increase the impact of Proparco’s operations” P i e r r e F o r e s t i e r, H e a d o f P r o p a r c o’s S u s t a i n a b i l i t y a n d Corporate Governance Depar tment

What does the new department’s approach involve?

PF: Our department has three key focus areas: due diligence and consulting on environmental, social and governance issues; impact measurement; and technical assistance for clients and blending. The goal is to meet the full range of Proparco’s commitments in terms of impact analysis and monitoring and

This new department bears witness to our goal of increasing the impact of our operations by providing support to development transitions.

of compliance with international standards, as well as to provide high value-added service to the Proparco teams and to clients.

enables us to deploy a complete spectrum of services to enhance the performance of

Proparco’s role is now clearly defined as

projects as well as of our clients.

supporting the deployment of private-sector initiatives and above all helping to increase

For example, we develop technical assistance

their impact as a means to facilitate major

programs that make it easier for our clients

development transitions.

to access any outside capabilities they may need to boost their performance. We also take

What is the make-up of your staff?

part in the process of examining financing and investment proposals. And because that

PF: The department is composed of experts in

keeps us engaged with the projects team,

environmental, social and governance issues,

we can improve our work by learning from

as well as in impact analysis, assistance to

experience, and more effectively leverage and

businesses, and financial innovation. That

highlight skills and achievements.

PA NOR A M A – ACTIVITY REPORT 2017

58

Organization

OUR TEAMS

Meaningful work Working in the development sector offers newcomers to Proparco the kind of meaning they

Expertise, openmindedness, giving back

were looking for in

I’ve been responsible

their career paths.

for monitoring our

Testimonials

East African portfolio and line-of-credit examinations in liaison with the Nairobi office since August 2017. This is my third position in the AFD Group. To

220 Proparco staff members

Commitment, optimism, open-mindedness

handle job or geogra-

After fifteen years of working in banking, I

phic mobility, you need to be tolerant and

was looking for more meaningful work and

open-minded. I always strive to convey those

the opportunity to move away from a corporate

values, because they are often what motivates

mindset, focused heavily on earning bonuses.

other people to join us. My short-range goal is

Since I joined Proparco in 2017, I’ve enjoyed a

to deepen my expertise so that I can give back

supportive, constructive atmosphere with teams

in return!

working toward a shared objective: development.

Yann Jacquemin · Investment Officer, Financial

Antoine Burgard · Investment Officer, Financial

Institutions and Inclusion

Institutions and Inclusion

Commitment, sharing, international orientation I’m in charge of structuring equity investment projects in the banking and insurance sector. After seven years at a large European financial group, I wanted to give my work a more international orientation and greater meaning. Sharing the same values and commitments as my colleagues is what I appreciate most.

I find my day-to-day work exciting, due to the variety of projects and people I deal with. Seeing the mandate and resources of the AFD Group and Proparco expand in the past few years has strengthened my motivation and commitment.

Dalia Stanikaite Torija Zane · Investment Officer, Equity Financial, Institutions & Venture Capital

PA NOR A M A - ACTIVITY REPORT 2017

59

Impact, international expertise Before I was hired as a local executive at the Douala office, I worked as a financial consultant at a Johannesburgbased company specializing in mergers and acquisitions. Today, I’m a multi-sector financial analyst at the Paris head office. My motivation for joining Proparco was to work on high-impact projects and at the same time to enhance my skills in examining international projects. Proparco offers an ideal work environment in terms of human relations and resources, and one that holds real career prospects.

Fabrice Arthur Mpollo · Analyst, Manufacturing, Agribusiness & Services

Diversity, innovation, assistance After an initial experience at a leading African e-commerce company, I joined the Douala office. Working on supporting start-ups and on infrastructure projects makes the job intense and exciting. Experience on the ground is crucial to understanding the cultural particularities and issues that project developers face every day. What clients expect from Proparco is more

Commitment, sustainability, a quality working environment

than just financing; they want support throughout their projects.

Claire Devey · Investment Officer, Douala Regional Office

Before joining Proparco, I worked in the Middle Office for AFD’s Guarantee Department. At present, I am in charge of compliance and

Innovation, cooperation, international solidarity

Middle Office work in the Energy division.

I’m lucky to have had this opportunity to

In my previous job as a lawyer, I assisted mining and

expand my skill set and make contributions on

oil companies with investing in Africa and Asia. It was

cross-cutting issues. And as I’m particularly

exciting work, but light-years away from issues like

sensitive to corporate social responsibility

sustainable development and resource sharing. Today,

questions, I’m also involved with promoting

I assist the Investment Officers with structuring equity

sustainability from the inside. For example,

and quasi-equity investments. Not only do I feel lucky

I’ve organized waste-reduction campaigns

to be involved with intellectually stimulating projects;

with several colleagues. More recently, we’ve

I also believe that, in my own modest way, I’m helping

formed a “Green Ideas” team to extend our

to improve living conditions for the poorest population

awareness-building work.

groups.

Erika Lous · Operations Support Officer, Energy

Mounira El Kalai Penedo · Senior Legal Officer, Equity team,

and Infrastructure projects

Legal Department

PA NOR A M A – ACTIVITY REPORT 2017

60

Results

OUR FINANCIAL RESULTS Proparco grew further in 2017, with €1.112 billion in new commitments—up 20% over the previous year—and nearly €1.4 billion in financing approvals. Those results, which are in line with the institution’s roadmap for 2020, have reaffirmed Proparco’s status as a leading development finance institution in Europe.

I

n 2017, France announced the ambitious

more than 35 countries, with a total value of

goal of raising its development assistance

€1.112 billion, up from €923 million in 2016.

to the equivalent of 0.55% of GDP by 2022. That increase confirms the drive

Those 2017 figures were therefore better aligned

to accelerate private-sector financing

with the trend in Proparco’s business plan than

championed by Proparco within the AFD Group.

those of 2016. The company boasts a sound

Proparco has just completed the first finan-

balance sheet and results in 2017 that reflect its expectations.

cial year of its new high-growth strategy for 2017–2020, which calls for a rapid increase in

The growth recorded this past year, particularly

financing amounts (to double those of 2015).

in terms of approvals and achievement of annual

An additional aim is to amplify the impact of

targets, shows that Proparco is well on its way

that financing, as measured by five indicators

to meeting the strategic goals set for the period

(to three times that of 2015).

from 2017 to 2020.

The volume targets for both approvals and commitments were essentially met, at 98% and 99% respectively. Disbursement volume reached 82% of the target set. In fiscal 2017, Proparco signed 69 investment agreements in

PA NOR A M A - ACTIVITY REPORT 2017

61

In brief Income 2015–2017 in millions of euros 150

Net banking income

140

Net income

130

130.8

120 110

126.3

110.0

100 90 80 70

60.4

60 50

48.1

40 30

32.9

20 10 0 2015

2016

2017

Total assets 2015–2017 in billions of euros 2015 2016 2017

5.095 5.401 5.175

PA NOR A M A – ACTIVITY REPORT 2017

62

Results

New commitments in 2017

€1.112 BN

in new commitments in 2017 including

€405 M

in Climate commitments

as of December 31, 2017 (excl. FISEA) Loans, other securities, equity investments and guarantees

New commitments by sector (% of total) Equity investments €198 M

Loans €840 M

€213 M

Guarantees €74 M

13%

in commitments in LACs and fragile States 32%

37%

11% 3%

Infrastructures

Corporate 19 % 57%

Financial institutions Infrastructures Corporate Investment funds

43%

25%

72%

43%

30% Financial

Investment 13 % funds

institutions

New commitments by region (% of total) Equity investments €198 M

Loans €840 M

Guarantees €74 M

Middle East

Africa Latin America & Caribbean Asia Middle East Multi-country

32% 8% 4% 5%

Multi-country

Asia 10%

36%

50%

3%

7%

19%

Latin America 28% & Caribbean

23%

22%

51% Africa

100% Percentages may not add up to 100% due to rounding.

PA NOR A M A - ACTIVITY REPORT 2017

63

Portfolio in 2017 as of December 31, 2017 (excl. FISEA) Loans, other securities and equity investments Guarantees are reported off-balance sheet; they totaled €90 million in 2017.

Total by sector (% of total)

34%

Loan portfolio €3.958 BN

Equity portfolio €503 M

Infrastructures 22% 11% 41%

Corporate 22%

21%

Investment 5% funds

institutions

Financial institutions Infrastructures Corporate Investment funds

37%

39% Financial

46%

22%

Total by region (% of total) Equity portfolio €503 M

Loan portfolio €3.958 BN

Middle East 15%

3%

Multi-country

French Overseas 2% Provinces 14%

Asia Latin America 25% & Caribbean

40%

41%

54%

Africa

8%

27% 13%

17%

2% 1%

20%

1%

13%

3%

Percentages may not add up to 100% due to rounding.

PA NOR A M A – ACTIVITY REPORT 2017

Africa Latin America & Caribbean Asia French Overseas Provinces Europe Middle East Multi-country

Results

64

Assets as of December 31, 2017 in thousands of euros ASSETS

Dec. 31, 2017

Dec. 31, 2016

2

7

2,377,705

2,678,830

110,725

110,435

Term

2,266,981

2,568,395

Transactions with customers

1,968,159

2,018,050

Cash and central banks Receivables due from financial institutions Demand

Bonds and other fixed-income securities

28,464

34,877

Equity investments and other long-term securities

767,992

649,201

Intangible assets

–

0

Property, plant and equipment

1,605

1,017

Other assets

11,730

2,242

Accrual adjustments

T O TA L A S S E T S

18,937

16,347

5,174,595

5,400,573

BALANCE SHEET – Liabilities & equity, as of December 31, 2017 in thousands of euros LIABILITIES & EQUIT Y Cash & central banks Debts to credit institutions Demand Term Other liabilities

Dec. 31, 2017

Dec. 31, 2016

76

0

3,658,682

4,029,295

-

0

3,658,682

4,029,295

508,537

404,119

Accrual adjustments

20,639

4,956

Provisions

64,365

66,861

Shareholders’ equity

922,295

895,341

Outstanding shares

724,898

724,898

Statutory reserve

16,576

13,554

Retained earnings

132,713

96,448

Net income

T O TA L L I A B I L I T I E S & E Q U I T Y

PA NOR A M A - ACTIVITY REPORT 2017

48,109

60,441

5,174,595

5,400,573

65

Income statement as of December 31, 2017 in thousands of euros I N C O M E S TAT E M E N T Interest and similar income

Dec. 31, 2017

Dec. 31, 2016

254,490

260,929

on transactions with credit institutions

105,315

110,938

on transactions with customers

148,027

148,542

on bonds and other fixed-income securities

1,149

1,449

Interest and related expenses

- 160,440

- 168,121

- 160,440

- 168,121

7,909

12,308

Commissions (income)

23,421

26,945

Commissions (expenses)

- 346

- 942

Other income on banking operations

1,227

0

on transactions with credit institutions

Income from variable-income securities

Other expenses on banking operations

NET BANKING INCOME Other administrative expenses Depreciation, amortization and provisions Gross operating income Cost of risk

-

- 289

126,261

130,831

- 52,447

- 44,906

- 339

- 268

73,475

85,657

- 21,530

- 25,286

Operating income

51,946

60,371

Gains and losses on property and equipment

11,492

29,763

Pre-tax income from operations

63,438

90,134

Exceptional income

- 637

- 2,978

Exceptional income

1,454

27

Exceptional expenses

- 2,090

- 3,005

Corporation tax

- 14,692

- 26,715

NET INCOME

48,109

60,441

PA NOR A M A – ACTIVITY REPORT 2017

66

Publications

Private Sector & Development Private Sector & Development is Proparco’s quarterly publication and blog. Both formats explore the ways in which the private sector contributes to development.

Magazine Private Sector & Development is a publication

institutions. Private sector electric power

Blog

with over 35,000 subscribers and 2,000 copies

utilities, the shipping port sector, the role of

printed per issue. It brings together the views

business in countries in conflict situations‌

of various experts from the private sector,

each issue provides several articles focused

The PS&D blog was

civil society, academia and development

on a specific question.

launched as an extension of the magazine to provide a wider forum for analysis and debate on the private sector and development. It gives people in the private sector the opportunity to highlight their own solutions to tackle the challenges of development. The articles posted online

All issues

take the discussion

available at:

further on the topics

bit.ly/PSD_mag

addressed each quarter in the magazine. bit.ly/PSD_blog

PA NOR A M A - ACTIVITY REPORT 2017

PROPARCO 151 rue Saint-Honoré 75001 Paris, France proparco@proparco.fr Tel.: +33 1 53 44 31 08 SOUTHEAST ASIA AND NORTH ASIA Bangkok 35/F Exchange Tower – Unit 3501-02 Sukhumvit Road, Klongtoey 10110 Bangkok, Thailand afdbangkok@afd.fr Tel.: +66 (0) 2663 60 90 SOUTH ASIA New Delhi 19A, Rajdoot Marg 110021 New Delhi, lndia afdnewdelhi@afd.fr Tel.: +91 (11) 42 79 37 00 CHINA Beijing 60 Tianze Street Chaoyang District 100600 Beijing, China chenj@afd.fr Tel.: +86 (0) 10 84 51 12 00 MIDDLE EAST, CENTRAL ASIA AND CAUCASUS, EASTERN AND SOUTHERN EUROPE Istanbul Büyükdere Cad. Yapi Kredi Plaza C Blok Levent, Istanbul, Turkey afdistanbul@afd.fr Tel.: +902122833111

NORTH AFRICA Casablanca 15 avenue Mers-Sultan 20130 Casablanca, Morocco afdcasablanca@afd.fr Tel.: +212 522 29 53 97 WEST AFRICA Abidjan Cocody, boulevard François Mitterrand 01 BP 1814 Abidjan, Côte d’Ivoire proparcoabidjan@proparco.fr Tel.: + 225 22 40 70 14 CENTRAL AFRICA Douala 96, Rue Flatters / Bonanjo Immeuble Citibank, 2e étage BP 2283 Douala, Cameroon proparcodouala@proparco.fr Tel.: +237 233 42 06 24 NIGERIA Lagos c/o Consulate General of France 1 Oyinkan Abayomi Drive Ikoyi, Lagos, Nigeria afdlagos@afd.fr Tel.: +234 1 4628459 SOUTHERN AFRICA AND INDIAN OCEAN Johannesburg Ballywoods Office Park, Ironwood House 29 Ballyclare Drive, Bryanston P.O. Box 130067 Bryanston 2021, South Africa proparcojohannesburg@afd.fr Tel.: +27 11 540 7100

EAST AFRICA Nairobi Top Plaza, 4th floor Kindaruma Road, Off Ngong Road P.O. BOX 45955 00100 Nairobi, Kenya afdnairobi@afd.fr Tel.: +254 2 592 914 CENTRAL AMERICA & CARIBBEAN Mexico City Torre Omega, piso 16 Campos Elíseos 345-16 Col. Chapultepec Polanco 11560 Mexico D. F. Tel.: + 52 (55) 9138 8953 Santo Domingo Av. Gustavo Mejía Ricart esq. Av. Abraham Lincoln Edifcio Corporativo 2010, Local 201, Ens. Piantini BP 285-7 Santo Domingo, Dominican Republic viciniv@afd.fr SOUTH AMERICA São Paulo Edificio Çiragan Office Alameda Ministro Rocha de Azevedo, 38 – 11° andar, conjunto 1103 01410-000 São Paulo, SP, Brazil afdsaopaulo@afd.fr Tel.: +55 11 3149 7900 Bogotá Office opening in September 2018 afdsaopaulo@afd.fr Tel.: +55 11 3149 7900

Proparco coordinators: Valérie Blanchard, Anne-Gaël Chapuis Editorial and graphic design, copywriting, layout and production: Contributors to this report: Backdrop Ltd, Valérie Blanchard, Anne-Sophie Bougouin, Loubna Bouras, Laure Bourgeois, Laurence Bottin, Antoine

Burgard, Maurizio Caio, Claire Devey, Romain De Oliveira, Kristina Díaz, Mounira El Kalai Penedo, Pierre Forestier, Alex Gohari, Blaise Gonda, Mustafa Hasan, Yann Jacquemin, Jean-Baptiste Jouve, Aïda Koumare, Laure Loaec, Erika Lous, Alice Lucas, Mohamed Majri, Gastón Mauvezin, Emmanuelle Matz, Fabrice Arthur Mpollo, Soline Praloran, Pascale Scapecchi, Dalia Stanikaite, Lorraine Talon, Roshaneh Zafar, Oriane Zerah, Eric Zontsop Lekuikeu

Photo and image credits:

Cover and p. 2: Benjamin Petit p. 3: Vert Ltd, Cécile Lemaire, Alain Goulard p. 4: Andrew McLeish p. 5: Alain Goulard p. 7: Laurent Zylberman, Cécile Lemaire, Patrick Furter, Karina Buriga, Backdrop Ltd p. 19 and 21: Nakheel Palestine p. 23, 25-28: Alfredo Durante

p. 31: Alice Lucas p. 32: Portrait 2.0 p. 33: Meridiam p. 35-42: Oriane Zerah p. 45, 47-48: Backdrop Ltd p. 51: MZCPCU p. 53: Vert Ltd p. 55 and 57: Alain Goulard p. 58 and 59: Proparco

Printed in France.

PEFC certification ensures full traceability from tree to paper and guarantees that the harvesting of the wood from which the paper fibers used here were made did not to contribute to deforestation and helped preserve the environmental and social benefits that forests provide.

ISSN: 1276-2156. Officially filed in July 2018.

#BusinessInCommon Tel.: +33 1 53 44 31 08 151 rue Saint-Honoré • 75001 Paris • France Twitter: @Proparco www.proparco.fr/en