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Irina Astrakhan, Sector Manager
World Bank Group, Africa Finance and Private Sector Development,
                 March 7, 2013, Tel Aviv, Israel
Africa today
opportunities & challenges for the
                   Private Sector
Africa today




Slide adapted from October 2012 Vulnerability, Macro Overview, Portfolio, Risk and Profitability Analysis Presentation by IFC.   December 3, 2012
Africa today   context



.
opportunities and challenges
Africa today - continued robust growth

 • Africa GDP growth is estimated
 at 4.6 % in 2012- excluding South
 Africa, the growth in the region was
 5.8%
 • Increased number of MICs




Source: Africa Pulse, Africa Chief Economist Office
• Widespread GDP growth
• Large untapped agribusiness and mining potential
• Growth does not create enough productive jobs to absorb the 7-10 million young people
  entering the labor force each year
• Lagging financial inclusion and limited term financing for growth
• Increased vulnerability to climate change

                               Widespread GDP growth                                                           Extractive Investment Potential

        %
                                                                             Guinea
        8
                                                                             Resource:
                                                                             • $20 Billion in
        7                                                                    investments in Iron Ore,
                                                                             Bauxite, and related
        6                                                                    infrastructure

        5
        4
                                                                                                                                                 Uganda
        3
                                                                             Ghana                                                               Resource:
        2                                                                    Resource:                                                           • $8-10 billion in oil investment
                                                                             • $8-10 billion in oil                                              • $50 billion in total oil export
                                                                             investment                                                          revenue
        1
                                                                             • $40 billion in export
                                                                             revenue                                                              Tanzania
        0
                                                                                                                                                  • Early stage but LNG potential $20+
            2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011                                                                           billion investment with $2 billion
                                                                                Cameroon
                                                                                                                                                  per year in Government revenue
                                                                                Resource:
                                    Sub Saharan Africa                          • $7 billion in Iron Ore and
                                                                                                                                             Mozambique
                                                                                Aluminum investment
                                                                                                                                             • Mining and related infrastructure:
                                    Sub Saharan Africa ex. South Africa                                                                      $10 billion in Coal
                                                                                                                                             • Gas: $70 billion in investment
                                    Developing countries average ex. China
Commodity prices are driving growth




Source: Africa Pulse
Reduced export diversification and
increased reliance on mining exports

  SSA Exports to the World 1992-2008 (% of total
                     exports )


                                                   SSA depends heavily
                                                   on its mining industries
                                                   for export revenues
                                                   which have increased
                                                   due to high commodity
                                                   prices.

                                                   Manufacturing exports
                                                   have decreased, further
                                                   increasing reliance on
                                                   mining revenues.



Source: COMTRADE, 2009
AFRICA’S PRIVATE SECTOR:
CHARACTERISTICS AND CHALLENGES
In order to encourage growth and poverty reduction in the long
term, productivity issues must be addressed
High levels of Informality

• Bulk of non-agricultural
  employment informal, and likely to        Share of Employment by Sector
  remain so.                                          5      5
• Private informal sector employment
  accounts for 70% of the labor force.
• Industrial clusters of indigenous
                                          20
  micro and small enterprises in
  Africa are a natural form of
  agglomeration.
• Almost all of them are “survival-
  level” -- growth based on expansion
  of quantity of production rather                                                  70
  than improvement in quality.

                                          Agriculture                 Private - informal

                                          Private - formal            Public

                                         Source: Household Surveys. The World Bank, 2009
large gap in productivity between
domestic indigenous and foreign firms

• In Africa, domestic indigenous
  enterprises fall behind foreign
  firms in terms of productivity.
• Foreign firms are often more
  productive in developing
  economies.
• But productivity gap between
  domestic and foreign-owned
  firms is more pronounced in
  Africa than in Asia.




Source: Feng, Mengistae, and Yoshino (2009): Foreign Premium on Productivity among Enterprises in Africa
Challenge: transforming mineral wealth into human
 capital development and job creation


• Restrictive business environment
• Poor infrastructure (e.g. power)
• Skills shortages
• Difficulties accessing finance
• Trade & logistics costs
• Value chain gaps and weaknesses
• Limited public sector
  organizational capacity


                                                 The World Bank - AFTFP 2010
Top Constraints faced by African private sector


                     Electricity                                                 26%

                        Finance                                      20%

              Informal Practices                       10%

                      Tax Rates                    9%

              Political Stability              6.50%

                     Corruption               6%

                          Crime               6%

                 Access to Land           5%

                      Transport           5%

                      Customs            4%

                                    0%   5%        10%       15%   20%     25%         30%

Source: World Bank Enterprise Surveys, 2010


   Electricity and access to finance are the top constraints faced by
                               enterprises
CORE INFRASTRUCTURE GAP

    • Core infrastructure gap (energy, telecommunications, transport and water)
       – Infrastructure gap is estimated at $30 billion per annum, with a cost to
         GDP growth of 2% per annum
           • The highest return to growth comes from transport, telecom and
             power investments
       – The overall gap hides wide dispersion in performance from 17% of GDP
         to less than 4%
    • Economic development gap
       – Africa has significant undeveloped resources in agriculture and mining
       – The present state of infrastructure reduces firm-level productivity by at
         least 40%
    • Social services gap
       – Africa has significant needs in the health, education and housing areas
    • PPPs have the potential to fill these gaps and put Africa on par with its best
      performers ( the 10% club)
Africa faces the highest trade
                 logistics costs
2.8

            2.74              2.74
                                               2.73

2.7



                                                              2.6
2.6




2.5                                                                 2.49


                                                                           2.42
2.4




2.3




2.2
            LAC              ECA               EAC           MENA   SA     SSA
       Source: World Bank Logistics Perception Index, 2010

      Landlocked countries such as Zambia, Botswana face even higher trade
                                 logistics costs
Access to Credit is low

                                         Half the small enterprises in
                                          the Enterprise Surveys identify
                                          access to credit as a major
                                          constraint, while 34% of large
                                          firms voice the same concern.


                                         The region lags behind on
                                          penetration of credit products
                                          —21 loans per 1,000 adults
                                          compared to 185 loans on
                                          average in developing
                                          countries.


Source: CGAP Financial Access, 2009
AFRICA CAN: SUCCESS STORIES
Example of the impact of market deregulation:
The case of Rwanda

          350                                                                                                                                  900
                                       Average transport prices (constant and current) from Mombasa to Kigali
                       Before liberalization                           After liberalization
                                                                                                                                               800
          300

                                                                                                                                               700
          250
                                                                                                                                               600

          200




                                                                                                                                                     US$/Ton
US$/Ton




                                                                                                                                               500


          150                                                                                                                                  400


                                                                                                                                               300
          100
                                                                                                                                               200

           50
                                                                                                                                               100


            0                                                                                                                                  0
                1989

                        1990

                               1991

                                      1992

                                             1993

                                                    1994

                                                           1995

                                                                  1996

                                                                         1997

                                                                                1998

                                                                                       1999

                                                                                              2000

                                                                                                     2001

                                                                                                            2002

                                                                                                                   2003

                                                                                                                          2004

                                                                                                                                 2005

                                                                                                                                        2006
                                                                          Years

                               Current transport tariffs (left)             Real transport tariffs - GDP deflator (right)
The Growing ICT Revolution

120
       Mobile Penetration in Africa
       (%)                                                                          Use of IT
100
                                                           Impressive
80                                                         growth in access
60                                                         to voice.                      Adoption of ICT Applications in
                                                            65% of African
40
                                                            population covered!          Government and Business, average by
20                                                                                                 region, 2007
  0
        South      Nigeria      Mali    Kenya   Rwanda                                   High income countries
        Africa
                                                                                         Europe & Central Asia
 40.0

                                                  Low internet                               East Asia & Pacific
          Data Service                             15x more
                                                   penetration
                                                    internet                                        Middle East
 30.0                                               In SSA
                                                     users
                                                                                  Africa (including North Africa)

                                                                                         Mauritius/ South Africa
 20.0
                                                                                        Gabon/ Ghana/ Kenya

                                                                                   CAR/ DRC/ Guinea-Bissau/…

 10.0                                                                                                               0    2     4      6     8     10

                                                                                                                        ICT performance measure
 0.0
         Americas            Europe       LAC          SSA (IDA)
                 Internet Users / 100      PCs / 100                                 Source: Global ICT Unit, The World Bank
M-PESA by Safaricom
 M-Pesa is one of the most successful examples of mobile money service since its
  launch in 2007. Has 8.8 million users in Kenya, many of them without access to a bank
  account.

 The Financial Sector Deepening Trust in Kenya (co-financed by DFID, World Bank
  project funds, and Swedish SIDA) provided a matching grant subsidy of 1 million
  pounds to Safaricom for product development.




    The new product allows money transfers across a secure,
     PIN protected system to those previously ‘unbanked’; a
     majority of cash recipients are rural women.


    On average US$1.96 million is transferred through M-PESA
     per day, mostly in small amounts averaging US$20 per
     transaction.
AfricA’s growing tourism sector
                                          Tourism’s Contribution to GDP

  Average contribution of tourism to
  SSA GDP is 5.9%. In some countries
  such as Seychelles, Mauritius and
  Namibia this contribution is large.

  Tourism constitutes over 10% of
  total exports (direct & indirect) in
  more than half of African countries.

  In 2009, the sector contributed to
  10.1 million direct and indirect jobs
  throughout the region, representing
  5.6% of total employment or 1 in
  every 18 jobs.


Tourism: a potential source of job creation and increased earnings for SSA
SCALING UP SUCCESSES: CATALYZING
THE PRIVATE SECTOR
Easing the business and regulatory
                 environment

• Increase provision of infrastructure and delivery of public services.

• Streamline cumbersome regulatory procedures to encourage new entrants,
  operating in the formal sector.

• Set up transparent formal market institutions for better enforcement.

• Increase financial outreach to mobilize resources for business ventures and
  risk taking.

• Harmonize legal and regulatory standards to enable rapid technological
  change.

• Invest in increasing “business skills” and training for workers.
Using The ICT promise to scale up

Leverage ICT enabled solutions for underserved populations and SMEs –
e.g. mobile banking, reduced cost of remittances and financial literacy.




Source: ITU, Information Society Statistical Profile 2009, Africa, Asia
Public Private Partnerships for
development
 PPPs potentially bring the efficiency of
  business to public service.
 Require effective legal, regulatory and
  institutional frameworks (PPP units and
  agencies to regulate public procurements), to
  catalyze private participation.
 Systematic cost benefit analyses of public
  investment projects will be a pre-condition to
  successful PPPs.
 Major infrastructure gaps can be filled by
  PPPs in infrastructure (e.g., Maputo port).
 Greater need for financial solutions: establish
  PPP finance facilities (e.g., Nigeria, UEMOA).
 Other PPPs include SEZs, vocational training,
  technology adoption (technoparks) and skills
  development (training and incubators).
Strategic priorities for the World
Bank in Finance and Private Sector
Development
Implementing the Africa Region’s Strategy
       A dynamic private sector that creates productive
        employment and leads to inclusive growth


     AFRICA FPD Priorities

 Job creation & youth
employment through skills
development & innovation.

 PPP infrastructure finance

 Financial Inclusion

 Agri-business
The World Bank - Africa Region
           Number of Active Projects by
                     Sector
                     OS, 10
                               FPD, 39


                                               HD, 96




SD, 280



                                         PREM, 28


                                                        The World Bank: Africa Region
                                                           FY 13 Lending by Sector
                                                           OS                  FPD
                                                           1%                  5%


                                                                                        HD
                                                                                        23%


                                         SDN
                                         55%
                                                                                         PREM
                                                                                          16%
•Implement business environment reforms
Assist client countries to:        • Realize the potential of key industries (agribusiness, tourism, mining)
                                   • Develop financial markets and inclusion (payment systems, competition,
                                   financial literacy, IT based solutions, rural finance)
                                   • Improve resilience (weather insurance and climate smart irrigation)
                                   • Evaluate impact of interventions

                                       Significant Volume of Lending                      Examples of recent projects


                                                                                 o OHADA (BEE reforms in 16 SSA countries)
                                                                                 o Budget Support Operations: Mauritius,
                                                                                   Uganda
                                                                                 o Growth poles and industry focused projects
                                                                                   (Burkina Faso, Niger, Mozambique,
                                                                                   Tanzania, Senegal , Guinea Bissau,
                                                                                   Ethiopia)
                                                                                 o Post conflict (South Sudan, Somaliland,
                                                                                   Guinea)
                                                                                 o PPP projects (Nigeria, Ghana and Kenya)
                                                                                 o Policy- based operations - DPOs (Tanzania,
                                                                                   Uganda, Mauritius)

                              Increasing domestic credit to the private sector                Innovative products



                                                                                 o Crisis response: SME financing (SA,
                                                                                   Nigeria, Kenya) & banking supervision
                                                                                 o Growth poles and value chains
                                                                                 o Impact evaluation schemes (Guinea Bissau)
                                                                                 o Agribusiness incubators (Senegal)
                                                                                 o Housing finance (Tanzania, Nigeria)
                                                                                 o Disaster Risk Finance and Insurance
BUILDING BLOCKS FOR PPPS


                                                           (1) PPP enabling Laws and
                                                           Regulations, Procurement Guidelines,
                                        (1) Legislative,
                                         Institutional &   Sector Legislation, Institutional setup,
                                            Fiduciary      Oversight body, Fiscal commitments
                                           Framework       and Contingent liability management




                                        PPP Enabling
                                        Environment

 (3) Capacity of local                                                       (2) Commercially
financial and capital                                                        Viable, Government
market, Financial            (3) PPP                         (2) PPP         Project Support,
                            Financing                        Pipeline        Infrastructure Plan,
instruments and vehicles,
Risk mitigation products                                                     Transaction Advisory
                                                                             Support
THE WORLD BANK GROUP SUPPORT TO PPPS
STRATEGY INSTRUMENTS



                                          Instruments

                           Partnerships                       Knowledge
  • Public-Private                                                        •   Technical Assistance
    Dialogue                                                              •   Capacity Building
  • Partnership Platform                                                  •   Project Pipeline
                                                                              Preparation
                                                                          •   Guidelines, Standards


                                               Finance
                              •   Early Stage Financing
                              •   Construction phase finance
                              •   Risk management tools
                              •   Environment for long term patient
                                  capital
                              •   Financial Engineering – customized
                                  financial solutions for client needs
THE PPP DEVELOPMENT AGENDA

   • Concerted efforts by all World Bank-IFC-MIGA units related PPP to develop
       the enabling environment required to ensure the level of certainty and
           predictability required for “serious” investors to make credible
                                    commitments

      • The WBG provides financial and technical support to nearly every
                         element of PPPs, including:
       – strengthening of enabling legal, institutional and regulatory environments
                     – design of and support on specific transactions
       – the provision of public sector financing at the sovereign and non-sovereign
                                             level
                             – valuing of contingent liabilities
                             – private sector debt and equity
          – key credit enhancements, such as Partial Risk and Credit Guarantees


         Source: World Bank PPP Day Presentation, December 2010
THE WORLD BANK GROUP PPP EXPERIENCE IN SSA


  As of 2011, the WBG has extended            IFC
  a total of around $3.8 billion to      investments
                                         in financing
  support the financial close of 50      PPP projects
  PPP transactions in energy,             US$ 0.3bil

  transport, and water, of which:
                                          MIGA                         World Bank
  •14 independent power plants        guarantees                         loans
   for more than US$1.3 billion of     to private                      US$ 2.4bil
                                        investors
   financial support                  US$ 0.4bil

  •10 rail concessions─                                 Partial Risk
                                                        Guarantees
   approximately US$1.1billion                          US$ 0.8bil
EXAMPLES OF WBG SUPPORT TO PPPS IN SSA
      • Power : Bujagali hydroelectric dam (Uganda) and IPPs in Cote d’Ivoire,
        Kenya and Rwanda and West Africa Gas Pipeline between Nigeria and
        Ghana.
      • Toll road: Dakar- Diamniadio Toll Road (Senegal)
      • Ports concessions in Nigeria (of 24 container terminals), in Monrovia
        (Freeport) and Sierra Leone (Freetown).
      • Railways : WB support to PPP projects has been via technical
        assistance, covering the social costs of labor retrenchment programs
        and in financing railway infrastructure assets. (e.g. Camrail in
        Cameroon).
      • Joint teams are now working on a growing list of agribusiness
        operations with the aim of attracting increased private investments in
        agriculture. Such projects are being implemented in Burkina Faso,
        Cameroon, the Democratic Republic of Congo, Ghana, Guinea Bissau,
        Nigeria, and Zambia.
AGRIBUSINESS IN SSA

    • Agriculture and agribusiness together are projected
      to be a US$ 1 trillion industry in sub-Saharan Africa
      (SSA) by 2030 (compared to US$ 313 billion in
      2010), and they should be at the top of the agenda
      for economic transformation and development

    • The challenge is thus threefold:
      – (1) develop downstream agribusiness activities
        (such as processing) as well as upstream
        activities (such as supplying inputs),
      – (2) develop commercial agriculture, and
      – (3) support and link smallholders and small
        enterprises to productive value chains
3 Stage Model to Agribusiness
                1. Production
             2. Transformation
            3. Commercialization

             Our Approach
        • Attract anchor investors
   • Build on existing situation/reality
• Promote aggregation beyond smallholder
  (stakeholder organization/interventions
      focusing on market development)
• Technology – tech requires upfront costs
    and expertise, which we can provide,
             improving viability
Overcoming Constraints

• Improving the performance of output
  markets

• Facilitating access to inputs and
  technology

• Enhancing access to land and tenure
  security

• Upgrading infrastructure using public-
  private partnership where possible

• Financing agribusiness

• Building skills and entrepreneurship

• Ensuring inclusive investments
INSTRUMENTS


 1. Facilitate venture capital investments combined
    with mentorship and technical assistance.

 2. Use a targeted matching grant with agribusiness
    startups and/or lines of credit accompanied by
    technical assistance.

 3. Tailor the PPP model to agribusiness.
Business Opportunities
During Project Preparation            During Implementation
                                      -   the borrowing country, not the World
-Limited consulting services for          Bank, is responsible for buying or
the World Bank to help design the         “procuring” goods and civil works and
project– eg. Conduct feasibility          selection consultants.
studies, analytical papers etc.       -   the Implementing Agency that was
                                          established during project preparation is
-the opportunities vary in size but       the main point of contact for companies
are usually below US$ 200,000.            on procurement matters.
                                      -   there are generally contracts for
-there are generally no                   consulting services above US$ 200,000.
opportunities for suppliers of        -   equipment and civil works contracts can
goods and civil works when a              be in the millions of dollars
project is in the Pipeline.           -   -all contracts require the publication of a
                                          request for expression of interest in the
                                          UN Development Business and dgMarket
                                          websites.
www.worldbank.org
Business Opportunities
     Invitations to bid or express interest for contracts
            under World Bank-financed projects

www.dgmarket.com                   www.devbusiness.com
THANK YOU!!

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Ms. Irina Astrakhan, World Bank Group

  • 1. Irina Astrakhan, Sector Manager World Bank Group, Africa Finance and Private Sector Development, March 7, 2013, Tel Aviv, Israel
  • 2. Africa today opportunities & challenges for the Private Sector
  • 3. Africa today Slide adapted from October 2012 Vulnerability, Macro Overview, Portfolio, Risk and Profitability Analysis Presentation by IFC. December 3, 2012
  • 4. Africa today context .
  • 6. Africa today - continued robust growth • Africa GDP growth is estimated at 4.6 % in 2012- excluding South Africa, the growth in the region was 5.8% • Increased number of MICs Source: Africa Pulse, Africa Chief Economist Office
  • 7. • Widespread GDP growth • Large untapped agribusiness and mining potential • Growth does not create enough productive jobs to absorb the 7-10 million young people entering the labor force each year • Lagging financial inclusion and limited term financing for growth • Increased vulnerability to climate change Widespread GDP growth Extractive Investment Potential % Guinea 8 Resource: • $20 Billion in 7 investments in Iron Ore, Bauxite, and related 6 infrastructure 5 4 Uganda 3 Ghana Resource: 2 Resource: • $8-10 billion in oil investment • $8-10 billion in oil • $50 billion in total oil export investment revenue 1 • $40 billion in export revenue Tanzania 0 • Early stage but LNG potential $20+ 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 billion investment with $2 billion Cameroon per year in Government revenue Resource: Sub Saharan Africa • $7 billion in Iron Ore and Mozambique Aluminum investment • Mining and related infrastructure: Sub Saharan Africa ex. South Africa $10 billion in Coal • Gas: $70 billion in investment Developing countries average ex. China
  • 8. Commodity prices are driving growth Source: Africa Pulse
  • 9. Reduced export diversification and increased reliance on mining exports SSA Exports to the World 1992-2008 (% of total exports ) SSA depends heavily on its mining industries for export revenues which have increased due to high commodity prices. Manufacturing exports have decreased, further increasing reliance on mining revenues. Source: COMTRADE, 2009
  • 11. In order to encourage growth and poverty reduction in the long term, productivity issues must be addressed
  • 12. High levels of Informality • Bulk of non-agricultural employment informal, and likely to Share of Employment by Sector remain so. 5 5 • Private informal sector employment accounts for 70% of the labor force. • Industrial clusters of indigenous 20 micro and small enterprises in Africa are a natural form of agglomeration. • Almost all of them are “survival- level” -- growth based on expansion of quantity of production rather 70 than improvement in quality. Agriculture Private - informal Private - formal Public Source: Household Surveys. The World Bank, 2009
  • 13. large gap in productivity between domestic indigenous and foreign firms • In Africa, domestic indigenous enterprises fall behind foreign firms in terms of productivity. • Foreign firms are often more productive in developing economies. • But productivity gap between domestic and foreign-owned firms is more pronounced in Africa than in Asia. Source: Feng, Mengistae, and Yoshino (2009): Foreign Premium on Productivity among Enterprises in Africa
  • 14. Challenge: transforming mineral wealth into human capital development and job creation • Restrictive business environment • Poor infrastructure (e.g. power) • Skills shortages • Difficulties accessing finance • Trade & logistics costs • Value chain gaps and weaknesses • Limited public sector organizational capacity The World Bank - AFTFP 2010
  • 15. Top Constraints faced by African private sector Electricity 26% Finance 20% Informal Practices 10% Tax Rates 9% Political Stability 6.50% Corruption 6% Crime 6% Access to Land 5% Transport 5% Customs 4% 0% 5% 10% 15% 20% 25% 30% Source: World Bank Enterprise Surveys, 2010 Electricity and access to finance are the top constraints faced by enterprises
  • 16. CORE INFRASTRUCTURE GAP • Core infrastructure gap (energy, telecommunications, transport and water) – Infrastructure gap is estimated at $30 billion per annum, with a cost to GDP growth of 2% per annum • The highest return to growth comes from transport, telecom and power investments – The overall gap hides wide dispersion in performance from 17% of GDP to less than 4% • Economic development gap – Africa has significant undeveloped resources in agriculture and mining – The present state of infrastructure reduces firm-level productivity by at least 40% • Social services gap – Africa has significant needs in the health, education and housing areas • PPPs have the potential to fill these gaps and put Africa on par with its best performers ( the 10% club)
  • 17. Africa faces the highest trade logistics costs 2.8 2.74 2.74 2.73 2.7 2.6 2.6 2.5 2.49 2.42 2.4 2.3 2.2 LAC ECA EAC MENA SA SSA Source: World Bank Logistics Perception Index, 2010 Landlocked countries such as Zambia, Botswana face even higher trade logistics costs
  • 18. Access to Credit is low  Half the small enterprises in the Enterprise Surveys identify access to credit as a major constraint, while 34% of large firms voice the same concern.  The region lags behind on penetration of credit products —21 loans per 1,000 adults compared to 185 loans on average in developing countries. Source: CGAP Financial Access, 2009
  • 20. Example of the impact of market deregulation: The case of Rwanda 350 900 Average transport prices (constant and current) from Mombasa to Kigali Before liberalization After liberalization 800 300 700 250 600 200 US$/Ton US$/Ton 500 150 400 300 100 200 50 100 0 0 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Years Current transport tariffs (left) Real transport tariffs - GDP deflator (right)
  • 21. The Growing ICT Revolution 120 Mobile Penetration in Africa (%) Use of IT 100 Impressive 80 growth in access 60 to voice. Adoption of ICT Applications in 65% of African 40 population covered! Government and Business, average by 20 region, 2007 0 South Nigeria Mali Kenya Rwanda High income countries Africa Europe & Central Asia 40.0 Low internet East Asia & Pacific Data Service 15x more penetration internet Middle East 30.0 In SSA users Africa (including North Africa) Mauritius/ South Africa 20.0 Gabon/ Ghana/ Kenya CAR/ DRC/ Guinea-Bissau/… 10.0 0 2 4 6 8 10 ICT performance measure 0.0 Americas Europe LAC SSA (IDA) Internet Users / 100 PCs / 100 Source: Global ICT Unit, The World Bank
  • 22. M-PESA by Safaricom  M-Pesa is one of the most successful examples of mobile money service since its launch in 2007. Has 8.8 million users in Kenya, many of them without access to a bank account.  The Financial Sector Deepening Trust in Kenya (co-financed by DFID, World Bank project funds, and Swedish SIDA) provided a matching grant subsidy of 1 million pounds to Safaricom for product development.  The new product allows money transfers across a secure, PIN protected system to those previously ‘unbanked’; a majority of cash recipients are rural women.  On average US$1.96 million is transferred through M-PESA per day, mostly in small amounts averaging US$20 per transaction.
  • 23. AfricA’s growing tourism sector Tourism’s Contribution to GDP Average contribution of tourism to SSA GDP is 5.9%. In some countries such as Seychelles, Mauritius and Namibia this contribution is large. Tourism constitutes over 10% of total exports (direct & indirect) in more than half of African countries. In 2009, the sector contributed to 10.1 million direct and indirect jobs throughout the region, representing 5.6% of total employment or 1 in every 18 jobs. Tourism: a potential source of job creation and increased earnings for SSA
  • 24. SCALING UP SUCCESSES: CATALYZING THE PRIVATE SECTOR
  • 25. Easing the business and regulatory environment • Increase provision of infrastructure and delivery of public services. • Streamline cumbersome regulatory procedures to encourage new entrants, operating in the formal sector. • Set up transparent formal market institutions for better enforcement. • Increase financial outreach to mobilize resources for business ventures and risk taking. • Harmonize legal and regulatory standards to enable rapid technological change. • Invest in increasing “business skills” and training for workers.
  • 26. Using The ICT promise to scale up Leverage ICT enabled solutions for underserved populations and SMEs – e.g. mobile banking, reduced cost of remittances and financial literacy. Source: ITU, Information Society Statistical Profile 2009, Africa, Asia
  • 27. Public Private Partnerships for development  PPPs potentially bring the efficiency of business to public service.  Require effective legal, regulatory and institutional frameworks (PPP units and agencies to regulate public procurements), to catalyze private participation.  Systematic cost benefit analyses of public investment projects will be a pre-condition to successful PPPs.  Major infrastructure gaps can be filled by PPPs in infrastructure (e.g., Maputo port).  Greater need for financial solutions: establish PPP finance facilities (e.g., Nigeria, UEMOA).  Other PPPs include SEZs, vocational training, technology adoption (technoparks) and skills development (training and incubators).
  • 28. Strategic priorities for the World Bank in Finance and Private Sector Development
  • 29. Implementing the Africa Region’s Strategy A dynamic private sector that creates productive employment and leads to inclusive growth AFRICA FPD Priorities  Job creation & youth employment through skills development & innovation.  PPP infrastructure finance  Financial Inclusion  Agri-business
  • 30. The World Bank - Africa Region Number of Active Projects by Sector OS, 10 FPD, 39 HD, 96 SD, 280 PREM, 28 The World Bank: Africa Region FY 13 Lending by Sector OS FPD 1% 5% HD 23% SDN 55% PREM 16%
  • 31. •Implement business environment reforms Assist client countries to: • Realize the potential of key industries (agribusiness, tourism, mining) • Develop financial markets and inclusion (payment systems, competition, financial literacy, IT based solutions, rural finance) • Improve resilience (weather insurance and climate smart irrigation) • Evaluate impact of interventions Significant Volume of Lending Examples of recent projects o OHADA (BEE reforms in 16 SSA countries) o Budget Support Operations: Mauritius, Uganda o Growth poles and industry focused projects (Burkina Faso, Niger, Mozambique, Tanzania, Senegal , Guinea Bissau, Ethiopia) o Post conflict (South Sudan, Somaliland, Guinea) o PPP projects (Nigeria, Ghana and Kenya) o Policy- based operations - DPOs (Tanzania, Uganda, Mauritius) Increasing domestic credit to the private sector Innovative products o Crisis response: SME financing (SA, Nigeria, Kenya) & banking supervision o Growth poles and value chains o Impact evaluation schemes (Guinea Bissau) o Agribusiness incubators (Senegal) o Housing finance (Tanzania, Nigeria) o Disaster Risk Finance and Insurance
  • 32. BUILDING BLOCKS FOR PPPS (1) PPP enabling Laws and Regulations, Procurement Guidelines, (1) Legislative, Institutional & Sector Legislation, Institutional setup, Fiduciary Oversight body, Fiscal commitments Framework and Contingent liability management PPP Enabling Environment (3) Capacity of local (2) Commercially financial and capital Viable, Government market, Financial (3) PPP (2) PPP Project Support, Financing Pipeline Infrastructure Plan, instruments and vehicles, Risk mitigation products Transaction Advisory Support
  • 33. THE WORLD BANK GROUP SUPPORT TO PPPS STRATEGY INSTRUMENTS Instruments Partnerships Knowledge • Public-Private • Technical Assistance Dialogue • Capacity Building • Partnership Platform • Project Pipeline Preparation • Guidelines, Standards Finance • Early Stage Financing • Construction phase finance • Risk management tools • Environment for long term patient capital • Financial Engineering – customized financial solutions for client needs
  • 34. THE PPP DEVELOPMENT AGENDA • Concerted efforts by all World Bank-IFC-MIGA units related PPP to develop the enabling environment required to ensure the level of certainty and predictability required for “serious” investors to make credible commitments • The WBG provides financial and technical support to nearly every element of PPPs, including: – strengthening of enabling legal, institutional and regulatory environments – design of and support on specific transactions – the provision of public sector financing at the sovereign and non-sovereign level – valuing of contingent liabilities – private sector debt and equity – key credit enhancements, such as Partial Risk and Credit Guarantees Source: World Bank PPP Day Presentation, December 2010
  • 35. THE WORLD BANK GROUP PPP EXPERIENCE IN SSA As of 2011, the WBG has extended IFC a total of around $3.8 billion to investments in financing support the financial close of 50 PPP projects PPP transactions in energy, US$ 0.3bil transport, and water, of which: MIGA World Bank •14 independent power plants guarantees loans for more than US$1.3 billion of to private US$ 2.4bil investors financial support US$ 0.4bil •10 rail concessions─ Partial Risk Guarantees approximately US$1.1billion US$ 0.8bil
  • 36. EXAMPLES OF WBG SUPPORT TO PPPS IN SSA • Power : Bujagali hydroelectric dam (Uganda) and IPPs in Cote d’Ivoire, Kenya and Rwanda and West Africa Gas Pipeline between Nigeria and Ghana. • Toll road: Dakar- Diamniadio Toll Road (Senegal) • Ports concessions in Nigeria (of 24 container terminals), in Monrovia (Freeport) and Sierra Leone (Freetown). • Railways : WB support to PPP projects has been via technical assistance, covering the social costs of labor retrenchment programs and in financing railway infrastructure assets. (e.g. Camrail in Cameroon). • Joint teams are now working on a growing list of agribusiness operations with the aim of attracting increased private investments in agriculture. Such projects are being implemented in Burkina Faso, Cameroon, the Democratic Republic of Congo, Ghana, Guinea Bissau, Nigeria, and Zambia.
  • 37. AGRIBUSINESS IN SSA • Agriculture and agribusiness together are projected to be a US$ 1 trillion industry in sub-Saharan Africa (SSA) by 2030 (compared to US$ 313 billion in 2010), and they should be at the top of the agenda for economic transformation and development • The challenge is thus threefold: – (1) develop downstream agribusiness activities (such as processing) as well as upstream activities (such as supplying inputs), – (2) develop commercial agriculture, and – (3) support and link smallholders and small enterprises to productive value chains
  • 38. 3 Stage Model to Agribusiness 1. Production 2. Transformation 3. Commercialization Our Approach • Attract anchor investors • Build on existing situation/reality • Promote aggregation beyond smallholder (stakeholder organization/interventions focusing on market development) • Technology – tech requires upfront costs and expertise, which we can provide, improving viability
  • 39. Overcoming Constraints • Improving the performance of output markets • Facilitating access to inputs and technology • Enhancing access to land and tenure security • Upgrading infrastructure using public- private partnership where possible • Financing agribusiness • Building skills and entrepreneurship • Ensuring inclusive investments
  • 40. INSTRUMENTS 1. Facilitate venture capital investments combined with mentorship and technical assistance. 2. Use a targeted matching grant with agribusiness startups and/or lines of credit accompanied by technical assistance. 3. Tailor the PPP model to agribusiness.
  • 41. Business Opportunities During Project Preparation During Implementation - the borrowing country, not the World -Limited consulting services for Bank, is responsible for buying or the World Bank to help design the “procuring” goods and civil works and project– eg. Conduct feasibility selection consultants. studies, analytical papers etc. - the Implementing Agency that was established during project preparation is -the opportunities vary in size but the main point of contact for companies are usually below US$ 200,000. on procurement matters. - there are generally contracts for -there are generally no consulting services above US$ 200,000. opportunities for suppliers of - equipment and civil works contracts can goods and civil works when a be in the millions of dollars project is in the Pipeline. - -all contracts require the publication of a request for expression of interest in the UN Development Business and dgMarket websites.
  • 43. Business Opportunities Invitations to bid or express interest for contracts under World Bank-financed projects www.dgmarket.com www.devbusiness.com