Enhanced Private Sector Assistance for Africa: EPSA Initiative

Introduction

The Enhanced Private Sector Assistance (EPSA) Initiative is an innovative, multi-component, multi-donor framework for resource mobilization and development partnership to support implementation of the AfDB’s Strategy for Private Sector Development. Drawing on successful development experience in Asia and around the globe, EPSA was conceived in partnership with the Government of Japan (GOJ), which has provided generous financial support to its implementation since 2005.

Components of EPSA

EPSA consists of (1) Accelerated Cofinancing Facility for Africa (ACFA), (2) Non-sovereign Loan (NSL), and (3) Fund for African Private Sector Assistance (FAPA), as shown in the picture below.

  • ACFA: is a sovereign co-financing arrangement between AfDB and the Japan International Cooperation Agency (JICA), where JICA lends on preferential terms to borrowers under this scheme
  • NSL: is a line of credit from JICA to the Bank on concessional terms for financing the Bank’s private sector operations
  • FAPA: is a Trust Fund for technical assistance and capacity building for the Bank’s public and private sector clients

Commitment of EPSA

At the July 2005 Gleneagles G8 Summit, GOJ committed to provide more than USD 1 billion over 5 years. This was fully achieved in 2011, leading to an additional commitment by GOJ to provide another USD 1 billion over 5 years on  the occasion of the May 2012 Camp David G8 Summit. Reflecting robust demand and the smooth implementation of EPSA 2nd phase, Japanese Prime Minister ABE, on the occasion of his policy speech at the Headquarters of the AU at Ethiopia in September 2014, committed to double the 2nd phase (to USD 2 billion).
http://www.mofa.go.jp/policy/economy/summit/2005/africa.pdf
http://www.mofa.go.jp/announce/announce/2012/5/0522_01.html
http://www.afdb.org/en/news-and-events/article/japan-pledges-1-billion-for-african-private-sector-development-through-afdbs-initiative-9346/
http://www.mofa.go.jp/files/000023952.pdf

The EPSA Loan for Non-Sovereign Operations (NSL)

The Non-Sovereign Loan component helps finance the Bank’s private sector operations through a line of credit from JICA to the Bank on concessional terms. So far, there has been 6 NSLs, totaling 1.2 billion USD equivalent.

1st NSL: JPY 11.5 billion (equivalent to USD 100 million) was signed on 20 February 2007, soon after the inauguration of President Donald Kaberuka. Press Release1 / Press Release2

2nd NSL: JPY 32.1 billion (equivalent to USD 300 million) was signed on 11 September 2008, which was pledged by GOJ at the Fourth Tokyo International Conference on African Development (TICAD IV) in May 2008. Press Release

3rd NSL: JPY 8.44 billion (equivalent to USD 100 million) was signed on 17 Oct 2011. Press Release

4th NSL: JPY 9.48 billion (equivalent to USD 100 million) was signed on 16 Dec 2013. Press Release

5th NSL: JPY 30.69 billion (equivalent to USD 300 million) was signed on 16 Sep 2014 (following the Exchange of Notes with GOJ signed on 12 Sep 2014 at Abidjan), which had been pledged by GOJ at the TICAD V Ministerial preparation meeting in Cameroon in May 2014. Press Release

6th NSL: JPY 35.88 billion (equivalent to USD 300 million) was signed on 8 Sep 2015, soon after the inauguration of President Akinwumi Adesina. Press Release

  In principle, although the resources are pooled with the other financial resources of the Bank and subject to normal Bank processes (including eligibility and pricing), the Bank attributes the utilization of NSL proceeds to specific operations. Thus far, the following projects have been endorsed for coverage under the NSL component of EPSA:

  • Infrastructure – Bujagali Hydropower Plant (Uganda), Sahanivotry Hydropower Plant (Madagascar), RASCOM (first Pan-African communications satellite), East Africa Submarine Cable System (EASSy), Lekki Toll road (Nigeria), Takoradi II Gas Fired Power Plant (Ghana), etc
  • Financial Sector – Credit Lines for SMEs through regional Development Financial Institutions (DFIs) such as the West African Development Bank (BOAD), Africa Trade Insurance Agency (ATI), Africa Finance Corporation (AFC), East Africa Development Bank (EADB), Eastern and Southern African Trade and Development Bank (PTA Bank), and African Export-Import Bank (Afreximbank), as well as several other commercial banks; equity investment in the creation of the TCX currency hedge facility.
  • Microfinance –Launch of a new MFI in Tanzania (Access Bank Tanzania) and two in Zambia (Investrust and Zanaco), as well as USD 125 million package SME assistance program expected to benefit 25 MFIs (Africa SME Program)
  • Equity Fund – Fund for Health (Africa Health Fund: AHF), Fund for Agriculture (Africa Agriculture Fund: AAF and Agri-vie), Fund to invest in selected regions (e.g. Maghreb Private Equity Fund: MPEF II and West Africa Emerging Market Fund: WAEMF), etc.
  • Industries, etc – Lake Harvest (Aquaculture project in Zimbabawe, which received one of the highest ex-ante ADOA ratings) and OLAM (major agriculture firm investing in Africa)

Accelerated Cofinancing Facility for Africa (ACFA)

The Accelerated Cofinancing Facility for Africa (ACFA) provides joint or parallel project financing with JICA on concessional terms. (See JICA’s website for its interest rates – special for EPSA under "Preferential Terms":)
AfDB provides project appraisal and loan administration services for the whole project.
The following 20 projects have been approved for ACFA co-financing by JICA (as of March 2016):

Approved ACFA Projects

Project

Approval Date
(JICA Loan Agreement Date)

JICA
(million UA)

ADB
(million UA)

1. Road Improvement and Transport Facilitation Program on the Southbound Bamako-Dakar Corridor (Senegal, Mali; JICA loan only for Senegal)

31-Mar-06

5.89

66.06

2. Montepuez – Lichinga Road Project (Mozambique)

9-Mar-07

19.71

30.10

3. Arusha – Namanga – Athi River Road Development Project (Tanzania, Kenya; JICA loan only for Tanzania)

19-Mar-07

39.712

53.279

4. Bujagali Interconnection Project (Uganda)

30-Oct-07

19.21

19.21

5. Power Supply, Transmission and Distribution Project in Santiago Island (Cape Verde)

25-Mar-08

25.07

4.82

6. Transport Facilitation Program for the Bamenda-Enugu Corridor (Cameroon, Nigeria: JICA loan only for Cameroon)

31-Mar-09

44.99

204.88

7. Nacala Corridor Phase I (Mozambique, Malawi: JICA loan only for Mozambique)

10-Mar-10

40.89

117.04

8. Road Sector Support Project (Tanzania)

26-Mar-10

49.04

152.00

9. Nile Equatorial Lakes Countries Interconnection line (Uganda, Burundi, Rwanda, DRC, Kenya: JICA loan only for Uganda)

31-May-10

37.48

160.2

10. Iringa-Shinyanga Backbone Transmission Investment Project (Tanzania)

13-Dec-10

42.72

45.36

11. The project to Strengthen and Extend the Electricity Transmission and Distribution Networks (Cameroon)

4-Mar-11

20.91

31.64

12. Electricity Transmission and Distribution Network Development Project (Cape Verde)

30-Mar-12

47.24

8.42

13. and 14. Kazungula Bridge Project (Botswana, Zambia)

12-Oct-12

93.25

51.00

15. Road Sector Support Project II (Tanzania)

8-Apr-13

62.14

140.00

16. Nacala Corridor Phase III (Mozambique, Parallel)

29-Nov-13

49.34

38.83

17. Batchenga Lena Road Development Project (Cameroon)

7-Apr-15

35.28

114.45

18. Power Sector Reform Support Program (PSRSP) (Angola, Parallel)

 

17-Aug-15

168.75

649.35

19. Kenya-Tanzania Power Interconnection Project (Tanzania)

15-Jan-16

63.48

102.79

20.  Green Morocco Plan Support Program (Morocco)

 

4-Mar-16

94.96

94.96

Total

 

953.38

2,046.01

Fund for African Private Sector Assistance (FAPA)

The Fund for African Private Sector Assistance (FAPA) provides grant funding for technical assistance and capacity building for the Bank’s public and private sector clients. The Board approved FAPA on 12 October 2005 and the related documentation was executed on 24 January 2006.

The Japanese Government originally committed and disbursed USD 20 million to launch FAPA, initially as a bilateral fund, and has continued to support FAPA as a multi-donor fund following the accession of Austria in October 2010. The AfDB has also contributed to FAPA from its net income.

Currently FAPA stands at a size of USD 68.92 million, which has so far approved 59 projects to date, bringing total FAPA commitments to USD46.74 million  (as of March 2016).

See more details about FAPA at: http://www.afdb.org/en/topics-and-sectors/initiatives-partnerships/fund-for-african-private-sector-assistance/

Contact
EPSA Focal Point
EPSA general inquiry email address
epsa@afdb.org
Peter Ide, Tel: (225) 2026 2743
Ryota Sugiyama, Tel: (225) 2026 4297

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