The Private Sector Department (OPSM) operates through a Front Office and five Divisions namely:
- Financial Intermediation Division
- Industries & Services Division
- Infrastructure & PPP Division
- Microfinance & SME Development Division
- Portfolio Management Division
Financial Intermediation Division (OPSM 1)
The mandate of the Financial Intermediation Division is to promote the development of efficient financial sectors in the Bank’s Regional Member Countries (RMCs). Toward this objective, the Division finances private financial institutions and regional Development Finance Institutions (DFIs). The Division also finances public financial institutions that are able to borrow on the strength of their own Balance Sheet without recourse to sovereign guarantees.
The core activities of the Division are geared towards:
- increasing the financial sector’s responsiveness to demand for long-term capital,
- strengthening the capacity of financial institutions, especially in relation to the financing of Small and Medium Scale Enterprises (SMEs),
- supporting the development of Africa’s Development Finance Institutions (DFIs), and
- ensuring sound business and financial management practices within the assisted institutions.
The Division uses four primary instruments to support financial sector development, viz. Lines of Credit, Equity Participations, Guarantees and Technical Assistance.
Industries and Services Division (OPSM 2)
The main objective of this division is to ensure the Bank’s Group’s support to private sector development in RMCs through equity and direct lending to private sector enterprises mainly in the sector of petrochemicals, mining, oil and gas, manufacturing, agribusiness, hospitality, health and education.
The Division’s role in Africa includes:
- Support economic growth by helping RMCs diversify their economies, process their raw materials and add value to their natural resources.
- Increase local participation by involving provinces, local communities, local SMEs in the project life cycle (from preliminary to post project phase)
- Apply high standards on environmental and social impacts.
- Help implement high standards on good governance such as EITI and revenues management;
- Provide utilities (water, electricity, connectivity…), health and education to local communities
The Division’s role within the Bank includes:
- Provide solutions to ADB portfolio concentration and weak franchise concerns;
- Offer opportunities to ADF countries to access ADB resources as part of the Bank’s strategy for fragile and post conflict countries.
- Promote investments diversification in various sub sectors.
Frequently used instruments/products:
- Long-term loans in foreign currencies and occasionally in local currencies
- Guarantees in foreign and local currencies
- Participation (equity and quasi equity investments)
Infrastructure and PPP Division (OPSM 3)
The primary role of the Infrastructure and PPP Division (OPSM 3) is implement the private sector strategy in the area of infrastructure development and public-private partnerships (PPPs) on the continent, on a regional basis, and within individual RMCs. The Division provides support directly to corporate entities and projects, as well as through specialised intermediaries such as private equity and venture capital funds.
The principal lending and investment activities of the Division entail the identification, preparation of and appraisal of programs and projects that provide debt, equity, credit enhancement (including guarantees) or a combination, in order to:
- Provide financial support to promote private sector infrastructure development and PPPs on a regional, national or sub-national basis in RMCs including health and education sectors;
- Support the development of indigenous entrepreneurship by promoting the participation of local entrepreneurs in infrastructure projects supported by the Bank;
- Promote the development of competitive private enterprises, through the development of efficient and affordable infrastructure services;
- Support private sector involvement in programs aiming at improving the quality of life of communities within RMCs by accelerating delivery and access to improved and affordable infrastructure services, including water and sanitation, power, telecommunications, transportation, health and education.
The Division’s non-lending activities as advisor and partner include:
- Technical assistance for the development and preparation of projects identified as a priority at regional, national and local level, though NEPAD and/or by individual RMCs;
- Technical assistance and capacity building support to promote international and local private sector participation in infrastructure projects;
- Collaborating with Country and Regional Departments to identify areas of policy dialogue and interventions to support Governments of RMCs to facilitate PPPs;
- Fostering and building strong development partnerships with multilateral, regional and national development banks, private sector financial institutions and other key players to support infrastructure development and PPPs on the continent.
Microfinance & SME Development Division (OPSM 4)
In line with its poverty reduction mandate and Private Sector Strategy to support MSMEs development, the Bank has created a dedicated division for ‘Micro-Finance & SME Development’. The division is mandated to support micro-enterprises through microfinance, and SMEs with growth potential through specific support initiatives. This entails building the capacity of the market to avail appropriate instruments and mechanisms for MSMEs’ growth and enhanced access to finance.
General objectives to be achieved by the Division are the following:
- Enhancing the financial systems in order to better serve the MSME sector and improving the financial environment for MSMEs;
- Enhancing the growth and competitiveness of MSMEs in a globalized economy; and
- Promote partnerships with development partners and technical partners as well as towards enterprise development in Africa.
The Division will support the financial systems deepening through:
- Leveraging, strengthening and commercializing the MFIs industry;
- Building capacity of existing commercial banks and institutions to adequately serve the financial needs of the MSMEs.
In selecting this approach, the Bank intends to play a catalytic and pioneering role in developing innovative structured finance and risk sharing mechanisms for the benefit of specific targeted smaller enterprises niches, in particular those with high growth potential and added economic value within the RMCs like export –oriented SMEs, as well as disadvantaged group like women, youth, black empowerment and rural populations. This includes incubation and implementation of SME financing mechanisms and facilitating their commercial uptake by public and private sector actors in RMCs.
Another key role of the Division is to enhance the Bank’s additionality role and the impact of private sector transactions in infrastructure and extractive industry projects through Local Economic Linkages (LEL) approaches, including first and foremost through enhancing direct and indirect forward and backward SME linkages with the projects at hand, but also through capacity building of local workforce, community development at large, and through local services and infrastructure development around large projects.
A further key component of the Division’s support role is the provision of targeted technical assistance and capacity building support build the market capacity to address the financing and non financing needs of MSMEs.
Role of Portfolio Management Division (OPSM 5)
The portfolio Management Division is assigned primary responsibility for the management of the Bank’s non-sovereign portfolio (private sector portfolio, enclave project portfolio, non-sovereign public portfolio and public sector equity investments) from first disbursement of a project until the project is completed.
This division has evolved in recent years and now operates under four primary groups of activities:
- Transaction Administration
- Project Management
- Exposure Management.