Private Sector Development

Private sector development is key to sustainable inclusive growth. The Bank’s vision for private sector development is operationalized through a number of approaches, namely: improving the business-enabling environment; supporting private enterprises; strengthening financial systems and institutions; promoting regional integration and trade; and creating a demonstration effect that will help to catalyze resources from other financiers.

During the year, the Bank allocated UA 868.9 million to support 25 new private sector operations. The 2011 allocation comprises UA 815.6 million in project loans and lines of credit (LOCs) and UA 53.4 million in private equity participations. In addition, UA 4.5 million was approved from Special Funds to enhance private sector development. The private sector operations represent 15.3 percent of the Bank Group’s total approvals for the year. Three publicly guaranteed LOCs were approved for Tunisia and Nigeria, to benefit private SMEs.

Regional and multinational projects received the largest share (40.9 percent), followed by middle-income countries (MICs) (35.1 percent) and then low-income countries (LICs) (24.0 percent). The 2011 allocation to LICs exceeded the 2010 level of 19.0 percent and included approvals for fragile states such as Zimbabwe, Togo, and Sierra Leone. Although the share of approved operations directly targeting LICs seems relatively low, when regional/ multinational operations that benefit LICs are factored in, the figure rises to over 50 percent of approvals. In terms of sectoral allocations, in 2011 finance attracted the most private sector approvals, followed by industries and services, and infrastructure).

Financial services: In 2011, UA 324.1 million of private sector approvals were allocated to financial institutions, including LOCs to the Development Bank of Southern Africa (DBSA) and the West African Development Bank (BOAD). Two African insurance institutions were supported by equity investments, namely ZEP-Re and Africa Re. This will help to strengthen the insurance sector in Africa, which is generally underdeveloped, and to boost its share of the global insurance market. Local financial institutions in Mali, Namibia, Nigeria, and Uganda were provided with LOCs, primarily for onlending to domestic MSMEs.

Industries and Services: The private sector approvals for industries and services in 2011 comprised four projects totaling UA 327.4 million, including the Office Chérifien des Phosphates(OCP) S.A. Project in Morocco (UA 156.2 million).

Infrastructure finance: The Bank approved UA 226.0 million for non-sovereign infrastructure finance to support nine private sector operations in 2011. It leveraged an additional UA 774.0 million from private sponsors, commercial entities, and development partners. Three key multinational infrastructure projects were approved in 2011.