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Tunis, 16 September 2009 – The Board of Directors of the African Development Bank (AfDB) Group on Wednesday, 16 September 2009 in Tunis approved a US$10 million investment in the West Africa Emerging Market Fund (WAEMF). The investment makes the AfDB one of the lead investors in the Fund, at par with the CDC (Commonwealth Development Corporation) and the International Finance Corporation (IFC).
The WAEMF is sponsored by three well recognized institutional investors (Colina, NSIA and CNPS) and by Phoenix Capital Management (PCM), a local investment partner. Both Colina and NSIA are regional insurance companies from West Africa, while CNPS is the Ivorian National Pension Fund.
The Fund targets the SME market and thus helps support non-public companies that demonstrate high-growth potential, including in the financial services and infrastructure sectors. The Fund will thus also contribute to government efforts to boost employment opportunities, increase GDP, and reduce poverty in line with the Millennium Development Goals.
The Bank Group’s participation in the Fund plays a catalytic role by attracting other institutional investors to support the mobilization efforts of the sponsors to reach the target capitalization of US$50 million. It will also send a positive signal to the market which will help attract other long-term private investors to the region, and may lead to other co-financing opportunities with other Development Finance Institutions (DFIs). In the current global financial context, the AfDB’s participation will be more critical as financial institutions have generally retreated from equity investments and equity funds.
WAEMF’s business strategy is well aligned with the Bank’s Medium-Term Strategy, which emphasizes private sector development, regional integration, infrastructure development, support to fragile states, and the need to strengthen key partnerships with DFIs. The proposed investment will contribute to the emergence of regional champions, create opportunities for women, and facilitate trade flows within the West African sub-region region. The Bank is seeking to redress the devastating effect of the financial crisis on regional trade, through the recent introduction of mechanisms such as the Trade Finance Initiative (TFI).
With a GDP of US$131 billion, equivalent to 16% of the continent’s GDP, West Africa offers many investment advantages, including a common currency (the CFA franc) in the eight UEMOA member countries (Benin, Burkina Faso, Côte d’Ivoire, Guinea Bissau, Mali, Niger, Senegal, and Togo), a common commercial and cultural tradition, and a Union law superior to national laws. The region comprises four big economies (Côte d’Ivoire, Ghana, Nigeria, and Senegal) which represent 75% of the population and 80% of GDP of the sub-region.
To date, the Bank has approved investments in 12 private equity funds closely aligned with the Bank’s Private Sector Operations priorities, as articulated in the updated Private Sector Operations strategy and business plan for 2008-2010.