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The activities of the Private Sector comprise two categories:
Lending activities are directed to privately-owned as well as (in selected cases) publicly-owned beneficiaries.
Bank assistance is provided directly to private entities (enterprises financial intermediaries) through term loans, equity participations, quasi-equity investments, guarantees, syndications, underwriting and advisory services.
Bank assistance may be considered for projects to establish, expand, diversify and modernize productive facilities in various sectors including energy, manufacturing, agribusiness, tourism, transportation, infrastructure, extractive industries, as well as in banking and finance and other service industries, as long as the investment is beneficial to the economy of the host country. The Bank does not participate in real estate development projects (except for low-income housing) nor provide direct trade financing. However, the Bank may invest in domestic or regional financial and capital market institutions, which support such activities; or alternatively, extend agency credit lines for such purpose. In selecting projects, the Bank gives consideration to financially and economically viable proposals, which primarily contribute to one or more of the following:
To be involved in a project, the Bank needs to be satisfied that the project is consistent with the country's economic development objectives, has sufficient comparative advantage and is likely to succeed in a sustainable manner. The Bank will satisfy itself that the project concept, technology, sponsorship and management are sound, that solid market and marketing arrangements exist for the products or services, that the project cost is reasonable and the financing plan is adequate. In making investment decisions, the Bank takes into account the economic circumstances in the country concerned, and the policies of the government as they affect private enterprises.
In addition, projects in which the Bank invests are required to comply with the Bank's Group Environment Assessment Guidelines and the prevailing environmental regulations of the country.
The Bank, under its Private Sector Window, can lend under commercial terms to publicly owned entities (financial institutions, utility companies, municipalities, etc.) provided that these entities:
Recent examples are a US $ 50 million line of credit to the Industrial Development Corporation (IDC) of South Africa, a Yen 5.5 billion line of credit to the National Development Bank of Botswana (NDB) and a US $ 100 million line of credit to the Development Bank of Southern Africa (DBSA).
FAPA is a multi-donor Fund for African Private Sector Assistance (FAPA) aims to support the implementation of the AfDB’s Private Sector Development (PSD) Strategy by providing untied grants for technical assistance and capacity building to African governments, regional economic communities and similar intergovernmental organizations, business associations, market regulatory institutions, business development service providers, business training and research institutions, and public/private enterprises. Grants under FAPA enhance the Bank’s ability to be more active in the upstream phases of the project preparation cycle in order to reinforce the quality of its pipeline of bankable private sector transactions. The resources may also be used to promote innovative programs that specifically support small- and micro-scale enterprises and clean technologies, including the provision of seed money for start-ups, business incubators, etc.