The AfDB’s Private Sector Operations intervene in support to private sector development in Africa at two primary levels:
- Assist African governments to improve a business enabling environment.
- Create strong demonstration effect by assisting entrepreneurs to achieve success with a select number of transactions.
The activities of the Private Sector comprise two categories:
- Non-sovereign guaranteed (NSG) lending activities in the area of Industries & Services, PPPs & Infrastructure
- Non-lending activities include studies, initiatives and new programs.
Lending activities are directed to privately-owned as well as (in selected cases) publicly-owned beneficiaries.
· Assistance to Private Entities
Bank assistance is provided directly to private entities (enterprises financial intermediaries) through term loans, equity participations, quasi-equity investments, guarantees, syndications.
Bank assistance may be considered for projects to establish, expand, diversify and modernize productive facilities in various sectors including energy, manufacturing, agribusiness, 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. In selecting projects, the Bank gives consideration to financially and economically viable proposals, which primarily contribute to one or more of the following:
- Generation of foreign exchange earnings and savings
- Job creation, skills; improvements; and enhancement of productivity of capital and labor
- Transfer of technology and acquisition of appropriate scientific equipment
- Forward and backward linkages enhancement.
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 Group’s Environment Assessment Guidelines and the prevailing environmental regulations of the country.
· Assistance to Public Entities
The Bank, under its Private Sector Window, can lend on commercial terms to publicly owned entities (financial institutions, utility companies, municipalities, etc.) provided that these entities:
- do not require a sovereign guarantee
- are financially sound and viable
- are autonomously managed.
The Bank’s Non-lending activities target all beneficiaries (Private & Public) as well as the development partners which assist RMCs.
The Bank’s Non-Lending activities are mainly to develop policies, provide advisory services and technical assistance and formulate programs for the development of the private sector. The Department undertakes studies and provides advice on the Bank’s strategy for private sector development in RMCs.
- Develop policies & guidelines
AfDB formulates and develops new approaches, policies, procedures, guidelines and programs, which help to analyse, study and improve business and investment climate for the Bank’s private sector activities in RMCs. The Bank can also provide advice to RMCs on specific policy related to private sector development.
AfDB has a large group of experts with a sound knowledge, who can help and support beneficiaries to phase out their projects. Furthermore, the Bank creates and maintains contacts with private organizations, non-governmental organizations and multilateral and bilateral organizations concerned with the financing and development of private enterprises.
- Enhancing investment opportunities in RMCs
AfDB undertakes studies in different areas and sectors in RMCs. These studies highlight country’s current inroads and business opportunities.
AfDB provides a wide range of advisory services (reforms for increased private sector involvement, structuring public-private partnerships, adoption of good practices and standards including environmental and social and governance practices…) to firms and governments. These services support the implementation of the Bank’s operation in RMCs.