Transcript GAFSP Private Sector Window IFC Agribusiness Department

IFC Agribusiness
Global Agriculture and Food Security Program
and New Innovations in Financing Agriculture
20th Brussels Development Briefing on Financing Agriculture in Africa
and ACP Countries
September 15, 2010
1. IFC Agribusiness Portfolio Overview
2. Global Agriculture and Food Security Program (GAFSP)
Private Sector Window
3. Recent Examples of Innovative Agri-Financing in Africa
2
IFC Agribusiness Portfolio Overview
Agri-related Investments
(including Syndications)
IFC has significantly increased its agri-financing in recent years
The active portfolio of agri-related investments was
$3.9 billion at FYE09 (excludes Trade Finance)
IFC'S AGRIBUSINESS PORTFOLIO BY REGION
2200
2.0 bn
Fertilizers
2000
1800
1600
Food Retail
Agri IT/Telecoms
Agri infrastructure
Equity Funds
1.3 bn
Rural and Trade Finance
1400
Africa
6%
Europe and
Central
Asia
25%
Middle
East/North
Africa
2%
South Asia
11%
1.4 bn
East Asia
11%
Latin
America
45%
Agribusiness Production and Processing
US$ millions
1200
1000
848 m
800
400
200
IFC'S AGRIBUSINESS PORTFOLIO BY SECTOR
546 m
600
304 m
347 m
406 m
Equity
Funds
3%
483 m
Food Retail
12%
Fertilizers
6%
120 m
0
FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09
3
Agribusiness
Production
and
Processing
75%
Agri
Infrastructure
4%
Global Agriculture and Food Security Program (GAFSP)
Private Sector Window (PSW)
 In 2009, G8 announced at L’Aquila a program to address food security and improve
incomes of poor in IDA countries.
 Global Agriculture and Food Security Program created with separate Public and Private
Sector windows to deliver on this objective.
 IFC selected to set up and directly manage the Private Sector Window for the GAFSP;
World Bank to be Trustee of Public Sector Window.
 WBG Board approved GAFSP Framework January 2010
 GAFSP launched in April 2010 with $880 million from United States, Canada, South
Korea, Spain and the Gates Foundation
Objectives
GAFSP
 Small Holders, SMEs
 Improving Productivity
 Improving Access to Finance
Public Sector
Window
WB is Trustee
 Fostering Innovation and Technology
Private Sector
Window
 Climate Change
Managed by IFC
4
GAFSP Private Sector Window - Overview
Mandate:
• Use limited resources to support and demonstrate new and innovative
financing aimed at increasing the commercial potential of small and
medium sized agri-businesses and farmers.
• Help increase productivity, improve market access and reduce risks
associated with financing agribusiness SME’s by using innovative financial
structures and technical assistance support.
Initial Donors:
• PSW will be operational with the CAD 50 m contributed by Canada.
• US intends to participate in PSW by December 2010 as well.
Target:
Raise additional Funds to achieve a size of US$500 m PSW allowing
initiative to extend reach, and deploy a wide range of innovative financial
instruments, and provide technical assistance.
5
GAFSP: Products & Targets
Products
Debt
Equity
Advisory Services /
Technical Assistance
Potential Targets
First Loss Cover
• First Loss Facility for small holders, MSMEs
LT / ST
• Farmers, small holders, and MSMEs
Direct / Fund of Funds
• MSMEs
• To be deployed through direct investments by IFC and
Private Equity SME Funds
Impact Investing
• Early stage project development companies, funds with
social and development impact objectives
• Increase access to agri and farmer finance
• Improve farmer productivity and market links
• Advertising & disseminating information to small holders
Target:
PSW will target smallholders, farmers, MSMEs, directly or
indirectly through banks, financial intermediaries, micro finance
institutions, private firms and equity funds.
6
Program Roll-out
Phase I
Phase II
Target Size: US$500 million
Target Size: US$100 million
• Due to limited funds, selective
investment products to achieve quick
results
• Majority of initial deployment though
local intermediaries
• Investments complemented by
Advisory Services
• In parallel with implementation of
Phase I, fund raising for Phase 2 will
be launched Q1,2011.
• Larger fund pool allows for the use of
more innovative instruments, such as:
– Impact investing funds,
– Agri marketplace development
– Scaling up interventions with FIs
– Additional Advisory Services
programs
7
Recent Examples of IFC’s Innovative Agri-Financing in
Africa
8
Stanbic Ghana (SBG) – Short Term Funding (Cocoa)
The Project
•“Hybrid” of Risk Sharing Facility (“RSF”) and Partial Credit Guarantee (“PCG”).
•Increases Stanbic Ghana’s activity in the sector by enabling it to exceed Single Obligor
Limit to Licensed Buying Companies (“LBCs”), and exceed sector limits.
•Up to US$ 40m seasonal financing (< 1 year) to LBCs, from US$ 19m in 2007-08 (2 LBCs)
•LBCs selected and appraised by IFC.
•IFC provides up to 50% PCGs to LBCs on an individual basis.
•Guarantees (can be) renewed on an annual basis.
IFC
Guarantee
SBG
Guarantees
Cocobod
Loans
IFC Role
LBC A
Cocobod
IFC
LBC B
LBC C
SBG
LBC D
LBC E
LBC F
Overdrafts
9
Portfolio
of preapproved
LBCs (Off
takers)
• Introduce a new,
innovative agribusiness
guarantee product
• Contribute sector and E&S
Expertise
• Supplement SBG’s
evaluation of LBCs – initial
and on-going.
Export Trading Group (ETG) – Guarantee for Agri-Trade
The Project
•Risk Participation up to 33% of US$120 million (collateral and overdraft).
•Supports one of Southern and East Africa’s largest agricultural supply chain operators to
expand its trading and processing businesses, including purchases from small farmers
•In 2008/09, ETG traded over 1.2 million tons of products from 60,000 farmers. Expects
to increase traded volume to 2.7 million tons by 2011/12.
•Will create over 1,000 jobs, mostly in rural areas
IFC Role
Farmers
ETG
(ETC)
Local Buyers
Collateral
Manager
• Provide advice on commercial,
technical, environmental and
social issues
Key: Flow of funds
Standard
Chartered
Bank
• Mobilize/supplement
resources for agri-sector
development from local
financial institutions
Risk
Participation
IFC
10
• Support ETG’s corporate
practices improvement
Ethiopian Coffee – Cooperative Financing (Pending)
The Project
•3 Year Renewable Guarantee facility (up to US$ 10 million p.a.)
•Assists coffee cooperatives to i) acquire wet mills for coffee processing, and ii) working
capital. Ethiopia portion of US$ 50 million East Africa Coffee Initiative managed by
TechnoServe and funded by Gates Foundation.
•Unique partnership - First-loss provided by local NGO; IFC takes Senior Loss; Banks share
both First Loss and Senior Loss.
•Collateral: coffee purchases from farmers
•Assets: Facility uses 20% for equipment loans; 80% for working capital
Loss Sharing [75%]
IFC Role
• Financial structuring guidance for
using stocks as collateral, rather
than mortgages
IFC risk
• Improve access to financing and
markets for coffee farmers
BANK
• Demonstration Effect: Attract
further financing to sector
NGO risk
• Contribute sector Expertise
11
Thank You
Rajesh Behal
Principal Investment Officer
Washington, DC
[email protected]
12