Paris, 21 May 2013. In its sixteenth issue, Private Sector & Development discusses the emergence of regional and pan-African banking groups in sub-Saharan Africa.
The African banking sector is undergoing radical change as regional and pan-African banking groups develop. Are these players contributing to sustainable development on the continent?
To what extent is the banking sector’s development contributing to the development of the African continent as a whole? The new players are undoubtedly adding value – yet might their quest for market share entail a systemic risk for the continent’s still-fragile economies? Will their emergence on the African scene boost efficiency in the banking sector? Issue 16 of Private Sector & Development seeks to answer these questions, in order to outline the conditions for sustainable development of Africa’s banking sector.
You can find articles of the following authors : Thorsten Beck (Tilburg University), Paul Derreumaux (Independent consultant), Laureen Kouassi-Olsson (Proparco), Julien Lefilleur (Proparco), Jean-Louis Mattéi (Société générale), Cyrille Nkontchou (ENKO Capital Management LLP), Peter Ondiege (ADB), Sarit S. Raja Shah (I&M Bank).
Private Sector & Development is a bimonthly magazine that compares the views of experts in different fields on issues relating to the role the private sector plays in the development of low-income countries of South countries, particularly in Sub-Saharan Africa. By comparing complementary approaches, Private Sector & Development aims to help us get a better grasp of the mechanisms through which the private sector can contribute to the development of these countries.
Paris, 21 May 2013. PROPARCO has signed an agreement for a EUR 30M senior loan with the Brazilian developer Electra Power to support the design, building and operation of nine small hydropower plants in Northern and Central-West Brazil. This hydropower fleet has a total installed capacity of some 122 MW and comes with a total investment cost of almost EUR 190M.
Brazil has become the leading power producer in Latin America, with over 500 TWh in 2011. The country’s production mix is widely dominated by hydropower, followed by thermal power plants (26%), nuclear energy (2%) and wind power (1%). Electra Power was initially set up to make minority equity investments in mini hydropower plants. In 2011, Grupo Petropolis, the country’s second largest brewery company, became a shareholder of the company, which gave Electra Power the financial basis to substantially increase the number and size of its projects and also to improve its environmental and social standards.
PROPARCO’s loan will finance the construction of the Jamari Complex, which includes three small plants in Canaã (17 MW), Jamari (20 MW) and Santa Cruz (17 MW), located in the State of Rondônia in the North of the country, as well as six other small hydropower plants located in the Center-West and South regions of Brazil, for an additional 68.1 MW. These small hydropower plants, with a capacity of less than 30 MW, exploit Brazil’s enormous hydropower potential, with a relatively low environmental footprint.
Marie-Hélène Loison, PROPARCO’s Deputy CEO declared: “PROPARCO is extremely pleased to be supporting the development of Electra Power Group in Brazil. Building new hydropower plants will scale up the Group’s generation capacity in a context of strong and continued growth in electricity demand. Brazil is expected to see an annual increase of 5.3% increase in its energy demand by 2019.”
More generally, this project contributes to the fight against climate change by developing renewable energies and, more specifically, small and medium-sized hydropower facilities. Building new hydropower plants is expected to contribute to reducing CO2 emissions. It should also have a number of significant impacts for Brazil, including job creation and an improvement to local infrastructure in the Northern and Central-West of the country.
PROPARCO is a Development Finance Institution jointly held by Agence Française de Développement (AFD) and public and private shareholders from the North and South. Its mission is to catalyze private investment in emerging and developing countries with the aim of supporting growth, sustainable development and the achievement of the Millennium Development Goals (MDGs). PROPARCO finances investments that are economically viable, socially equitable, environmentally sustainable and financially profitable. PROPARCO is one of the main bilateral development finance institutions in the world. It invests on four continents encompassing the major emerging countries and the poorest countries, particularly in Africa, and has a high level of requirements in terms of social and environmental responsibility. www.proparco.fr
ELECTRA POWER is a renewable energy generation company based in Curitiba, Brazil. It has a portfolio of minority stakes in SHP's, which were built in joint ventures with local suppliers and communities during the 2000s. In 2010, Grupo Petrópolis acquired a 50% stake in Electra Power. The capital increase is being used to support a pipeline of almost 30 new SHPP projects.
Managua, 15 May 2013. Eolo de Nicaragua, S.A. (Eolo) officially celebrated the commencement of operations of the 44 MW Eolo wind farm, with an inaugural event attended by Government officials, senior ministers and numerous guests representing industry, lenders, local municipality, international and local organizations and community members. Eolo is Nicaragua’s third wind farm to start generating an alternative and clean source of electricity.
Eolo is owned by Globeleq Mesoamerica Energy (Wind) Limited (GME Wind), part of the Globeleq Mesoamerica Energy renewable energy platform in Central America which is owned by Globeleq, the emerging markets power company, and Mesoamerica Power.
“With demand for electricity growing around 5% per year, the introduction of additional wind generation will greatly benefit the country. It continues to reduce the country’s reliance on expensive fossil fuels and provides essential electricity without any additional carbon emissions. The Eolo wind farm is another excellent renewable wind project which reinforces our position as the leading wind power producer in Central America.” said Jay Gallegos, Managing Director of Globeleq Mesoamerica Energy.
The Eolo wind farm is located in the province of Rivas on the shores of Lake Nicaragua (Cocibolca), about 123 kms south of the capital Managua. Using 22 x 2.0 MW Gamesa G90 wind turbine generators, electricity will be sold through two 20-year PPAs to the national privately owned Distribuidora de Electricidad del Sur S.A. (DISSUR) and Distribuidora de Electricidad del Norte S.A. (DISNORTE).
Sean Porter, Country Manager for Globeleq Mesoamerica Energy, noted: “This is such an exciting day for all of us on the EOLO team. We want to thank all of our project partners and contractors for successfully completing the project safely, within budget and ahead of schedule. We are proud to be fully operational and a significant contributor of clean and affordable power to the people of Nicaragua.”
During construction, approximately 400 jobs were created with approximately 40 full time positions required for ongoing operation, including direct employees and sub-contractors. Construction of the Eolo wind farm was completed ahead of schedule and within budget with first power being delivered to the grid in November 2012. The facility was successfully constructed using the technology and expertise of Gamesa Eolica S.L. which is also contracted to assist with maintenance of the facility.
Electricity generated by the Eolo wind farm is estimated at more than 178 GWh/year which is equivalent to approximately 7% of all of Nicaragua’s annual electricity needs, and is expected to displace approximately 110,054 tons of carbon emissions per year.
PROPARCO, is a Development Finance Institution jointly held by Agence Française de Développement (AFD) and public and private shareholders from the North and South. Its mission is to catalyze private investment in emerging and developing countries with the aim of supporting growth, sustainable development and the achievement of the Millennium Development Goals (MDGs). PROPARCO finances investments that are economically viable, socially equitable, environmentally sustainable and financially profitable. PROPARCO is one of the main bilateral development finance institutions in the world. It invests on four continents encompassing the major emerging countries and the poorest countries, particularly in Africa, and has a high level of requirements in terms of social and environmental responsibility. www.proparco.fr
EOLO de Nicaragua S.A. is owned by Globeleq’s majority owned subsidiary, Globeleq Mesoamerica Energy (Wind) Limited (GME Wind), part of the Globeleq Mesoamerica Energy renewable energy platform in Central America, and owned by Globeleq and Mesoamerica Power. Globeleq Mesoamerica Energy is a company dedicated to the development, construction and operation of renewable energy projects in Central America and adjacent regions. www.mesoamericaenergy.com
Globeleq is an experienced operating power company. The company develops economically sustainable projects that support the continued development of the electric power sector in Africa and the Americas. Globeleq is solely owned by Actis, the pan-emerging markets private equity firm. www.globeleq.com
Mesoamerica Power is a Central American investment group focused on the development of renewable energy in the region. Mesoamerica Power is managed by Mesoamerica, the leading private equity mergers and acquisitions and strategic consulting firm in Central America and the Andean Region. www.mesoamerica.com
Paris, 22 April 2013. PROPARCO, the French Development Finance Institution, has signed an agreement to invest up to € 12m in the form of compulsory convertible preference shares in Indian Independent Power Producer (IPP) NSL Renewable Power Private Limited (NRPPL). This investment is part of a larger fundraising which saw NRPPL gather the commitment of DEG – Deutsche Investitions- und Entwicklungsgesellschaft, the German development finance institution, International Finance Corporation (IFC), the World Bank private sector arm, and several other Asian private equity investors. The fund raising size reached c. US$ 60m and will give NRPPL the required financial support to more than double its installed wind power capacity, with a target of 400MW in operation by March 2014.
Part of Indian conglomerate NSL Group, with activities in the fields of agri-business, energy, textile, real estate and infrastructure, Hyderabad-based NRPPL is the entity of the group dedicated to the development and operation of renewable and clean energy projects. Launched in 2001, NRPPL has first successfully developed wind farms and subsequently diversified the mix of technologies used towards other sources of renewable energy, such as hydro, biomass and solar. With an installed capacity of 185MW and an additional 340 MW under construction, NRPPL is well placed to become one of the five largest IPP in India. Wind energy remains the corner stone of NRPPL’s foray into renewable power and its development within the company should accelerate substantially with the recent support of both financial investors and development institutions. By 2016, the Company should operate renewable power assets representing an installed capacity of c.1,300 MW making it a credible candidate for a listing on the local stock market.
Paris, 25 February 2013. PROPARCO announces the signing of a USD 38.5m senior loan with a 15-year maturity with Polesine S.A., a subsidiary of Akuo Energy S.A.S., to finance the construction and operation of a wind farm in Uruguay. PROPARCO has coordinated the entire financing operation, worth a total of USD 88.5m, by involving the two development finance institutions from the Netherlands – FMO – and Germany – DEG – in the round of funding.
Following the rise in the price of hydrocarbons, which occurred at the same time as one of the severest droughts the country has ever experienced, Uruguay set out to implement a national energy policy focusing on renewable energy. In 2008, the Government launched a 25-year plan aiming to diversify its energy mix and reduce its reliance on fossil fuels. Wind energy is expected to provide 15% of electricity by 2015, thanks to the construction of around twenty new wind farms. Biomass and hydropower, which are already highly developed, will complete the generation capacity.
This new wind farm, with a capacity of 50 MW and a total cost of USD 128m, is located in the Florida Department, 100 km to the north of the capital Montevideo. Its commissioning is scheduled for November 2013 and will contribute to scaling up energy supply in Uruguay, in context of high pressure demand . This project will reduce its reliance on hydrocarbon imports, especially in periods of drought.
“Uruguay has always been a prime location for Akuo Energy, since it was founded, as a point of entry into the Latin American market. This strategy has paid off and we are delighted today to be a leading player in renewable energy in the region. This has also strengthened our international presence. In addition to the Florida wind farm, Akuo has just financed a 2nd project in Uruguay, the Minas wind farm. The two projects together total 92 MW under construction for an overall investment of USD 205M. With these two wind farms, Akuo Energy will remain committed to electricity generation from renewable and sustainable sources”, says Eric Scotto, Chairman of Akuo Energy.
Akuo Energy is an independent French producer of electricity generated exclusively from renewable energy sources. It develops, finances, builds and operates a portfolio of power plants. The Group has over 100 employees and operates in 13 geographical areas: mainland France, Réunion Island, Corsica, the West Indies, Poland, Croatia, Serbia, Montenegro, Morocco, the USA, Uruguay, Indonesia and Turkey.
Mauritius, 22 February 2013. PROPARCO’s Chief Executive Officer, Claude Périou, is making his first visit to Mauritius since he took office in 2012. He is being accompanied by Christophe Blanchot, Director of the Southern Africa Regional Office based in Johannesburg. Meetings have been organized with several Mauritian economic operators during his visit.
PROPARCO’s action in Mauritius
The development finance institution PROPARCO has been operating in Mauritius since it was founded. This subsidiary of Agence Française de Développement mobilizes its full range of long-term financial instruments (senior loans, subordinated loans, equity investments) in the banking and financial intermediation, infrastructure, industry and service sectors. It has successfully completed investments in Mauritius, with a portfolio of outstanding loans worth EUR 69m (equivalent to MUR 2.7bn) at 31 December 2012.
The most recent operations in 2012 include support for the redeployment of the industrial conglomerate of Mauritius Stationery Manufacturers (MSM), with an equity injection of EUR 3.7m (equivalent to MUR 150m), and participation in the capital increase of AfrAsia Bank to support its regional growth in Africa. PROPARCO has been providing longstanding support to the Mauritian banking sector, with the allocation of credit lines to MCB, SBM and Bank One.
“Mauritius, through the dynamism of its economy and the outreach of its groups in Africa and Asia, is a focus region for PROPARCO’s operations. We wish to further our commitment to the Mauritian private sector by supporting businesses in both their local development and their expansion in Africa and Asia”, points out Claude Périou, Chief Executive Officer of PROPARCO.
PROPARCO aims to further its support to the financial sector, while continuing its diversification in the agrifood, industry and logistics sectors. Health and education are other sectors in which PROPARCO aims to invest in the coming years. For each project, the development finance institution will promote low-carbon economic models and high environmental and social standards to its clients.
Agence Française de développement’s operations and role in Mauritius
“The partnership between AFD and Mauritius dates back to 1975 when the Caisse Centrale de Coopération Economique opened an office. After leaving the country in 1995, when it was in the process of successfully achieving its economic take-off, AFD returned in 2006 at the request of the Prime Minister, Dr. Navinchandra Ramgoolam. Its main objective was to support the new economic transition phase and help the country find new growth drivers in order to make it both more robust in a context of increasing globalization and more sustainable in a context of limited and fragile natural resources”, explains Laurence Breton-Moyet, Director of AFD’s Regional Agency for Mauritius and the Seychelles.
AFD is present on four continents where it has an international network of seventy agencies and representation offices, including nine in the French Overseas Communities and one in Brussels. It finances and supports projects that improve people’s living conditions, promote economic growth and protect the planet, such as schooling for children, maternal health, support for farmers and small businesses, water supply, tropical forest preservation, and the fight against climate change.
In 2011, AFD approved over €6.9 billion to finance activities in developing countries and the French Overseas Communities. The funds will help get 4 million children into primary school and 2 million into secondary school; they will also improve drinking water supply for 1.5 million people and give 6.1 million people better access to electricity. Energy efficiency projects financed by AFD in 2011 will save nearly 3.8 million tons of CO2 emissions annually.
Claude Périou was appointed Chief Executive Officer of PROPARCO by the Board of Directors in March 2012. He took office on 2 July 2012. Claude Périou graduated from the Centre d’Etudes Supérieures de Banque and started his career in French Polynesia at the bank SOCREDO. He went on to become its Deputy Chief Executive Officer in 1987. He subsequently took over the management of SOFIDER Indian Ocean from 1997 to 2002. Claude Périou joined AFD Group in 2002 as PROPARCO’s Chief Executive Officer, a position he held until 2006. After four years at SOCREDO as the Chairman of the Board of Directors, he returned to AFD Group in 2010 as Chief Risk Officer, before taking over from Etienne Viard as PROPARCO’s Chief Executive Officer on 1 July 2012.