PROPARCO confirms his place among the world's leading bilateral financing institutions dedicated to the private sector
Paris, 4 June 2012. PROPARCO, Agence Française de Développement’s (AFD) private sector financing arm, has marked the release of its 2011 annual report by presenting its operational results for 2011. With EUR 865 M€ in commitments, PROPARCO has further reinforced its high level of activity. These results reaffirm its leading role as a responsible investor in Southern countries.
With a portfolio worth 2.6 bn€ at 31 December 2011 – up 24% on 2010 – PROPARCO has demonstrated its ability to scale up its activity within a difficult market environment. The total balance sheet has reached a record level at 3 bn€. PROPARCO now has over 300 clients in 60 countries. This growth has occurred within a context of controlled risk, with a particularly low rate of doubtful loans at 1.3%. “The 2011 results reaffirm PROPARCO’s position among the leading development finance institutions dedicated to the private sector. This success testifies to the relevance of our economic model based on a balance between developmental impact and financial profitability”, explains Etienne Viard, Chief Executive Officer of PROPARCO.
Year marked by high level of subsidiarity
2011 was marked by a number of operations in crisis and post-crisis countries, such as Côte d’Ivoire, Iraq and Tunisia. “The private sector has come out of crisis situations weakened and decapitalized. The gloomy business environment, the erosion of capacity and informality tend to limit business participation in economic life. Our role is to support business development and show, through our financing, the viability of private solutions in these regions which are deemed too risky by investors”, adds Etienne Viard. In the Mediterranean and Middle East, PROPARCO has confirmed its intention to support the economic development of the region with EUR 250m in commitments – an 84% increase on 2010. For example, it has financed a pharmaceutical company in Tunisia and the development of a mobile phone network in Iraq.
PROPARCO has also maintained a high level of commitment in sub-Saharan Africa, which continues to be too far removed from international investment flows. The amount of its financing in the region stood at 250 M€ in 2011 and its activities mainly focused on developing infrastructure and strengthening the financial sector. Projects financed included a container terminal in Togo, a gas power plant in Cameroon and a sugar company in Côte d’Ivoire. A significant amount of equity financing was also mobilized to support African banks. The Investment and Support Fund for Businesses in Africa (FISEA) owned by AFD and managed by PROPARCO has, for its part, made 19 M€ of investments in African businesses.
A strong commitment to the fight against climate change
In 2011, PROPARCO earmarked almost 20% of its financing for the fight against climate change. It financed key operations in the renewable energy sector in Latin America in order to address the need for energy security as well as climate challenges. Major energy efficiency projects were also financed in Asia. AFD’s subsidiary is also committed to disseminating and promoting high environmental standards to all its clients.
“Climate change is a core element of PROPARCO’s strategy. Our operations have a twofold rationale: to fight climate change and promote sustainable development. We support low-carbon economic models. In 2011, our financing and cofinancing will contribute to avoiding or reducing greenhouse gas emissions by 2.3 million tons of C02 equivalent every year”, explains Etienne Viard.
Broad support to banks
PROPARCO provided substantial support to financial institutions. This activity, which accounts for 48% of financing in 2011, promotes long-term investments in businesses and SMEs in developing and emerging countries. New operations have also been launched in the insurance and reinsurance sectors. In addition, 2011 was marked by PROPARCO’s increased presence in the banking sector in Latin America. For example, several credit lines earmarked to finance the agro-industry have been allocated to Paraguayan, Brazilian and Argentinian banks.
An activity with a strong impact on development
PROPARCO’s results combine sound financial performance with a strong impact on development. PROPARCO’s financing and cofinancing in 2011 will help:
- Connect 8 million people to a telecommunications network
- Create or maintain 89,000 direct jobs and 273,000 indirect jobs
- Contribute 670 M€ to government revenues
- Give 275,000 people access to microfinance
- Improve the environmental and social performance of 34 projects
- Transport over 11 million tons of freight a year
2012, further consolidation efforts
PROPARCO will endeavor to pursue its mandate to finance the private sector, with greater priority given to sub-Saharan Africa. Additional efforts will be made to finance small and medium-sized enterprises with the creation of a dedicated unit. PROPARCO is aware of the scale of the challenges of capacity building and will be working to develop its technical assistance activities. Finally, it will be reinvesting in the French Overseas Communities in order to foster endogenous development and promote the regionalization of their economies.
“The growth in our activity over the past five years has changed the face of PROPARCO. Since 2009, it has been present on all the continents and invests in new sectors every year. The continuation of this growth requires strengthening our economic and financial model. In 2011, we made substantial efforts to structure and streamline our institution. In 2012, we will need to pursue these consolidation efforts by reinforcing our human capital and our financial model and by seeking the best standards in all our activities”, says Etienne Viard.
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 is among the world’s leading bilateral development finance institutions. 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.