Industry and Services

The industrial sector is essential to the economic development of developing countries. No country has ever been able to achieve economic development without going through the industrialization phase, apart from tax havens. Today, industry accounts for 25% of GDP in Sub-Saharan Africa and over 36% of GDP in Southeast Asia. It is therefore an important sector in PROPARCO’s areas of operation.
Projet VSL

Supporting the environmental, social and governance (ESG) objectives of industry players

Un ouvrier dans l'usine

Supporting the environmental, social and governance (ESG) objectives of industry players

The sustainable industry of tomorrow raises many issues, two of which are key focuses for PROPARCO’s operations:

o Improving working conditions for employees, meaning that companies in the sector need to create more value,

o The need for an energy transition, which will be achieved by an increasing use of clean technologies and strengthening the local industrial fabric.

In this respect, PROPARCO focuses on working with players engaged in an environmental and social process and helping them improve their practices.

Focus on the cement and textile industries

factory

Focus on the cement and textile industries

PROPARCO finances industrial projects in several sectors, particularly in the cement and textile industries.

Cement

The cement sector is essential for the construction of critical infrastructure (schools, hospitals, ports…), which are seriously lacking in developing countries. The lack of infrastructure is one of the main reasons why African countries are not competitive and hinders their economic development. Cement is also used to build housing, demand for which is expected to skyrocket with population growth and increasing urbanization. For example, Kenya lacks 2 million housing units.

Textiles

This sector creates jobs on a massive scale, attracts foreign direct investments and increases the exports of countries, which generates foreign exchange earnings. In this sector, PROPARCO supports pioneering companies for responsible environmental and social practices. For example, in Egypt, the textile and clothing industry is a key sector for the country, as it employs over 1 million people and accounts for 3.5% of GDP. In 2020, PROPARCO allocated a USD 20m loan to T&C Garments, one of the country’s leading jeans manufacturers. The company is specialized in high-quality products, which are mainly exported to the USA for major brands. PROPARCO’s support is allowing the company to double its production capacity by purchasing machines with the highest standards and finance the launch of two green initiatives: to improve wastewater filtration and recycling and install solar panels. This will allow 90% of wastewater to be recycled and increase local green energy generation, with 30% of the electricity consumed by the factory generated by solar energy. This project is thereby improving energy efficiency, substantially reducing water consumption and supporting thousands of jobs.

PROPARCO encourages responsible players that launch a process to improve their environmental, social and governance practices. We support local industry players that wish to progress towards best practices. We systematically demand that the players we finance improve their standards by implementing action plans defined by environmental, social and governance (ESG) specialists. These plans are based on the performance standards defined by IFC, the world reference for development institutions.

The support to these industrial enterprises makes it possible to develop sectors in these countries. It also builds local expertise and creates value for the country to ensure its industrial independence, a major issue that has come to the fore during Covid-19.

By selecting high-impact projects, PROPARCO’s objective is to upgrade the entire industrial sector. It achieves this by demonstrating that environmental and social (E&S) requirements and economic profitability are not only compatible, but also prerequisites for resilience to external crises (climate, social…) and value creation for the company of the future.

PROPARCO has a portfolio of EUR 145m of outstanding loans in the industrial sector, particularly in the cement and textile sectors (data at end-2019).

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