PROPARCO'S RESPONSE TO THE COVID-19 CRISIS

In March, Proparco launched a survey to identify the difficulties and needs expressed by its clients. The article published in Jeune Afrique Business + on 30 March



 

Proparco provided an immediate response to support the most affected private players through emergency measures :
 

• Additional equity investments ;
• Authorisations to allow the reallocation of funds according to their needs ;
  Deferred repayments : in almost 20 countries (Uganda, Niger, Kenya, Côte d’Ivoire…), Proparco postponed deadlines for its most affected clients (especially in the tourism and transport sectors), with a risk exposure of more than to EUR 225 million. For instance:
  
      - In Egypt: Proparco postponed two deadlines for a NBFI (Non-banking Financial Institution) client: the April 2020 deadline moved to October and the October one moved to April 2021 – i.e. an extension of the initial schedule by 6 months. The aim is to allow the client to weather the crisis, while the NBFI itself has granted moratoriums to its clients affected by the impact of the Covid19 pandemic.
  
      - Similarly in South Africa, for a NBFI client in the transport sector: Proparco postponed the June 2020 deadline. As the NBFI's clients were impacted by the crisis, moratoriums were granted to them. The NBFI asked its lenders for their support through this temporary difficulty.

Since March, Proparco has been actively participating in the "Covid 19 - Health in common" initiative implemented by AFD Group

Proparco provides targeted assistance to health stakeholders in Africa – networks of hospitals and clinics, producers of essential drugs or protection equipment – to address the Covid-19 pandemic.

Grants were allocated to Proparco's clients in the health sector. The purpose is to ensure the protection of front-line employees and to strengthen the capacity to supply equipment and consumables to care for COVID19 patients. For example, Proparco has allocated grants to two major healthcare companies in Morocco: the Oncology and Diagnostics Group of Morocco (ODM) and Amanys Pharma (formerly Saham Pharma).

 

Subsidies were also allocated to ensure good working conditions for employees and to guarantee access to essential products. For example, the Bigot Flowers Kenya horticultural farm has received emergency support from Proparco to mitigate social and health impacts:

 Video report :

Targeted support: for example, Proparco enabled companies or funds benefiting from technical assistance to change the purpose of this assistance in order to meet urgent needs related to the protection of employees and communities.

To support the long term economic recovery : an increased financial commitment and the implementation of new and targeted tools

In addition to emergency measures, Proparco has also deployed a financial response to support affected private companies in the longer run:

Dedicated credit lines in Africa, Proparco granted in 2020 nearly €450 million to local financial institutions to mainly encourage them to maintain and strengthen their support to SMEs. For example :


 

In May, Proparco and Cofina signed a EUR 10m loan agreement that will facilitate access to credit for Ivorian and Senegalese microenterprises and SMEs and help them play their key role in the economy in these difficult times. 

• In October, Proparco granted a US$100 million loan to Equity Bank to support Kenyan SMEs. This operation illustrates Proparco’s firm commitment to the Kenyan private sector amid current COVID-19 crisis and economic turmoil, with a particular focus on job-creating SMEs. 

“Choose Africa Resilience”: an additional €1 billion to support affected SMEs in Africa

AFD Group stepped up Choose Africa, the French initiative to support MSMEs in Africa. The new component of the Choose Africa initiative, Resilience, is implemented by Proparco and includes a set of tailor-made solutions to address the needs of African MSMEs that have been severely hit by the health and economic crises related to the Covid-19 pandemic. The Choose Africa initiative was initially set at EUR 2.5bn for 2018-2022 and now stands at EUR 3.5bn.

This new EUR 1bn component “Resilience” is France’s contribution to the USD 4bn commitment for African MSMEs made by some twenty public development banks, including PROPARCO, at the Finance in Common Summit (FiCS).

• The press release
• Read the interview of Proparco’s CEO in DEVEX
• The Choose Africa website

"Bridge by Digital Africa" fund: a new €5 million financial instrument dedicated to start-ups to help mitigate the economic crisis.

Promoted by Digital Africa and deployed by Proparco, the Bridge Fund by Digital Africa intends to provide  specific responses to the challenges young innovative African companies face due to the economic impact of the Covid-19 pandemic.It aims to offer a bridging loan, over a maximum period of 24 months, to companies which fundraising process has been cancelled or delayed due to the global economic crisis and the contraction of the investment market. The budget of the fund amounts to €5 million.

- Read The press release

- Video presentation: :

Beyond the African continent, Proparco is supporting the private sector wherever it intervenes, especially in the most fragile countries.

Choose Africa Resilience is a key component to mitigate the impacts of the economic crisis in Africa, but Proparco’s response is obviously not limited to the African continent.  Proparco is supporting the private sector wherever it intervenes.

For example, in Costa Rica: Proparco has recently reaffirmed its commitment to SMEs. To support Banco Promerica during this crisis, Proparco has renewed its partnership by granting it a USD 45 million credit line dedicated to its recovery plan for its SME clients. 

Finally, to support the most fragile and least developed countries (LDCs), Proparco and IFC signed in May an agreement enabling them to collaborate more closely to deliver stronger development impact and accelerate economic recovery in the LDCs in the wake of the COVID-19 global crisis.