PROPARCO'S RESPONSE TO THE COVID-19 CRISIS

At the outset of the pandemic, Proparco provided an immediate response to the needs of its clients affected by the crisis

In March 2020, Proparco launched a survey to identify the difficulties and most urgent needs expressed by its clients. The article published in Jeune Afrique Business on 30 March. In response to the needs expressed in this survey, Proparco continued to support its clients and immediately deployed emergency measures to support the most affected private players:

• Additional equity investments in certain client companies
   
• Authorizations to allow the reallocation of funds according to their priority  needs related to the pandemic
   
• Deferred repayments to ease their cash flow. 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 €225 million. For instance:
   
  • In Egypt: Proparco postponed two deadlines for an 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. This extension of the deadline allowed the client to weather the first wave of the crisis and grant moratoriums to its clients affected by the impact of the pandemic.
     
  • In South Africa, for another NBFI client in the transport sector, Proparco postponed the June 2020 deadline to the end of the amortization schedule with a 6-month extension, i.e. to December 2024. Moratoriums have also been granted to the clients of this NBFI, which asked its lenders to support them during this period.

Since March 2020, Proparco has been actively participating in AFD Group’s "Covid 19 - Health in Common" initiative: a €1.2 billion initiative in response to the global health crisis caused by the Covid-19 pandemic.  

Proparco rapidly provided 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 was to ensure the protection of front-line employees and to strengthen the capacity to supply equipment and consumables to care for Covid-19 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 the 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 2020, 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 2020, Proparco granted a US$100 million loan to Equity Bank to support Kenyan SMEs, with a particular focus on job-creating MSMEs, under the French Choose Africa initiative, as well as projects with climate co-benefits.

Watch the interview with the CEO of Equity Bank Holding, Dr. James Mwangi

This operation illustrates Proparco’s firm commitment to the Kenyan private sector amid the current Covid-19 crisis and economic turmoil. 

“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.

The Choose Africa “Resilience” mechanism is a major financial commitment by AFD Group and is part of the by development banks, particularly in Europe, to help African MSMEs.  

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

Read the in-depth interview with PROPARCO’s CEO in Jeune Afrique: PROPARCO deploys an additional €1 billion for the Choose Africa initiative

"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 offers a bridging loan, over a maximum period of 24 months, to companies whose 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. All the countries where Proparco operates have been hard hit by the health and economic consequences of the pandemic. 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 in late 2020 dedicated to its recovery plan for its SME clients. 

Finally, to support the most fragile and least developed countries (LDCs), Proparco and IFC also signed a framework agreement in May 2020 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.