#BusinessInCommon
SUSTAINABLE DEVELOPMENT REPORT ANALYSIS OF THE RESULTS AND IMPACTS OF PROJECTS FINANCED IN 2018
Business in Common Proparco has been working for the private sector and sustainable development for over 40 years. A subsidiary of Agence Française de DÊveloppement, Proparco invests to support the growth of private actors and funders mobilized to contribute to the economic, environmental and social development of developing and emerging countries. We finance companies and financial institutions whose activity contributes to the creation of decent jobs and incomes, the provision of essential goods and services, and the fight against climate change. Our operations thereby aim to strengthen the contribution that private actors make to the achievement of the Sustainable Development Goals.
CONTENTS
Sustainable Development Report Editorial
2
Strategy and ambitions
4
Main results in 2018
18
The direct impacts of funded projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 USD 3bn to reduce gender inequalities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Our operating methods
8
Our impacts on the transformation of stakeholders . . . . . . . . . . . 28 Our impact on mobilizing financing flows and unlocking investment in countries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Focus: Evaluation of the results of Proparco’s technical assistance services since 2010
Measuring and analyzing the impacts of projects. . . . . . . . . . . . . . . 8 Taking the environmental, social and governance risks into account and assisting our clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Building the capacities of clients and diversifying Proparco’s range of instruments via delegated resources. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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SCALING UP THE IMPACTS OF OUR OPERATIONS Grégory Clemente, Chief Executive Officer of Proparco
In a world of challenges, which calls for more sustainable and inclusive societies, the role of private actors is increasingly essential to contribute to the achievement of the Sustainable Development Goals (SDG) and the implementation of the Paris Agreement. Mobilizing more private investments towards developing countries is a global challenge. Directing these investments to ensure they provide sustainable and innovative solutions is an issue for the transformation of our economies and our societies. In 2017, Proparco adopted an ambitious strategy: to triple its impacts on the SDGs by 2020 while doubling its activity. The results are there to see. Proparco is
Our ambition to achieve environmental and social excellence demonstrates our commitment to support an effective, responsible and sustainable private sector.
well on track. E UR 1.6bn of financing approvals in 2018, including EUR 578m in Africa and EUR 536m for the climate;
Proparco is also engaged in a strategy to strengthen
1.5 million tons of CO2 equivalent avoided every year
partnerships with its counterparts (International Finance
thanks to 16 projects with climate co-benefits signed
Corporation, network of European development finance
in 2018;
institutions…) in order to provide the responsiveness and
2 2.6 million people will have an improved access to
level of service expected by the companies it supports.
essential goods or services; 1 7 innovative projects signed in 2018 to support transitions; 82 clients supported since 2017 to improve their environmental and social performance.
Private investment is, even more than in the past, an essential need for developing countries. The products and services deployed by the private sector will produce benefits locally, while acting as major sources of innovation and inspiration for our societies. Proparco,
This strategy has been combined with organizational
as a responsible actor, will continue to support private
changes in response to the rapid growth in activity, and,
stakeholders towards an increasingly sustainable and
more importantly, to the changing needs of our clients.
inclusive development.
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Strategy and ambitions Over the years, the private sector has become one of the economic actors that influence the most the development paths of countries. It has therefore become a key component of the development assistance policy.
Private investment and enterprise have long
prosperity and biodiversity and the Paris Climate
been mainly regarded in terms of their positive
Agreement have all forced us to change our
impacts on economic growth
production and consumption
and employment. For a few
patterns and lifestyles. The
years now, their impacts on
private sector plays a key role in
the quality of life, the envi-
this field, through the volume
ronment and social life have
of its investments (new and
been highlighted via Corporate Social Responsibility (CSR) approaches. These approaches are also increasingly popular among professionals, regulators and clients.
1.53 Mt CO -eq
2 avoided every year thanks to projects financed by Proparco in 2018
A universal transition towards more sustainable and more equitable models
renewal of its infrastructure stocks) and the dynamics of players who create organizations able to rapidly change practices. The purpose of international aid is therefore no longer simply to protect and promote the
catching-up of the weakest, but also to redirect and regulate private investments so that they can support this transition. This new challenge
The Sustainable Development Goals, the
requires international aid actors to completely
major international negotiations on trade,
renew their mandate.
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The Wind Farm of Gul Ahmed Energy, in the Jhimpir corridor (Sindh Province, Pakistan), has been supported by Proparco since the start of the project in 2016. In addition to the financial support (loan of some USD 19m), Proparco has promoted CSR practices and the recruitment of a local labor force.
The private sector, a key driver of the transition AFD Group, and Proparco in particular through support to the private sector, promotes transitions towards sustainable and balanced growth models that are inclusive and carbon-free, in developing and emerging countries. Indeed, the private sector is a major driver for achieving these transformations: as an investor, it has the
The private sector is a key actor for achieving the international sustainable development objectives. Ambitious objectives for a private sector conducive to transitions
capacity to take action on and direct most of the investment dynamics; as an employer and
To address these challenges, in December 2016,
increasingly an actor in the territorial fabric and
Proparco adopted a new strategy for 2017-2020.
public policies, it directly influences the quality
It is in line with the commitment of the French
of life and social well-being; as a producer of
Government and international community to
effective and innovative ranges of goods and
boost the international development and solida-
services, it is able to boost ecological, social
rity policy in order to support these transitions
and economic transitions.
through private initiatives.
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THREE AMBITIOUS OBJECTIVES OBJECTIVE 1
OBJECTIVE 2
OBJECTIVE 3
DIRECT IMPACTS ON DEVELOPMENT
TRANSFORMATION OF ACTORS
REDIRECTION OF INVESTMENTS
To double its financial commitments in
To help strengthen the environmental
To scale up the mobilization effect that
order to triple its direct impacts on the
and social responsibility of private sector
Proparco has on financing flows, notably
development and transitions of countries
actors and their capacities to innovate,
private flows, and its capacity to unlock
implement and support the transitions
investments in targeted countries
The aim is to support the new sustainable economy by relying on operational
This objective is implemented via:
strategies that:
Proparco’s strategy towards this objective focuses on:
A greater involvement of Proparco’s promote projects with a potentially strong impact on transitions, in particu-
teams and experts in advising clients on CSR and governance;
lar energy and transport infrastructure,
the deployment of instruments with strong leverage, with an increase in equity and guarantee instruments;
and the major industries and agribu-
A deployment and strengthening of the
sinesses, while building Proparco’s
resources allocated to technical assis-
the use of grant resources blended with
capacities to evaluate and manage the
tance and capacity building programs.
market instruments to diversify and
impacts created by these companies;
tailor Proparco’s instruments to the needs and level of risks of companies,
support the actors most likely to boost the local entrepreneurial fabric and
while maximizing the impact of its action;
the economic activities of populations, in partnership with the various
the support to innovations which have
stakeholders in local financial systems
an unlocking effect on investment:
(banks, microfinance institutions), but
new technologies, new processes, etc.
also international investment actors in Proparco’s areas of operation; encourage the deployment of activities in social sectors (education, health…) and services (ecological, technological…), so that the private sector can contribute to the catching-up and emergence of the human and economic potential of the poorest countries.
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PROPARCO’S IMPACT OBJECTIVES 2017-2020 Proparco doubles its commitments
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A new department for a greater impact Clients triple their impacts
Proparco has overhauled its organization in order to support this strategy focused on the impact and added value of the institution. The Sustainability and Corporate Governance Department (A2D) was set up on 1 January 2018. It
Number of direct and indirect jobs created and/or maintained
has increased resources and is at the same hierarchical level as the operational departments. This
Number of tons of CO2 equivalent avoided
department includes three teams of Proparco experts in environmental, social and governance issues
Theoretical number of people who will have access to an essential good or service Number of innovative projects offering solutions suited to the population
(ESG), impact measurement (IMP) and specialists in technical assistance to companies and blending (ATM). It has a threefold mission. It deploys the assistance services for client companies projects. It assists Proparco’s teams in the
Number of companies assisted in their CSR process
appraisal of project financing to ensure they respect AFD Group’s commitments in terms of environmental, social and governance standards and impacts. Finally, it feeds into Proparco and AFD
A commitment to accountability and transparency
Group “sustainable development”
Proparco has decided to release an annual “Sustainable Development
and feedback, and promotes their
Report” in order to estimate the achievement of its objectives and the result
expertise and achievements both
of its strategies, and report on them. This document shows the progress
internally and externally.
and results in a transparent manner. A list of indicators which measure its contribution to the Sustainable Development Goals (SDGs) has been selected. Proparco is working on developing this list, based on the best practices deployed by its peers.
strategies through its reflection
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Our operating methods Proparco supports and advises its clients in order to improve the environmental and social management of their activities and the governance of their institutions. It is strengthening its own evaluation and impact measurement practices and developing its support tools to better assist the private sector.
Measuring and analyzing the impacts of projects As a development finance institution and to
Impact measurement in the project cycle
improve accountability, Proparco evaluates and reports on the impact of its action. An
Proparco focused its initial efforts on imple-
approach to measure the results and impacts
menting the approach and tools for ex ante
of its financing has therefore gradually been
impact assessment of projects. Progress is
developed. This leads to the development of
regularly made in monitoring the impacts of
tools and procedures in line with international
projects and in evaluating operations ex post.
practices and Proparco’s strategy.
The mechanism is integrated into the various stages of the project cycle.
The measurement of the results and impacts aims to:
Proparco measures its results and presents the
A ssist the financing decision by assessing,
contribution made by its operations in terms of
during the appraisal of projects, their expected
its three main strategic objectives:
impacts on sustainable development;
Tripling its direct impacts;
Strengthen the impact of projects by identifying the drivers making it possible; Serve Proparco’s strategies; I mprove knowledge and capitalize on know-how.
Supporting the transformation of stakeholders; Strengthening its role in redirecting private investments and financing.
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THE MEASUREMENT OF IMPACTS IN THE PROJECT CYCLE AT PROPARCO from identification to ex post evaluation
1 IDENTIFICATION
2 APPRAISAL
3 DECISION
4 MONITORING
5 EVALUATION
Pre-identification of impacts
Analysis of the contribution to the impact objectives and to sustainable development
Presentation of the results of the analysis to the project committee and investment advisory committee
Annual reporting on the main results indicators
Ex post study of the results and impacts of projects
For the sake of accountability, this analysis is presented from the broader perspective of
Evolutions in the impact measurement approach
consistency with the SDGs (see p. 19).
Estimate of the results and impacts
A full review of the impact analysis and measurement approach was conducted in 2017. It led to the implementation of work focusing on
The main indicators and expected impacts of each
four aspects.
project are assessed in relation to the collection of a certain amount of data grouped together in a
ď Ą Stabilize and strengthen results and impact
database called GPR. The assessment is based on
measurement and monitoring indicators.
taking into account quantitative and qualitative indicators provided by the investment officer
This subproject is expected to be finalized in
with support from the Impact Measurement
the course of 2019. The aim is to more effec-
(IMP) team, thanks to project studies and
tively harmonize our practices with those of
exchanges with the client. The analysis is
other financial institutions and AFD, and to
subsequently conducted by the experts from
simplify the list of results/impacts indicators
the IMP Unit, working with the project team.
in order to make the monitoring more accurate
The GPR also produces an aggregated rating
and more exhaustive. The objective is also to
(score), which is provided in the analysis and,
improve data collection and the monitoring
in theory, allows the impacts of projects to be
of indicators during the implementation and
compared with each other.
throughout projects.
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RENEW IMPACT MEASUREMENT
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Make the analysis of projects more effective
New dimension for analysis: 100% Paris Agreement
Facilitate the collection of reliable data
2018 was marked by the empowerment and
Improve quality control
responsibilities include assisting operational
M ore easily monitor what our clients have achieved
teams in the analysis of the impacts of funded
In line with AFD Group’s Climate and
operations. Its positioning has been strengthened
Development Strategy for 2017-2022,
and stabilized. It aims to:
Proparco has committed to ensuring
Provide the project team with methodolo-
that its financing is compatible with
gical and benchmark elements upstream on
the expectations of the Paris Agreement
impact issues, using sectoral methodologies
and, in particular, promoting a path
and documentation;
reducing the carbon intensity and
Current method 4 specific GPR models per project, depending on the type of client (banks, funds, companies, infrastructure) 141 indicators collected on average
Development envisaged A common list for all projects of key results indicators related to Proparco’s strategic objectives A few additional relevant sectoral indicators adapted to the sector
strengthening of the Impacts Unit, whose
Adapt its level of analysis and involvement to
strengthening the resilience of coun-
the type of potential impacts of the project,
tries and economies. In 2018, Proparco
while aligning the methods with those of other
consequently adopted a procedure
financial institutions and AFD;
to operationalize the “100% Paris
Strengthen the monitoring of project imple-
Agreement” commitment in two
mentation and capitalization (sectoral ana-
phases. The first phase implemented
lysis), in order to respond to the increasingly
involves a systematic analysis of any
important demand for accountability.
potential inconsistency of Proparco’s direct financing and investments
D evelop assessment and analysis tools and processes
(excluding intermediation) with the Paris Agreement. In a second phase, the levels of the positive contribution to the
The data collection and processing tool needs to
lower carbon intensity and resilience
be made more ergonomic and easier to use and
path made by funded projects will be
the current project rating methodology will be
analyzed and valued, beyond being
more suited to needs.
simply counted as a “project with a climate co-benefit”.
Phase in additional support before and after the appraisal
AFD Group has also pledged to finance projects with a strong impact in terms
The aim is to help the regional departments
of the social link, support for fragile
and operational teams have a better forward-
countries, and all aspects of sustai-
looking understanding of the impacts by sector
nable development: the evaluation
and by type of operation and more effectively
process and indicators are currently
capitalize on the ex post evaluations of the
being considered. Proparco examines
results of operations.
the indicators and processes adapted to its activity in order to monitor the contributions its projects make to these objectives.
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Taking the environmental, social and governance risks into account and assisting our clients with their CSR and governance processes Development operations by nature involve risks in relation to the environment and populations. Proparco’s approach aims to manage the environmental and social (E&S) risks, as well as the governance (G) risks. The objective? To avoid, mitigate or offset the negative impacts of funded projects.
Our ESG approach
Working with Proparco is a real challenge. It has extremely high social and environmental requirements. Katrina Diaz, CSR Manager at Proteak, a client of Proparco
E&S-G as added value for all projects
Our approach is similar to AFD’s and to the best practices of international financial institutions.
A project/client that manages all these ESG
It is based on the performance standards of the
risks in accordance with the best standards is
International Finance Corporation (IFC), the
a more financially viable project/client. This
international labor standards of the International
statement is a matter of common sense and
Labour Organization (ILO), the guidelines
has now been proved by crosscutting studies
of the United Nations Food and Agriculture
on the consequences of the application of the
Organization (FAO) on tenure and the Universal
best environmental, social and governance
Declaration of Human Rights. It involves asses-
practices in companies.
sing the environmental and social risks and impacts of each project submitted to Proparco’s decision-making bodies and the measures planned by the recipients of financing to remedy
Environmental and social issues of projects financed by Proparco
them. We propose additional measures to clients to implement in order to limit these risks or
It involves all subjects that concern or may have an impact on the envi-
offset their impacts. During the execution of the
ronment and populations. Based on the IFC performance standards,
operation, we monitor the implementation of
E&S issues include the following main themes:
these measures before ensuring the project has
Assessment and management of E&S risks and impacts;
properly managed unforeseen situations with
Labor force and working conditions;
negative environmental and/or social impacts.
Rational use of natural resources and prevention of pollution;
Finally, where appropriate, it involves helping
Health, safety and security of communities;
the client to build its capacities to manage
Acquisition of land and involuntary resettlement;
and implement its environmental, social and
Biodiversity conservation and sustainable management of living
governance performance.
natural resources; Indigenous peoples; C ultural heritage.
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By financing the development of the Pontifical Catholic University Madre y Maestra (PUCMM) in the Dominican Republic, AFD Group, including Proparco, is contributing to access to higher education for young people from disadvantaged backgrounds who benefit from scholarships.
360° visit of PUCMM University: bit.ly/PUCMM360 Beyond a better management of risks, the pro-
provide more specific support to the project. This
ject creates additional value. This added value
E&S and/or G support is specific to each project
leads to coherent decision-making, access
and depends on each client. It may comprise a
to new markets via certifications, increased
technical assistance component.
attractiveness by obtaining new financing, improved productivity and competitiveness and, ultimately, a contribution to improving people’s living conditions and environmental protection.
Monitoring ESG performance throughout the project life The monitoring of the implementation of ESG recommendations is crucial to respecting best practices in the long term. It is subject to the
A project/client that manages all these ESG risks in accordance with the best standards is a more financially viable project/client.
calculation of indicators, which are produced and regularly managed by Proparco’s teams. It
Proparco has strengthened its Environment,
thereby materializes the development of the ESG
Social and Governance (ESG) Division: in early
performance and of the levels of residual risks
2019, a team of 16 people was ensuring the effec-
throughout the life of each project.
tive implementation of these ESG approaches. Depending on the issues (risks and support), as
In some cases, in view of the indicators and
defined in a standardized and shared approach,
the relationship with the client, it is decided to
the ESG team is involved to varying degrees
P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT
in the appraisal and monitoring phases in all
or long-term assistance program, by conducting
funded projects.
a diagnostic using the best practices available, in particular the OECD standards.
Proparco works closely with IFC and the other development finance institutions, in particular
Proparco has several diagnostic and assistance
the European Development Finance Institutions
tools for its clients. This mainly involves Rapid
(EDFIs), on the development of tools specific to
Risk Screening (pre-analysis rating tool), a pro-
the sectors, the types of companies, the contexts,
gression matrix (measurement of the maturity
etc. These harmonized tools give everyone
of governance), ad hoc questionnaires, a results
greater ownership of these reference standards.
matrix (rating tool for the results of due dili-
The specific risk management tools for governance
gence), and model documents for companies (bylaws of a Board of Directors, for example). A vademecum of good practices has also been prepared for entrepreneurs, among others.
Good corporate governance contributes to strengthening and streamlining the exercise of power in companies. It is an engine of growth and limits the risk. We assess the corporate governance of our clients (equity investment, except investment funds, debt above EUR 10m, family-owned business) and monitor the implementation of the improvement measures negotiated with the client. Our teams develop appropriate recommendations and, where necessary, a specific short, medium
Corporate governance in projects financed by Proparco Corporate governance refers to all the relations between the management of a company, its Board of Directors, its shareholders and the other stakeholders. It is also the framework in which the company’s objectives are set, the means to achieve them are defined and performance is monitored. Its evaluation is based on the analysis of five main components: The structure and operation of the Board of Directors; The control environment and procedures; The transparency and dissemination of information; Shareholders’ rights, conflicts of interest and related party transactions; The company’s commitment to good governance.
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The Guatemalan company Kingo has designed an innovative prepaid solar energy service, well-suited to inhabitants. In addition to its equity investment, Proparco has financed technical assistance to support the start-up for the training of its employees and securing of its client data.
To find out more about Kingo: bit.ly/proparco-kingo-ENG
Building the capacities of clients and diversifying Proparco’s range of instruments via delegated resources In the context of its strategy for 2017-2020, Proparco is developing and diversifying its range
Supporting the development of clients
of assistance in order to increase the impact of its operations. This involves deploying technical
Alongside its financing operations (debt,
assistance projects and mobilizing delegated
guarantees or equity investments), Proparco
financing from several sources external to
offers a range of technical assistance services:
Proparco and combined with our own ins-
this allows it to build its clients’ capacities to
truments according to blending methods. At
implement projects and improve their prac-
Proparco, these two activities are managed by
tices. The technical assistance may be delivered
the Technical Assistance & Blending Unit (ATM).
directly to Proparco’s clients or delegated to the investment funds in which Proparco invests.
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Indeed, in addition to financing which they
This need is especially seen in developing coun-
may be lacking, SMEs express the need to be
tries: SMEs work in these countries in contexts
supported in order to increase their capacity
often marked by a lack of training, information
for innovation, to be assisted in their adoption
or know-how, which holds back their expan-
of best practices and their ownership of CSR
sion and, consequently, their contribution to
approaches, or to increase their positive impact.
economic and social development.
APPRAISAL CYCLE FOR TECHNICAL ASSISTANCE PROJECTS
IDENTIFICATION
APPRAISAL
DECISION
MONITORING
Definition of the client’s need during the appraisal or monitoring of financial operations
Clarification of the content of the technical assistance and of the most appropriate expertise to meet the need
Agreement on the content of the technical assistance and the maximum amount cofinanced by Proparco
Support for the recruitment of the service provider, monitoring of the quality of the service and the impact that the technical assistance has in the company
Technical assistance, a complementary tool to financing The technical assistance aims to provide added value and increase the positive impact of financial operations, by building the capacities of clients or improving the environment in which they work. Various forms of assistance can be cofinanced by Proparco: consultant missions; implementation of internal projects conducted by an expert/experts; training (thematic workshops, university courses, external training, etc.); exchange visits between companies and practitioners; studies (feasibility studies, market studies, product and diversification studies, audits, etc.); seminars and crosscutting events.
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Providing support to assist local development Technical assistance proves essential for companies which: develop products that are less common or are at a very recent development stage (venture capital/digital technology or start-up); offer products or services with a strong social impact (social or inclusive enterprises); work in countries where the support ecosystem is particularly weak (priority poor countries or fragile countries).
Access to Green Climate Fund financing is a driver for action to support private sector involvement in the emergence of development models that are more resilient to the impacts of climate change.
These operations are cofinanced by the beneficiary company. They allow companies to adapt
Grégory Clemente, Chief Executive Officer of Proparco
to an increasingly competitive local and international environment and to develop responsible
Commission (EC). Several operations have been
practices in line with their values and those of
launched and Proparco is managing four fund
AFD Group. They are financed via Proparco’s
delegations, directly or in partnership with other
operating budget (EUR 3m planned from 2017 to
European actors.
2020) and by the governance capacity building facility (FRCG) managed by AFD.
Managing delegated funds and developing Proparco’s range of instruments
In addition, Proparco has also been accredited to mobilize the Green Climate Fund since 2016. The Framework Agreement with the Fund was approved by Proparco’s Board of Directors on 5 October 2018 and was signed in April 2019. This partnership is a strategic opportunity for
Access (direct or intermediated) to highly
Proparco to further strengthen its support to
concessional resources for the private sector and
the private sector in the low-carbon transition.
investors in order to speed up transitions is being
Access to the Green Climate Fund financing gives
increasingly integrated into the strategies of
it the opportunity to manage grants or benefit
international donors: their resources earmarked
from guarantees, as permitted by the European
for these blending activities are growing. For
Commission, but also to become a manager of
a few years now, Proparco has been taking up
subsidized loans or equity investments with high
this opportunity to use concessional resources
risk profiles. These tools are complementary and
combined with market instruments to diversify
increase the incentive effect of Proparco’s own
its instruments and tailor them to the needs
financing through resource blending.
and levels of risk of the projects or companies it wants to finance.
The accreditations from these institutions are a recognition for Proparco. They demonstrate an
Since 2015, it has been accredited “7 pillars” and
effective capacity to appraise, implement and
can manage funds delegated by the European
manage financing by third parties for a potentially
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The 800 employees of Proteak, a leading Mexican company in the agroforestry industry financed by Proparco, are included in the company development project to implement a sustainable forestry model.
wide range of operations (in terms of types of
its overall, thematic and geographical expertise.
instrument, risk-sharing and amounts). They
Finally, they provide great opportunities for addi-
promote its institutional capacities (banking
tionality on operations and for the development
institution, manager of international mandates),
of Proparco’s range of services and instruments,
technical capacities (capacities in terms of trust
while development finance institutions are
funds, control, human and logistical capacities) and
increasingly taking positions on these resources.
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Main results in 2018 Proparco has adopted a new strategy for 2017-2020, which aims to double its financing, while tripling the direct impacts of funded projects in terms of sustainable development.
The direct impacts of funded projects The impact of each project is evaluated on the
61 projects signed in 2018 were subject to an
basis of an assessment of the project’s effect using
ex ante assessment of the results and impacts.
three key indicators: job creation, greenhouse
The impacts of ICCF projects, financing comple-
gas emissions avoided and access for people to
mentary to projects signed in 2016 and 2018 and
essential goods and services. For each strategic
the refinancing of a loan allocated by Proparco
objective, the analyses of the results highlight
in 2007 have not been analyzed and counted.
the key indicator, secondary indicators and quantitative and qualitative assessments, in relation to the SDGs.
61 PROJECTS ANALYZED EX ANTE out of 68 projects financed in 2018
24
financial institutions
6
investment funds
21
business plans
10
infrastructure projects
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RESULTS OF THE IMPACTS OF PROJECTS FINANCED BY PROPARCO IN 2017 AND 2018 Ex ante analysis Direct and indirect JOBS created and/or maintained 896,400 1,405,200
TONS of CO2 equivalent avoided
2017
2017
1,600,000
2018
2018
1,529,000
ANNUAL OBJECTIVE 2020
1,700,000
ANNUAL OBJECTIVE 2020
5,000,000
Theoretical number of PEOPLE who will have access to an essential good or service 2017
COMPANIES supported on CSR matters 44 82 180
2018 ANNUAL OBJECTIVE 2020
2017 2018 CUMULATIVE GOAL 2020
Innovative PROJECTS 2017 2018 ANNUAL OBJECTIVE 2020
14 17 45
5,150,000 22,638,000 12,000,000
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OBJECTIVE
EMPLOYMENT AND GENDER EQUALITY
IMPACT TARGETED Number of direct and indirect jobs created and/or maintained
ACHIEVED IN 2015
560,000 jobs
ACHIEVED IN 2017
896,400 jobs
ACHIEVED IN 2018
1,405,200 direct and indirect jobs
2020 OBJECTIVE
1,700,000 direct and indirect jobs
Ensuring the development of quality jobs and access to a decent job for the entire working age population is a major challenge. Proparco focuses on its role in terms of employment dynamics.
1. Helping create and maintain direct and indirect jobs 196,700 jobs directly created or maintained by our clients in 2018 (77,400 in 2017) 1,208,500 indirect jobs created or maintained in 2018 (819,000 in 2017)
In 2018, the majority of direct jobs created or
institutions generated 45% of these indirect
maintained with our clients were from financial
jobs in 2018, against 83% in 2017. Companies in
institutions (55%, against 64% in 2017), with
the MAS sector created 38% of indirect jobs: the
a rise in companies from the manufacturing,
agribusiness activities financed this year (SIFCA,
agribusiness and service (MAS) sectors, which
Golden Rice, KTDA) play a key role in supporting
accounted for 44% of direct jobs (against 34%
the activity of smallholders. Investment funds
in 2017). In 2018, EUR 1m of commitments
account for 12% of these indirect jobs created or
signed will create or maintain 202 direct jobs
maintained (13% in 2017). In 2018, indirect jobs
in financial institutions and 256 in MAS com-
amounted to six times the direct jobs created or
panies. These figures, which have increased
maintained, a lower ratio than in 2017, when it
significantly compared to 2017, are due to the
stood at 10.6 to 1. These indirect jobs were par-
size of the counterparties supported in 2018.
ticularly numerous in Central Europe and Asia
Furthermore, 26.4% of these direct jobs will be
Minor (almost one indirect job for one direct job)
created or maintained in low-income and lower
and in Sub-Saharan Africa (the ratio is 2 to 1). In
middle-income countries, and 43% in Sub-
terms of job creation, Proparco’s investments in
Saharan Africa and Latin America. Proparco is
2018 should support the creation of over 40,000
very well positioned to support the catching-up
direct jobs and 911,000 indirect jobs among our
of the poorest countries.
counterparties and their value chain over the next five years.
“Indirect” jobs, meaning they are supported among suppliers, subcontractors and clients of Proparco’s counterparties, are taken into account in the indicators. In this context, financial
P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT
21
2. Promoting equality and economic empowerment of women 35.7% of direct jobs created or maintained held by women Women account for over 50% of employees with a quarter of our clients
SAWARI VENTURES employment and training
To contribute to sustainable growth and a
of these financial institutions also offer
resilient economy, Proparco helps strengthen
financial products and services tailored to
The Sawari Ventures
the financial inclusion of women and their
women customers, thereby strengthening
Dutch Fund project targets
access to job opportunities, as well as the
the financial inclusion of women, while
innovative companies in
development of women entrepreneurship.
they account for 80% of the clients of MFIs
Egypt, Morocco and Tunisia.
supported by Proparco (excluding Jumo). The
It will support over 91,000
The operations signed by Proparco in
projects located in Europe and Asia Minor
direct and indirect jobs. The
2018 contribute to female employment:
recruited the most women, with 57.2% of
fund attaches importance to
women account for 36% of employees in
direct jobs. In Sub-Saharan Africa, 50.2% of
training and improving skills:
the companies financed or invested in by
direct jobs benefited women, in the Maghreb
all the fund’s employees will
Proparco. Over 40% of female jobs are in
region, 49.6% of direct jobs are occupied
be trained, in particular on
Sub-Saharan Africa. 54% of the jobs created
by women, and 46.9% in Latin America.
environmental and social
or maintained in the financial institutions
issues. Efforts are also
supported in 2018 are held by women. Half
planned to train employees in the investee companies. An annual budget of EUR
Promoting decent employment
800,000 will be earmarked for them and will mainly be implemented by the Flat Labs,
Four social and working conditions indicators assess the quality of the direct jobs
which are present in each of
created or supported: the social protection offered to employees and their families,
the three countries.
the existence of a non-discrimination policy, the implementation of measures for the prevention of infectious diseases (HIV, malaria, tuberculosis) and a salary level higher than the legal minimum wage in the country (or the customary level in the relevant area and business sector). In all banks, in 76% of companies in the MAS sector (“business” projects) and in 50% of the infrastructure financed by Proparco in 2018, employees benefit from social protection for themselves and their families. Salaries are higher than the market average in 62.5% of banks, in 47.6% of “business” projects and 30% of the infrastructure projects financed in 2018. Non-discrimination policies have been defined in 87.5% of banks, 81% in “business” projects and 70% in infrastructure projects financed in 2018. Measures for the prevention of infectious diseases are proposed in 17% of banks, 67% of “business” projects and 80% of infrastructure projects, in relation to the prevalence of diseases in the country concerned.
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P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT
USD 3bn to reduce gender inequalities
AFD Group’s Strategic Orientation Plan for 2017-2022 is also more ambitious in terms of reducing gender inequality, as it gives AFD Group a greater role in strengthening the social link and reducing inequalities in developing countries.
Identifying projects that strengthen gender equality A working group made up of DFI members of the 2X Challenge has defined the eligibility criteria for projects that contribute to reducing gender inequalities. Criteria and thresholds have been defined on the basis of four components: women leadership, women entrepreneurship, women employment and access to essential goods and services for women.
In this context, Proparco has become involved
In early 2019, Proparco reviewed projects
in a large-scale initiative to promote gender
signed in 2018 in order to identify operations
equality. During the G7 summit on 9 June
that contribute to the 2X Challenge. There is a
2018, development finance institution (DFI)
priori a significant contribution to reducing
members of the G7, which include Proparco,
gender inequalities. The final list of Proparco
launched the 2X Challenge. This commitment
projects counted under the 2X Challenge is
aims to invest USD 3bn by 2020 in companies,
currently being drawn up for a communication
financial institutions and investment funds
to the group of DFI members and to be counted
that contribute to reducing gender inequali-
with the collective objective of mobilizing USD
ties. This objective means that Proparco has
3bn by 2020.
to mobilize private capital in an innovative manner (including by using blended products)
In addition, since April 2018, Proparco has
in order to unlock financing which would not
been participating in the Gender Finance
otherwise be used to promote the equality and
Collaborative, a network of 15 DFIs aiming at
economic empowerment of women.
sharing experiences, practices, tools and studies on the theme of reducing gender inequalities. It also aims to seek opportunities for partnerships and co-investments between DFIs in order to increase the impact of funded projects.
In June 2018, Proparco and the development finance institutions of the G7 countries committed to mobilize USD 3bn
EX A M PLES OF PROJ ECTS FI N A NCED BY PROPA RCO TO SU PPORT WOM EN ENTR EPR EN EU R SH I P
Supporting an E&S plan for equality
in companies and funds that benefit women by 2020.
Financing women entrepreneurs
A USD 150m loan (Proparco, AFD and DEG) has been
EUR 50m have been subscribed to the social bond issue
allocated to Mauritius Commercial Bank Ltd (MCB).
led by Atlantic Business International to finance social
This Mauritian bank employs over 45% of women
projects in West Africa. 30% of the social bond products
and conducts activities to promote gender equality
will be exclusively earmarked to finance or refinance
in-house, but also in its lending operations. These
small and medium-sized enterprises owned by women.
activities are set out in an E&S action plan set up by AFD and Proparco. Technical assistance is ongoing to help MCB define better products for female clients and better initiatives for its female employees.
Supporting women’s empowerment A EUR 6.6m loan has been allocated to MCE Social
Strengthening the financial inclusion of women
Capital, a company which finances microfinance institutions (MFIs). Its social mission concerns, in particular, women’s empowerment and financial
Proparco has made an equity investment in Sonata
inclusion in rural areas. MCE has a gender equality
in Indian rupees, equivalent to USD 2.65m. Sonata
strategy and a strategy focused on women’s
is an Indian microfinance institution dedicated to
empowerment via its financial and non-financial
the financial inclusion of populations excluded from
services. It supports institutions which are managed by
the financial system. 100% of its clients are women.
women and/or in which the majority of borrowers are
Proparco’s operation is thereby contributing to women’s
women, and/or which develop products and services
empowerment by providing some 37,000 women clients
dedicated to women. 79% of the ultimate borrowers of
with access to Sonata’s microfinance products.
the MFIs are women.
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P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT
OBJECTIVE
CLIMATE ACTION AND ENERGY TRANSITION
IMPACT TARGETED
Number of tons of CO2 equivalent avoided
ACHIEVED IN 2015
ACHIEVED IN 2017
1,650,000
1,600,000
t CO2-eq avoided
The promotion of low-carbon growth is one of
t CO2-eq avoided
ACHIEVED IN 2018
2020 OBJECTIVE
1,529,000
t CO2-eq avoided
5,000,000
t CO2-eq avoided
water distribution (EUR 41m of co-benefits)
the strategic objectives of Proparco and, more generally, of AFD Group. In 2018, the “climate”
In terms of approvals, 16 projects were autho-
financing signed by Proparco corresponds to 16
rized in 2018 (4 dedicated credit lines and 12
projects amounting to EUR 521m.
infrastructure, energy efficiency and water and sanitation projects) for EUR 536m (33.2% of
Seven projects for energy and energy efficiency
total authorization). There has been an increase
infrastructure with climate co-benefits (EUR
in “climate” signatures compared to 2017, both
249m of co-benefits)
in the number of projects (11 infrastructure
Six credit lines dedicated to the climate in
and 5 dedicated credit lines financed in 2017)
financial institutions in Honduras, Ghana,
and in volume (EUR 365m signed in 2017).
Turkey, Bangladesh and India (EUR 151m of
There has, however, been a downward trend in
co-benefits)
terms of approvals: 26 projects for EUR 646.7m
A project by an investment fund specialized in green bonds (EUR 80m of co-benefits) Two “business” projects for agroforestry and
The 92,000 solar panels of the Ten Merina power plant (Senegal), financed by Proparco, meet the energy needs of over 225,000 inhabitants and avoid the emission of 33,300 tCO2-eq every year.
allocated in 2017.
P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT
Supporting adaptation and mitigation strategies Proparco’s investments in 2018 avoid the emission of 1.53 Mt CO2-eq every year (- 4% compared to 2017) An installed renewable energy capacity of 886 MW (1,059 MW in 2017) once the projects are operational
The projects with climate co-benefits financed
Jamaica and India. They have a future installed
by Proparco in 2018 are expected to avoid the
capacity of 885.5 MW and an expected annual
emission of some 1.53 Mt CO2-eq on average
power generation of 3,870 GWh.
every year. Proparco uses AFD Group’s procedure and tools to establish this estimate. These tools
Finally, in 2018, Proparco also financed an
are aligned with the international standards
adaptation project by engaging with China
used by the majority of international financial
Water Affairs Group Ltd (CWA), one of the main
institutions in the transport, renewable energy
operators in the water and sanitation sector in
and energy efficiency sectors.
China. The loan will contribute to financing the rehabilitation of infrastructure, increasing
These climate change mitigation projects are
the production capacity of existing concessions
mainly renewable energy infrastructure projects.
and acquiring four pre-identified BOO and BOT
Proparco supports the energy transition, while
concessions in Jiangxi, Hubei and Hunan.
improving access to energy for companies and people. The five energy infrastructure projects signed by Proparco in 2018 concern solar, hydropower, wind and biomass energy facilities in Cameroon, Namibia, Uganda, El Salvador,
BURAPHA: Supporting the development of sustainable agroforestry practices in Laos By supporting Burapha Ltd, Proparco is contributing to the extension of agroforestry activities and the construction of a plywood manufacturing factory. The company is FSC certified and uses waste wood to produce energy. The installation of solar panels on the factory is under study. The company currently has 3,000 hectares of eucalyptus plantations and is targeting 7,000 hectares by 2019. These plantations are only established in degraded or modified areas. The carbon assessment established using the AFD tool indicates a reduction in emissions of 2.1 Mt CO2-eq throughout the duration of the project. It is mainly related to the sequestration of carbon in the biomass and soil. The emissions from the saw mill and factory have been estimated to be negligible. The project is also in line with the objective of Laos to reforest 70% of the country’s surface area by 2020.
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26
P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT
OBJECTIVE
CLIMATE ACTION AND ENERGY TRANSITION
IMPACT TARGETED
ACHIEVED IN 2015
Theoretical number of people who will have access to an essential good or service
ACHIEVED IN 2017
ACHIEVED IN 2018
2020 OBJECTIVE
22,638,000
5,150,000 4,100,000
people
people
theoretical number 12,000,000 of people who will theoretical number of have access to an people who will have essential good or access to an essential service good or service
Proparco works to reduce inequalities in countries
According to the current criteria, these projects
through projects that provide people with access
will benefit 22.6 million people over the next
to essential goods and services. These projects are
five years. However, this indicator only reflects
implemented in the sectors of health, education,
a potential impact and there is considerable
water and sanitation, infrastructure (energy
variability. Indeed, two operations – China
and communication) and financial inclusion. 19
Water (10 million beneficiaries) and Nachtigal
projects financed in 2018 are improving access
(9.4 million beneficiaries) – make a very signi-
to essential services for people:
ficant contribution to this result. Theoretically,
three hospital and medical analysis services
over 10 million people living in low-income and
(415 additional beds installed for 2.1 million
lower middle-income countries (in particular
consultations a year);
Bangladesh, Cambodia, Cameroon, Georgia,
a producer of biosimilar medicines;
Ghana, Honduras, India, Morocco and Uganda)
six energy infrastructure projects;
will eventually gain access to an essential good or
a water distribution project;
service thanks to the projects signed in 2018.
seven microfinance institutions.
NACHTIGAL, a hydropower plant in Cameroon AFD Group has allocated a EUR 150m loan to Nachtigal Hydro Power Company, including EUR 60m by Proparco, for the design, construction, operation and maintenance of a 420 MW run-of-river power plant in Cameroon. The expected impacts are: the annual generation of 2,900 GWh of electricity using a renewable source, which is equivalent to 30% of the generation of Cameroon’s interconnected grid and to the electricity consumption of over 9 million inhabitants; the contribution to reducing the cost of electricity; the maintenance or creation of 23,000 local jobs over the next five years; the strengthening of local expertise (O&M); the contribution of an annual average of EUR 9.7m to the country’s GDP; 845,000 tons of CO2 equivalent avoided every year.
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27
OUR IMPACTS IN THE FIELD BY SECTOR
10
million people
will theoretically have access to a renewable source of electricity
1.47
million people
will benefit from basic financial services and products
22.6
million people
will benefit from improved access to an essential service or good
10
million people
will have improved access to water
1.16
million patients
will have access to health services and/or to drugs
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P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT
Our impacts on the transformation of stakeholders In its 2017-2020 strategy, Proparco has set the
them to meet the expectations of their
objective of stepping up its activity to stren-
investors, access international markets and
gthen the CSR of its clients, their governance
be more competitive, while maintaining
capacities, as well as their capacities to innovate,
decent working conditions, by establishing
implement and support transitions.
peaceful relations with local communities and not degrading the environment. It is
Our experts’ support to our clients’ CSR approach
for this purpose that Proparco helps its clients improve their environmental and social practices.
The implementation of sustainable consumption and production patterns is a real opportunity for companies. It allows
82 clients of Proparco have benefited from an Environmental and Social Action Plan (ESAP) and/or governance plan (CGAP) – including 38 signed in 2018 – since 2017
Proparco set up environmental and social (E&S)
these action plans.
performance indicators in 2014. Generally speaking, we can see:
In view of these various factors, Proparco
a significant improvement in the resources
supports the implementation of action plans
implemented by our clients, especially during
(ESAP) and the achievement of better results in
the first three years;
the field, by providing its clients with advice,
an E&S organization and management system
networking, tools…
comparatively better in equity investment projects (mainly investment funds); E&S management systems for infrastructure and energy projects less mature than those for projects in other sectors for signing: this is due to the fact that Proparco arrived prior to the construction of a number of greenfield projects, and not all the procedures are available yet; the active negotiation of an E&S action plan for some 60% of projects signed in 2018 and in the portfolio (40%); a n increase in the actual implementation of
Our risk management is improving thanks to Proparco’s technical assistance. Roshaneh Zafar, founder of the Kashf Foundation, a client of Proparco
P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT
29
In the hotel industry, there are many impacts in terms of sustainable development. Proparco has been financing the sector for over 20 years. The seven projects financed since 2015 will create some 1,120 direct jobs and some 3,500 indirect jobs. They comply with the E&S criteria in line with IFC standards. Here, we can see Azalaï Group’s Chiaka Sidibé hotel apprenticeship school, which opened in 2015 in Bamako. Proparco has lent the group EUR 16.4m to refurbish and expand the Salam hotel which hosts the school.
Supporting an actor of the hotel industry in Niger, CHAIN HOTEL NIAMEY Proparco has helped Chain Hotel Niamey (Teyliom Group) strengthen its security system in order to provide better protection to its employees and clients in the context of deteriorated security in Niger. A consultant has been mandated to conduct a diagnostic of the design of the hotel and the technical safety measures, followed by a diagnostic of the organizational measures, before recommending procedures. This work has led to a modification in the design and specifications of the surveillance systems. CHN has since been working on integrating recommendations. A twoday training course on emergency procedures has also been planned for the hotel’s employees.
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P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT
Our experts’ support to our clients’ governance
This framework agreement supports the implementation of a common policy and methodology for good governance, based, for example, on the
Proparco assesses the corporate governance of
work of the International Finance Corporation
part of its clients, negotiates action plans and
(IFC) on its performance standards.
monitors the implementation of improvement of contractualized measures. Beyond an approach
In 2018, 35 projects were subject to an in-depth
focusing on risks (nevertheless very real), this
evaluation of corporate governance. Nine
process fits in with the search for added value for
corporate governance action plans have been
Proparco’s clients, by offering them a diagnostic
prepared: Proparco is monitoring their proper
and personalized support, which can be com-
implementation. While it is difficult to draw
bined with technical assistance (TA) services.
general lessons, the main highlights of the diagnostics and monitoring conducted are worth noting: for family-owned businesses, the issues of succession and the employment arrangements for the family are recurrent; t he diversification of skills in Boards of
35
Directors remains a sensitive subject, related to the business manager feeling he/she has
PROJECTS ASSESSED on corporate governance in 2018
been dispossessed; the committees of Boards of Directors (audit, risks, appointments and remunerations, or E&S) are not always set up; B oards of Directors often function with no
Proparco committed to this approach back
bylaws, no Board secretary and almost always
in 2011, alongside 33 banks and development
with no self-assessment procedure;
finance institutions, by ratifying the Corporate
The internal control is often too small.
Governance Development Framework (CGDF).
FOCUS Good governance, a framework for the functioning of a company Corporate governance provides the decision-making framework in which the company’s objectives are defined, as well as the means to achieve them, and the monitoring of performance. Today, good corporate governance is also understood as respecting business ethics and its E&S commitments. It also contributes to strengthening and streamlining the exercise of power in the company and is thereby an instrument to limit risks and an engine of growth. Similarly, it promotes transparency and aims to establish a climate of confidence, which is essential to attract investors and lenders. Good governance is a key factor for access to financing and is therefore essential to wealth creation and the development of employment.
P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT
Good governance and responsible growth, the example of AZALAÏ Group
Improving the governance of ONCOLOGIE DU MAROC The diagnostic conducted by Proparco
The Azalaï Hotels Group develops hotels in
showed that the governance of Oncologie
strategic cities in West Africa. In 2017, the
du Maroc (ODM) was relatively basic, in
Group set two major objectives: proceed with
particular concerning the structuring of the
an initial public offering in 2019 and become
Board of Directors, the control environment
a major hotel group in Africa, with a growth
and transactions between related parties.
plan of 130% in the number of hotels in five
Indeed, while the involvement of the founder
years.
seemed to guarantee the company’s vitality, the checks and balances and the internal
In the context of the Group’s financing
control system were inadequate.
request for the construction of a hotel in Dakar, Proparco has asked it to strengthen
An action plan comprising a dozen or so
and rationalize its governance practices to
measures has been negotiated, approved by
ensure they meet the highest international
ODM and integrated into the shareholders’
standards. The objective? To offer a
agreement. It has allowed an autonomous
“governance” roadmap to allow the Group
and functional Board of Directors to be set
to achieve its objectives in the best possible
up, the establishment of an audit committee
conditions. Azalaï has committed to
and the control of transactions between
follow the two-year action plan proposed
related parties by the Board of Directors.
by Proparco with ad hoc support. This plan provided for: the formalization of a succession plan for the shareholder, the drafting of bylaws and a charter for the Board of Directors, the creation of specialized committees, including an audit committee, the updating of accounting and financial procedures in order to strengthen internal control, the gradual alignment with international transparency requirements, the adoption of procedures to handle conflicts of interest and transactions between related parties.
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32
P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT
Results in terms of financing technical assistance for our clients
EUR 3m over four years on its own resources in order to be able to deploy technical assistance. In 2018, EUR 583,000 were disbursed to cofi-
In addition to the support provided by its
nance external services and capacity building
experts, Proparco finances technical assistance
activities for 19 clients. Furthermore, 11 new
programs and thereby facilitates access for its
technical assistance projects were signed in
clients to the external expertise required to
2018 for EUR 596,000.
improve their performance. By supporting the
Growth and diversification of technical assistance financing
implementation of a geographical information system (GIS), by strengthening human resources, by
€ 3m
for technical assistance over four years
developing marketing and commu-
In 2018, there was significant growth in the
nication strategies or through staff
number of technical assistance projects. Indeed,
training programs, Proparco allows
the volume of activities (financed with Proparco’s
companies to better adapt to their
budget, as well as with AFD’s Support Fund for
environment.
Governance Capacity Building) saw a fourfold increase between 2017 and 2018, with signifi-
In the context of its strategy for
cant growth in the volumes of disbursements.
2017-2020, Proparco has allocated
This growth should be confirmed in 2019. The
EUR 596,000 FOR 11 NEW TECHNICAL ASSISTANCE PROJECTS CLIENT
COUNTRY
TYPE OF SUPPORT
Kingo
Guatemala
Innovation
Duopharm
Senegal
Performance
Promerica
Costa Rica
Performance
Credo
Georgia
Performance
Pakistan Microfinance Network
Pakistan
Innovation
Union internationale de banques (UIB)
Tunisia
Performance
BNI
Madagascar
Responsibility
Kash Foundation
Pakistan
Performance
Multi-country
Performance and responsibility
Esrom 2
Bangladesh
Responsibility
Akuo Energy
Multi-country
Responsibility
AgTAF
(delegated budget)
EUR 30,000 MOBILIZED VIA THE FRCG* NSIA Bank
Côte d’Ivoire
Responsibility
* AFD’s Support Fund for Governance Capacity Building (FRCG), which has financed the mobilization of an expert for the implementation of an E&S management system.
P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT
In Burkina Faso, supporting the development of the activities of the agribusiness BARIKA Barika was launched in March 2014 by Onyx Développement, a company in Nutriset Group.
33
Helping the bank PROMERICA develop services for SMEs
It is a distribution retail brand which is seeking to improve access to quality food products for disadvantaged households. Following a study showing the low level of mobility of low-
In 2018, Proparco decided
income residents, particularly in precarious neighborhoods, Barika wanted to adapt its
to help the bank Promerica
distribution strategy and requested technical assistance from Proparco.
strengthen and deploy its services for SMEs in
The project implemented has developed and tested a new strategy that meets the objectives
Costa Rica in order to
of improving access to essential goods and services, strengthening the reputation and
better meet their needs.
attractiveness of the brand, and improving the situation of mobile and fixed vendors.
Dedicated events will build
It has also contributed to creating an observatory of the consumption patterns of local
the capacities of SMEs in
communities, the launch of new products with high nutritional value, and the search for
order to promote their
distribution methods adapted to the target.
competitiveness and their access to appropriate and responsible sources of financing. The financial
improved clarity in the technical assistance
the start-up and growth phases). Finally,
inclusion of the country’s
services accounts for the provisional flow of
Proparco made a significant contribution to the
SMEs will be strengthened.
projects for 2019. In December 2018, eight new
allocation of EUR 5m by the European Union
The project will also
projects had already been submitted to the
to the successor fund to FISEA, FISEA+. The
promote existing support
identification committee for a total estimated
signing of this guarantee is expected to take
programs.
at EUR 418,000.
place in the course of 2019.
Proparco is also continuing its efforts to
Finally, new technical assistance facilities for
mobilize and deploy additional financing,
financial inclusion have been partly delegated
which is partly intended to scale up its tech-
to Proparco by AFD and should be deployed
nical assistance activities. In addition to the
in the coming years. It concerns, for example,
TA projects financed with its own funds,
the technical assistance budget mobilized in
since 2016, Proparco has had EUR 700,000
the context of the Transforming Financial
made available by the European Union and
Systems for Climate projects (financed by the
earmarked to support African companies
Green Climate Fund), the MENA Facility and
in the sector of access to energy. It has also
EURIZ (financed by the European Union).
worked on establishing a contract for a budget of EUR 6.5m of technical assistance financed by the European Union and which could be deployed for fund management teams and companies invested in by the funds launched by IPDEV2 (fund sponsor) in West Africa (in
34
FOCUS Defining innovation
P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT
Our impact on mobilizing financing flows and unlocking investment in countries
A project is currently defined as being inno-
To take action on the redirection of investments for transitions, Proparco aims to increase its mobi-
vative when it provides
lization impact on the private sector and support innovation which unlocks investments.
a solution that is not available on the market and mobilizes future
Our support for innovation to serve transitions
investors. The innovation may concern
Proparco is committed to supporting innovative private initiatives with a strong impact via a clear
the product or ser-
objective for a number of innovative projects financed each year.
vice, the process or the technology. It may also concern the financial vehicle proposed to the counterparty
ď‚Š 17 innovative projects for a total amount of EUR 449m
by Proparco. Finally, a game changer project may also be considered as innovative.
In 2018, Proparco financed 17 innovative
by supporting Burapha Agroforestry for the
projects for EUR 449m signed, a figure which
development of its eucalyptus forest.
has increased considerably compared to the EURÂ 233m signed in 2017. Over half concerns
Furthermore, part of the financing provided for
projects for energy infrastructure, transport
technical assistance by Proparco aims to support
and telecommunications developing innovative
clients who wish to launch innovative products
technologies (non-CSP storage component,
and services. For example, in 2018, Proparco
data centers in frontier countries, urban BRT),
approved the allocation of technical assistance
using innovative and customized financial
to Kingo, a Guatemalan start-up which offers
instruments in certain countries (first Unlock
a pre-paid off-grid solar solution, to provide
guarantee, first PPP financing in the country,
it with new ideas in terms of technologies and
first financing in local currency) or making a
solutions to meet the needs of its market. This
significant contribution to the climate objectives
assistance should lead to the adoption of new
(first adaptation project in China for Proparco,
technical solutions and an increase in its market
rooftop solar panels on public and administrative
share, once these solutions have been adopted
buildings in India).
and deployed. The project will thereby increase and improve access to energy for a growing
Six of these projects support investment funds,
number of people, thanks to the design and
banks and microfinance institutions, which
development of new solar and off-grid tech-
are particularly innovative due to the financial
nologies. Kingo’s objective is to reach a million
instruments on offer and/or the clients targe-
households by 2021.
ted. Two health projects providing innovative and/or new solutions have also been supported through EUR 10m of equity investments. Finally, Proparco has signed its first biodiversity project
P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT
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Proparco’s support to the TLcom Tide Africa fund has paved the way for new fundraising opportunities and allows it to invest at an early stage in innovative companies such as Andela.
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P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT
Our impact on the mobilization of third parties and the knock-on effect of finance Contributing to the development of green and social bond markets alongside investors
Proparco syndicated EUR 291.6m in EDFI cofinancing for projects signed in 2018.
Through its operations to support develop-
and the OECD, Proparco and AFD are working
Building on its
ment, Proparco seeks to act as a catalyst
on the implementation of robust and shared
commitment with the
in mobilizing additional external financial
methodologies to measure the effect of donor
Moroccan group Banque
resources (private and public), required to
financing on private finance mobilization.
Centrale Populaire (BCP)
finance investments for transitions. It also
in 2017, Proparco has
seeks to work in synergy and in partnership
become actively involved
with AFD and the other development finance
in the development
institutions, in particular in Europe, to increase
of the global green
its impact via strengthened partnership and
bond market, with the
quasi-syndication mechanisms.
Our results in the deployment of blending instruments using delegated financial resources Proparco is increasingly using external financing, in the form of subsidies or risk-sharing
signing of a USD 100m equity investment in
Out of the approvals for 2018, EUR 201.5m
tools. They allow it to diversify and adapt its
the Amundi Planet fund
provided by FMO (Dutch development bank)
range of instruments to the needs and level
and the subscription of
and DEG (subsidiary of KfW, the German
of risk of projects and companies. This mobi-
EUR 50m of social bonds
development bank) were mobilized and
lization of external financing is governed by
with Atlantic Business
syndicated by Proparco in the context of five
the principles of blending currently applied in
International in 2018.
projects. Four were also signed in 2018: an
development finance institutions and is forma-
energy infrastructure In 2018, Proparco also
project in Cameroon,
authorized support for
airport infrastructure in
the first green bond
Serbia and two support
issue in Ecuador and will
projects for banks in
conduct further work on
Mauritius and Ecuador
the construction of this
for EUR 174.6m. In terms
new bond market in 2019,
of the signings in 2018,
particularly in Eastern
there are also EUR 117m
Europe.
mobilized with FMO, which were approved in 2016 and 2017.
COFINANCING PROPARCO - FMO - DEG Amounts signed by Proparco
€ 611m € 440m
lized in an internal note on the mobilization of delegated funds, approved by Proparco’s Board of Directors (December 2016). Proparco has received three financial delega-
€ 323m
tions since its accreditation by the European
€ 202m
Union in 2016 and has worked closely with AFD on the mobilization
Finally, in cooperation with the international financial institutions
2015
2016
2017
2018
of a European Fund for Sustainable Development
P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT
(EFSD). These delegated funds allow it to:
to support investment in impact funds and in
i ncrease its investments in companies deve-
venture capital in fragile countries or SMEs in
loping solutions for access to energy in Africa
Africa (via first-loss guarantees and a technical
(guarantee tools and ARE Scale-Up technical
assistance budget with FISEA+).
assistance budget); contribute to the stability and soundness of renewable energy projects in countries where there may be risks of non-convertibility or non-transferability of local currency into foreign currency (risk-sharing tools from the T&C Facility); s upport private equity investment and the development of SMEs in West Africa (guarantees, start-up grants and technical assistance budget made available from the IPDEV2 fund); promote the mobilization of the private sector
An EFSD guarantee for FISEA + Proparco has provided considerable support to AFD for its work on the mobilization of a new European Union guarantee tool to benefit the successor of the FISEA vehicle (FISEA+). In November 2018, EFSD approved a EUR 35m guarantee to cover the first losses of part of the investment funds that may be financed by FISEA+. This guarantee is made available to all the investors in these funds. It should, in particular, increase the size of the investments of FISEA+, while attracting other investors in the digital and social entrepreneurship sectors or in companies working in fragile African countries. The request also comprises a major technical assistance component: EUR 5m have been allocated by the European Union and EUR 16m are currently being appraised with AFD’s supervisory authorities.
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P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT
THEMATIC FOCUS
Evaluation of the results of Proparco’s technical assistance services since 2010 Alongside its investment activities, Proparco provides technical assistance services to the private sector targeting three thematic areas: responsibility, performance and innovation. This chapter sets out the results and impacts of these services (operations from 2010 to 2018) evaluated between June 2018 and January 2019.
Services being scaled up
for these activities for 2017-2020. This will allow the dedicated budget to be considerably increased, alongside the technical assistance
Since 2010, some EUR 6m have been committed
facility of the Investment and Support Fund for
by Proparco to implement 65 technical assistance
Businesses in Africa (FISEA, budget of EUR 6m)
operations (completed or ongoing) with various
and the Support Fund for Governance Capacity
types of clients (banks, investment funds,
Building (FRCG).
microfinance institutions, small and medium enterprises). The average annual budget stands at some EUR 700,000 committed. And it has been scaling up: it rose from EUR 500,000 in
Different typologies and methods for technical assistance to meet the needs of clients
2010 to EUR 1.4m in 2016, then EUR 600,000 in 2017.
Technical assistance was initially based on strengthening the responsibility of clients
Using technical assistance as a driver to increase its impacts.
Proparco has a strong
(support in environmental and social matters,
strategic will to use
in governance, and in obtaining certifications).
technical assistance
It has been diversified to cover new issues, such
as a driver to increase
as the improvement in performance (technical,
its impacts. EUR 3m
financial and cross-functional) and support for
from Proparco’s own
innovation (development of markets and/or
budget are earmarked
activities, impacts, innovative projects).
P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT
A new form of assistance on climate issues has
The direct technical assistance projects are
recently come into being. Its objective is to build
also mainly located in Africa, although Asia
the capacities of beneficiaries in terms of the
also accounts for a significant share of activity
reduction of greenhouse gas emissions, energy
(20% of direct projects).
management and adaptation to the effects of
Added value recognized by our clients
climate change.
Technical assistance operations focused on Africa
39
Proparco’s clients particularly appreciate our broad and flexible understanding of technical
With 75% of projects and 85% of the budget
assistance, which allows us to provide a response
committed on the continent, Africa predomi-
to a wide range of needs.
nates in Proparco’s technical assistance activity, in line with the investments made by Proparco.
Indeed, the technical assistance provides access to external expertise, which is deemed relevant
The delegated technical
and necessary. It speeds up
assistance projects (mainly
growth or upgrading and often
financed from the FISEA
proves to be decisive financing
budget) are also almost
in the implementation of
exclusively focused on Africa
clients’ projects.
75%
and primarily concern multi-country projects. This is mainly due to the type of client supported (investment funds covering several countries).
of technical assistance projects conducted in Africa
Central Europe 1 TA project € 22,000 Asia 10 TA projects € 447,000 Latin America and Caribbean 2 TA projects
€ 66,000
Africa 48 TA projects € 5.12m
Multi-country 4 TA projects € 419,000
Source: Ernst & Young
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P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT
BREAKDOWN OF TECHNICAL ASSISTANCE OPERATIONS € 1.04m
17% € 3.81m
63%
DELEGATED TECHNICAL ASSISTANCE 17 operations
Positive results for delegated technical assistance projects reported by investment funds
13% 7%
RESPONSIBILITY 28 operations
€ 792,000
INNOVATION 11 operations
€ 431,000
PERFORMANCE 9 operations
Following the implementation of information and management systems and, more generally, following the strengthening of the financial management and improvement in the social
Between 2010 and 2018, Proparco committed
performance of beneficiaries, the development of
EUR 3.8m (mainly from FISEA) for 17 delegated
the performance of clients is generally positive. By
operations. They were almost exclusively dele-
contributing to building the capacities of clients
gated to investment funds and aim to support
of funds in various components (management,
their clients (SMEs/microenterprises, producers’
HR, finance, marketing), the credit lines for
organizations, MFIs…), with budgets ranging
delegated technical assistance contribute to
from EUR 100,000 to over EUR 420,000.
strengthening the environmental and social impact of the investments of these funds in local communities.
The FEFISOL experience The European Solidarity Financing Fund for Africa (Fefisol) has obtained two financial allocations for delegated assistance from Proparco for a total amount of EUR 330,000. Since 2012, these budgets have supported 40 projects to assist microfinance institutions and producers organizations. Fefisol has thereby been able to support and strengthen the financial and commercial sustainability of its clients, even the most fragile ones. Reduction in the portfolio at risk at 30 days, growth in net income, increase in the number of clients… There has been an overall improvement in the financial performance indicators for client microfinance institutions (MFIs) of the fund. The producers’ organizations supported have, for their part, seen an improvement in their commercial performance: rise in sales and increase in the number of small producers.
P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT
Promoting the development of financial inclusion in Cambodia with AMK In Cambodia, the microfinance institution AMK has benefited from EUR 55,000 of technical assistance from Proparco. This has allowed it, for example, to make in-house organizational changes to optimize its network of officers. AMK reports a marked improvement in its coverage rate in Cambodian rural areas: 92% of villages were covered in 2017, against 86% in 2014. The marked increase in the number of clients in the portfolio (+ 213,000 clients between 2014 and 2017 and tripling the number of depositories) also contributes to improving the financial inclusion of rural communities. The assistance also included support for the development of an application for the automation of credit scoring. This support will improve the assessment of clients’ profiles and will allow AMK to offer them products more in line with their long-term expectations.
Overall improvement in performance
These operations have brought about an overall improvement in the financial, operational and technical performance of the clients supported,
There has been an overall improvement in the
as well as positive commercial impacts for the
performance of clients, in particular thanks to
MFIs supported. Their client portfolios have been
specific support to MFIs to allow them to improve
extended and they have penetrated new areas
their loan allocation procedures and to increase
in rural and remote regions.
access to financing for vulnerable groups. These technical assistance operations also have Over EUR 430,000 were committed between
social impacts: the improvement in the perfor-
2010 and the first half of 2018 to support nine
mance of microfinance institutions leads to a
projects of financial institutions (mainly MFIs)
better internal organization and an optimiza-
and companies:
tion of the coverage of the geographical area of
four operations to support targeted “business”
operation. It thereby contributes to improving
projects: advisory services for the development
access to financing for vulnerable communities.
of a financial model, online training on securing computer data, etc.; five operations to support financial institutions, including four for support and advice to MFIs, in improving allocation procedures and credit management, and in optimizing their internal organization.
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P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT
Results in upgrading the E&S standards of our clients Financing the development of the environmental and social management system of BCP
Support for innovation, mainly leading to the development and launch of products
28 ESG technical assistance projects have been supported, with an average budget of some
EUR 790,000 were committed between 2010
EUR 40,000 between 2010 and the first half of
and the first half of 2018 to help 11 companies
2018, for a total commitment of EUR 1m. 15 of
achieve innovative initiatives. It is mainly
these projects came from financial institutions.
SMEs which benefited from financing for
Proparco assists its clients in upgrading envi-
studies and consulting services, with budgets
ronmental and social standards, in most cases
ranging from EUR 40,000 to EUR 135,000. A
in the context of an investment operation. To
total of eight support operations (launch of a
In Morocco, Banque
do so, it sets up training and tools to provide
brand, communication plan, monitoring of
Centrale Populaire
a better understanding of these issues. The 28
impacts, etc.) and three studies (sources of
(BCP) has obtained
upgrading projects have supported:
renewable energies, energy diagnostic, model
EUR 50,000 of
17 support operations (advice and training)
of a foundation) were conducted.
financing to set up an ESMS. This financing is backed to a Proparco loan. It has increased the proportion of loans submitted to the ESMS assessment committee
for the implementation of environmental and social management systems (ESMS); 4 specific studies (gender, soil bioremediation, waste management, etc.); 3 crosscutting support operations for good governance; 4 support operations to obtain certifications.
(137 out of 138 in the
The results can mainly be seen via the growth in the volume of sales and in the number of outlets. The impacts also concern the improvement in the economic and financial performance of companies such as Esprit, which has managed to attract additional investors and mobilize new partners. The improvement in the
first half of 2018),
The technical assistance projects have allowed
commercial performance can also be seen with
and has also trained
clients to make progress in E&S risk management
the reputational gains: Onyx in Burkina Faso
officers from the bank
and improve their governance practices. The
gained 200 new clients after having received
in how to use the
main impacts concern the increase in corporate
support during the launch phase of the retail
system (200 officers
social responsibility. Commercial benefits have
brand Barika (see page 33). Finally, there are
trained in 2016).
also been reported, particularly in terms of
significant final impacts in terms of financial
the reputation of clients. Finally, a knock-on
inclusion, for both the students benefiting
effect has been observed: following the support
from additional Esprit scholarships and the five
proposed to BCP in Morocco, the ESMS has been
stable and permanent jobs created by Onyx in
deployed in other group subsidiaries in Africa.
the groundnut sector.
Esprit trains 15% of Tunisian engineers. The school does not wish to train exclusively the wealthiest. It is
Supporting ESPRIT, a solution to finance studies in Tunisia
for this reason that its foundation allocates grants to young people
Esprit has received two financial allocations from Proparco for a total amount of EUR 225,000 to
with strong potential
support the creation of a foundation to finance higher education for the most deserving students in
which can cover the
Tunisia. This support has brought about significant results: the number of loan beneficiaries has risen
enrolment fees. In 2012,
from 16 to 100 and the loan amounts from TND 75,000 in 2016-2017 to TND 230,000 in 2017-2018.
Proparco made a EUR 2m equity investment in the institution.
Coordination Proparco: Valérie Blanchard, Anne-Gaël Chapuis Edited by: Proparco Editorial and graphic design, drafting, creation and printing: Iconographic credits:
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