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Date : 22/02/2021 TECHNIQUE ÉCHELLE 1/1
C100 M90 J20 N7
SUSTAINABLE DEVELOPMENT REPORT
#WorldInCommon
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Proparco’s Sustainable Development Report 2021
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“Together we can help build dynamic, green, inclusive and resilient economies.”
Proparco’s Sustainable Development Report 2021
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Contents
Edito
Françoise Lombard Chief Executive Officer of Proparco..................6
At a glance:
our key results in 2021....................8-15 10-11 75 new projects contributing efficiently to achieving SDGs 12-13 Sub-saharan Africa, the region concentrating our clients’ expected impacts 12-13 Significant progress in expected impacts vs 2020 14-15 Effective impacts of Proparco client projects in line with ex-ante forecasts
CONTENTS
Monitoring
impacts of our interventions.....48-63 50-51 Introduction 52-55 Supporting jobs 56-57 Promoting gender equality 58-59 Fighting against climate change 60-63 Supporting access to essential goods and services
Proparco’s Sustainable Development Report 2021
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Focus:
our actions for SDGs in 2021......... 16-47 18-21 Supporting jobs 22-25 Promoting gender equality 26-29 Improving access to essential goods and services 30-33 Accompanying client efforts in mitigating and adapting to climate change 38-41 Mobilizing private finance and delegated funds 42-47 Supporting the transformation of our clients
Promoting
sustainable development in each of our operations.........................64-79 66-69 Selecting projects for their impacts 70-73 Managing ESG risks 74-77 Supporting clients for more positive impacts 78-79 Diversifying instruments to accelerate transitions: concessional financing
Proparco’s Sustainable Development Report 2021
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Edito
EDITO Françoise Lombard Chief Executive Officer of Proparco
Given the urgency of the climate challenge, with less than a decade left to meet the Sustainable Development Goals (SDGs) and in a context where the crisis following the Covid-19 pandemic has led to an increase in poverty and inequalities, mobilizing all stakeholders is more crucial than ever. Banks, investors and private sector companies have an essential role to play, in particular through their capacity to invest, create jobs and provide innovative and sustainable solutions to the challenges the world faces. Let me share my insights for 2021: •M y first observation relates to economic recovery. While all countries are experiencing an up-turn, recovery is slower in developing countries. To participate in reducing this gap, Proparco and its European counterparts have intensified their collaboration to deploy record investments in 2021 in favour of the private sector, thereby fulfilling their counter-cyclical role. For the first time, Proparco has exceeded the 2 billion euros threshold in signed financings and, for the third consecutive year, that of
Proparco’s Sustainable Development Report 2021
2 billion euros in approved financings, which places Proparco among the leading development finance institutions in terms of activity and confirms its change in scale. Whereas our financings in 2020 essentially served to support our clients in difficulty and provided liquidity to the financial sector, in 2021 these were primarily dedicated to support the real economy, companies, jobs and infrastructures whose deployment had been put on hold. •M y second observation is our clients’ resilience, as demonstrated with the impact results achieved by the 273 projects signed between 2015 and 2019 in terms of jobs and development of essential goods and services – these are quasi in line with our exante forecasts, despite the still significant effects of the Covid-19 crisis. No major redundancies, no questioning of activity and production objectives, plus a rapid and efficient restart with our support. •M y third observation lies in the relevance of Proparco’s strategy which placed accompanying its clients and impact investing at the heart of its ambition, with significant results in 2021:
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- Almost 9 million people expected to benefit from access to an essential good or service within 5 years, with more than 5 million from Sub-Saharan Africa - 1.4 million jobs supported within 5 years, 460,000 of which in fragile countries - Almost 2 million tCO2eq avoided per year - 668 million euros worth of projects with climate co-benefits - 368 million euros worth of signed financings qualified for the 2X Challenge, i.e. 20% of signed amounts - 1.7 billion euros in private finance mobilised to serve sustainable development investments Because we are convinced that accompanying our clients is essential to support their transformation, we have once again been very active in 2021 alongside our clients. As an illustration, 282 Environmental and Social action plans and the 20 Governance action plans are deployed at our portfolio level together and 8 new PROPULSE projects were signed in 2021 (2.3 M€) to benefit our clients.
However, we want to go further by leveraging our strategy which consists of accompanying and supporting clients to innovate. This year we have taken a step further in the deployment of our “100% Paris Agreement” commitment regarding financial institutions and investment funds by providing them with more global solutions to integrate “climate” issues in their strategies within the framework of our Pro-Climate approach. We have also intensified our presence in the impactdriven investment arena, in an unprecedented international momentum within the private sector and want to continue this effort to help boosting the impact investing market and strengthen its credibility. As CEO of Proparco, I am delighted and looking forward to contributing to the many challenges of private sector development in our countries of operation. Alongside our European and international partners, we will continue our work to support stakeholders in their transformation and to increase our efforts to mobilise private investment, so that together we can help build dynamic, green, inclusive and resilient economies.
Proparco’s Sustainable Development Report 2021
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AT A GLANCE
Proparco’s Sustainable Development Report 2021
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OUR KEY RESULTS IN 2021
Proparco’s Sustainable Development Report 2021
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At a glance
Our key results in 2021
75 NEW PROJECTS CONTRIBUTING EFFICIENTLY TO ACHIEVING SDGs In 2021, Proparco signed the financing of 75 new projects for which ex-ante impacts have been analysed and recorded. These new projects amount to 1.7 billion euros and include 11 projects located in fragile countries. Expected contribution to Sustainable Development Goals (SDGs) are set out here.
Proparco’s Sustainable Development Report 2021
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698,000 expected micro-credit beneficiaries Social protection for employees and their families for 100% of direct jobs in fragile and/or low income countries
In Sub-Saharan Africa,
566,000
beneficiaries of a healthcare service within 5 years
24 projects qualified (368 M€) for
2.8 million beneficiaries
of a telecommunication service within 5 years, 1.3 million of whom in Sub-Saharan Africa
151,000 beneficiaries
of a public transport service and 3,600 beneficiaries of affordable housing within 5 years
282 environmental and social action plans & 20 governance action plans deployed through our portfolio
Minimum
50% jobs held by women in 39%
8 new projects
of our clients within 5 years
(2.3 M€) benefitting our clients
In Sub-Saharan Africa,
1,952,000 tCO2eq
3.1 million beneficiaries
will access renewable energy within 5 years, 2 million of whom from fragile countries
1,424,000 jobs
supported within 5 years, 460,000 of which through projects in fragile countries
668 M€
avoided per year
of projects with climate co-benefits, including 64 M€ with adaptation co-benefits (commitments)
1,742 M€
private finance mobilized
(commitments), i.e. a mobilization ratio of 0.91
Proparco’s Sustainable Development Report 2021
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At a glance
Our key results in 2021
SUB-SAHARAN AFRICA, THE REGION CONCENTRATING OUR CLIENTS’ EXPECTED IMPACTS The priority intervention region for the AFD Group is Sub-Saharan Africa. This year again, it is the main beneficiary of supported jobs, new or improved access to essential goods or services and tCO2eq avoided per year thanks to the projects led by our clients for which the financing was signed in 2021.
Number of jobs supported within 5 years by projects signed in 2021 in the geographic zone
Jobs Access tCO2eq avoided per year
More than 500,000 Between 200,000 and 500,000 Between 100,000 and 200,000 Less than 100,000 Outside scope of intervention
SIGNIFICANT PROGRESS IN EXPECTED IMPACTS VS 2020 Despite the still sizable consequences to the health crisis, the volume of signed operations with ex-ante forecasts has seen a turnaround in 2021, increasing to reach 1.7 billion euros (+47% vs 2020), corresponding to 75 projects (+15 projects). The charts below indicate expected impact results vs objectives as defined within our 2020-2022 strategy and vs adjusted targets integrating effects of the crisis on volume and sectoral distribution of financing.*
Number of supported jobs within 5 years
Gender equity: % of signed amounts qualifying for
1,616,000 1,424,000 (167% of adjusted target)
803,000
20% (100% of objective)
13%
852,000 Achieved Objective
Achieved Objective
Adjusted target 2020
2021
2020 *
Proparco’s Sustainable Development Report 2021
2021
These graphics show the impact results expected from the projects of our clients financed in 2021 in relation to the objectives defined in the strategy for 2020-2022. An adjustment exercise has been conducted to take the impact of the health crisis into account: adjusted targets have been calculated with respect to the volume and sectoral breakdown of projects actually signed in 2021. The percentages of the achievements are calculated in relation to the adjusted targets.
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Europe and Central Asia
MENA region*
98,400 187,100 577,100
40,300 1,422,600 36,000
East Asia and Pacific South Asia
134,200 46,100 66,300
86,600 324,800 0
Sub-Saharan Africa 578,900 5,000,000 1,040,600 Latin America and Caribbean 245,900 1,707,600 231,700 + Multi-country 100,400 projects in Africa 0 0 (including Sub-Sahara)
+ Multi-country 139,100 projects (including 179,400 0 Africa)
MENA region: Middle East and North Africa
*
8,902,000 (160% of adjusted target)
Number of people gaining access to new or improved essential goods or services within 5 years
5,886,000 5,572,000
Achieved
2,589,600
Objective Adjusted target 2020
Tons of CO2eq avoided per year
2021
Amounts mobilized from the private sector for sustainable development investments (SDIs), in M€
1,952,000 (128% of adjusted forecast) 1,965,000 2,932
1,524,000 1,767 719,000
2,242 1,742 (78% of adjusted target)
Achieved
Achieved
Forecast
Objective
Adjusted forecast 2020
2021
Adjusted target 2020
2021
Proparco’s Sustainable Development Report 2021
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At a glance
Our key results in 2021
EFFECTIVE IMPACTS OF PROPARCO CLIENT PROJECTS IN LINE WITH EX-ANTE FORECASTS This year’s monitoring exercise focused on tracking impacts achieved end 2020 by all 273 projects signed between 2015 and 2019 representing a total investment of 4.9 billion euros. Despite the lasting and considerable Covid-19 effect, real impacts of these projects at end 2020 are quasi in line with our ex-ante forecasts. Key results are mapped out below.
Significant impacts on economies, notably in Africa
Europe
1,916 657 22,425 191,588
Africa 7,038,850 3,231,150 7,049,072 537,800
Latin America 627,897 247,574 719,505 1 441,880
Number of jobs supported at end 2020 for projects signed between 2015 and 2019 within the geographic zone More than 2,000,000 Between 1,000,000 and 2,000,000 Between 500,000 and 1,000,000 Less than 500,000 Outside scope of intervention
Proparco’s Sustainable Development Report 2021
Asia 1,540,810 679,713 5,805,023 1,227,900
Multi-country 474,793 202,474 15,575
Jobs Jobs held by women Access tCO2eq avoided
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Almost 10 million jobs created or maintained
519,328 direct jobs
9.2 M indirect jobs
158,955 Jobs held by women
4.2 M Jobs held by women
82% of ex-ante forecasts reached for jobs maintained or created Goal : 635,000 jobs
227 Bn€ in added value recorded in 2020 and generated by the global activity of clients financed by Proparco between 2015 and 2019 (sum of salaries, tax and profits)
Almost 14 million people have benefited from improved access to an essential service
Energy 7,402,161
Health 3,155,531
Financial inclusion 1,753,155
Water and sanitation 805,600
Education 481,567
Telecommunications 90,000
Fight against climate change: 3.4 million tCO2eq avoided In 2020, renewable energy infrastructure projects (28 operational projects) have avoided a volume of CO2e emissions reaching 88% of ex-ante forecasts. This small gap is mainly attributed to setbacks encountered by two clients in deploying projected capacities at appraisal.
3.40 M tCO2eq avoided (Total/year) 3.87 M
24%
88% of ex-ante forecast
Achieved
Forecast
76%
Wind 827,868 tCO2eq avoided
Solar 2,571,300 tCO2eq avoided
Proparco’s Sustainable Development Report 2021
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FOCUS
Proparco’s Sustainable Development Report 2021
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OUR ACTIONS FOR SDGs IN 2021
Dedicated to the private sector and sustainable development for 45 years, we invest to support the growth of companies and financial institutions mobilized to contribute to development in Africa, Asia, Latin America and the Middle East and we accompany them in strengthening their capacities. Through our interventions, we aim to reinforce private actor contribution to achieving the 2015 international community SDGs by concentrating on key development sectors: infrastructures and, in particular, renewable energies, industry and agribusiness, financial inclusion, entrepreneurship and developing microenterprises and small and medium-sized enterprises (MSMEs) and innovative companies, healthcare, education, etc.
Despite the still heavily felt effect of the health crisis, financing volumes have bounced back in 2021 to reach a total 2.1 billion euros in signed amounts i.e. a 48% progression vs 2020. 75 new projects, representing 1.7 billion euros in financing, have had their ex-ante impacts analysed and recorded, i.e. 15 more projects than in 2020 and a progression in financing volume of 47%.1 Amongst these 75 financings are 35 financial institutions, 16 business projects, 12 infrastructure projects and 12 capital investments. 11 projects are located in fragile countries.2 The expected impacts of these projects have been evaluated using key indicators in terms of supported jobs, gender equality, new or improved access to essential goods or services, avoided greenhouse gas emissions, amounts mobilised from the private sector for sustainable development investments (SDIs) and transformation of our clients to better contribute to SDGs.
Out of the 86 projects signed in 2021 excluding ARIZ/EURIZ guarantees, FISEA projects, exceptional Covid-19 financing, loans on delegated funds and grants (1.751 Bn€), 75 projects have had their ex-ante impacts analysed and recorded, corresponding to 1.719 Bn€ in amount. The 11 projects for which expected impacts have not been recorded include : 5 top-up projects for existing clients with ex-ante impacts already recorded at the time of the initial signing, 3 European Financing Partners (EFP) projects, 2 Interact Climate Change Facility (ICCF) projects and 1 trade finance guarantee project out of the “impact” scope at the time of assessment. 2 P roparco used a combination of fragile country lists from the World Bank, OECD and G7 to determine its own fragile country list, ending up with 60 countries in total in 2021. 1
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Focus
Our actions for SDGs in 2021
SUPPORTING JOBS The private sector’s capacity to create jobs makes it an essential contributor to SDGs. Guaranteeing the development of quality jobs to the whole working-age population while facilitating gender equality is a major challenge that Proparco contributes to via each of its financings. With the projects signed in 2021, 1,423,800 jobs should be supported within a 5 years, i.e. a 77% progression vs 2020. Excluding multi-country projects, 67% of supported jobs in the next 5 years will come from client projects located in low-income countries (378,000 jobs) and lower-middle-income countries (360,000 jobs). 117,600 direct jobs should be created and/or maintained within 5 years, including 44% jobs held by women; the percentage is as much as 60% in low-income and lower-middle-income countries.
Proparco’s Sustainable Development Report 2021
19 In 2021, more than 1.4 million jobs supported thanks to client projects, 460,000 of which in fragile countries Through client projects signed in 2021, 1,423,800 jobs are expected to be supported within 5 years by our counterparties and their value chains. In line with Proparco’s positioning, 67% of supported jobs within 5 years are expected from client projects located in lowincome or lower-middle-income countries, excluding multi-country projects, with 460,000 in fragile countries. 53% of supported jobs through projects signed in 2021 are expected in Africa, excluding multi-country projects.
117,600 direct jobs supported, including 33,300 created jobs: 2 figures in progression
Job quality rising globally Proparco draws on three complementary indicators to evaluate the quality of jobs within its clients. Results for projects signed in 2021 (excluding investment funds) are as follows: • For 90% of projects (80% in 2020), workers benefit from social protection for themselves and their families, beyond that covered by local regulation; the percentage reaches 100% for projects located in fragile and/or low-income countries. • For 56% of projects (64% in 2020), salaries are above those usually received in the region; • Non-discrimination policies have been defined in 85% projects (78% in 2019).
Thanks to the projects signed in 2021, 117,600 « direct » jobs should be created and/or maintained within 5 years by our clients themselves or, in the case of investment funds, by investee companies: This represents a 31% increase vs 2020 (89,700). Excluding multi-country projects, 59% of these jobs are found in low-income or lower-middle-income countries. In 2021, one in four direct jobs supported by a signed project corresponds to a job creation; this ratio rises to one job in three in Energy, Digital and Infrastructure sector and for Equity investments.
The volume of supported jobs as high as 167% of the adjusted target The evolution of expected results in terms of jobs supported by projects signed since 2017 is charted below. For the comparison to be relevant, the analysis has been presented excluding atypical projects. The chart specifies objectives as defined prior to the health crisis for 2021 and for the 2020-2022 period, within the guidelines of our 2020-2022 strategy. Adjustments have been made to account for the effect of the health crisis: The adjusted 2021 target has been calculated in relation to the volume and sectoral breakdown of projects effectively financed in 2021. Results in 2021 correspond to 167% of the adjusted target, thanks to the « Banks and financial institutions » sector performance with two projects cumulating 427,000 jobs.
Number of jobs supported within five years 4,834,000
Atypical projects
+ 336,000
1,616,000
+410,000(2)
1,424,000
(1)
427,000
PROJECTS SIGNED IN
2017
978,000
2018
1,208,000
2019
803,000
2020
2021
Adjusted target 852,000
Objective for 2021
Achieved in 2020-2021 2,227,000
Cumulated objective for 2020-2022
(1) In 2018, the Jumo project contributed to one quarter of supported jobs within 5 years. (2) In 2019, the ETG group contributed to one quarter of supported jobs within 5 years.
Proparco’s Sustainable Development Report 2021
Focus
Our actions for SDGs in 2021
Loan
20
In Madagascar, more than 300,000 supported jobs thanks to a 10 M€ subordinated loan in favour of the leading financial partner of the Madagascan economy. In 2021, Proparco expanded its support to BNI Madagascar, a key partner of AFD Group with whom it shares ambitious objectives regarding the financing of businesses, notably SMEs and projects contributing to the fight against climate change. Thanks to this « Tier II » loan – a powerful tool in creating jobs and supporting all the value chain – 318,300 jobs should be supported within 5 years.
Proparco’s Sustainable Development Report 2021
A 20 MUSD investment to support medium-sized enterprises in Thailand and in the Mekong region Through a 20 MUSD investment in the Lombard Asia V fund, targeting medium-sized enterprises in Thailand and in the Mekong region operating in various industries like health, agribusiness and distribution, Proparco is supporting job creation and sustainable development. Almost 19,000 created and/or maintained jobs are expected within 5 years in the fund’s investee companies.
51,700 direct jobs occupied by women within 5 years
Within 5 years, at least 50% of jobs held by women in 39% of our clients
Thanks to the projects signed in 2021, some 51,700 direct jobs occupied by women will be supported within 5 years, i.e. 63% more than in 2020 (31,800), in line with the increase in the total number of direct jobs supported in 2021. Women represent 44% of direct jobs supported within 5 years by projects signed in 2021 (vs 35% in 2020), 60% of direct jobs supported in low-income and lower-middle income countries and 67% of direct jobs supported in the Eastern Asia and Pacific region – this figure is driven by the two Textile Industry projects in Vietnam financed in 2021, Leading Star and Scavi, each reporting an expected 80% in direct jobs held by women within five years.
Women should represent within, 5 years, at least 50% of the workforce within 39% of our clients (33% in 2020). Excluding multi-country projects, three quarters of supported direct jobs held by women through projects signed in 2021 are expected, within five years, in lowincome or lower-middle-income countries; the percentage reaches 83% in these geographies in terms of direct job creations which should be occupied by women.
Equity investment
21
Proparco’s Sustainable Development Report 2021
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Focus
Our actions for SDGs in 2021
PROMOTING GENDER EQUALITY Despite considerable progress made regarding gender equality in terms of decision-making, economy, access to essential services and rights, no country can claim to have reached a state of equality today. Significant social, legal and economic inequalities affecting women and their amplification due to the Covid-19 crisis call for actions from public and private sector actors. Contributing to reach gender equality is a priority goal for the AFD Group in which Proparco is participating. In 2021, Proparco continued implementing its strategy to strengthen its actions promoting gender equality. Concretely, Proparco encourages the financing of projects facilitating gender equality as set out by the 2X Challenge initiative criteria that focusses on female entrepreneurship, female leadership, quality jobs and the supply of goods and services for women. Proparco is committed to reaching 25% of its financings dedicated to projects fulfilling 2X Challenge criteria by 2022. In 2021, 24 financings signed by Proparco qualified for the 2X Challenge, amounting to a total of 368 million euros, i.e. a progression of more than 130% vs 2020.
The increase in 2X Challenge signings follows the improved integration of challenges and opportunities in Proparco operations, facilitated by the in-house training of teams and greater proactivity in certain operational teams within Proparco. In 2021, we also noticed a rise in credit lines with higher tickets dedicated to supporting enterprises managed or owned by women, or enterprises fulfilling 2X Challenge criteria.
In line with previous years, 2X Challenge signings in 2021 comprise, for the majority, financial institutions (65% of amounts signed within 2X Challenge). Asia represents the geography cumulating the highest 2X Challenge amounts, in particular with the IndusInd Bank project in India (75 million dollars with 100% of the line dedicated to women accessing credits).
Breakdown of signed amounts qualified for the 2X Challenge in 2021
Banks & Financial institutions
Latin America and Caribbean
Microfinance
65%
13%
Industry
9% 6% 2%
5%
27%
Asia
48%
Health Multi-sector investment funds Renewable energy
By sector
Proparco’s Sustainable Development Report 2021
Africa
13% 11% 1%
By geography
Middle East Multi-country
Proparco’s growing commitments to the 2X Challenge 2021 marked as the year with the highest level of Proparco commitments working to reduce gender inequalities. The signings that qualified for the 2X Challenge almost reached 368 million euros in 2021 and represented 20.3% of the year’s total signings. Proparco has reached the 2X Challenge objective fixed at 20% of signings for 2021.
25% 20%
% of signed amounts qualified for the 2X Challenge
Loan and guarantee
PROJECTS SIGNED IN
20%
13%
2020
Initiative
23
2X Challenge: momentum increase for 2021 and 2022 The first phase of implementation of the 2X Challenge from June 2018 to December 2020 proved to be a great success both for mobilizing commitments in favour of 2X Challenge projects (4.1 Bn USD for an initial target of 3 Bn USD) and for securing the adhesion of development banks (20 DFI and multilateral banks) as well as establishing standards in line with best practices (GIIN, HIPSO, OECD, WEPs). For the 2021-2022 period, the 2X Challenge is aiming to mobilize 15 Bn USD in favour of projects reducing gender inequalities. The accountability criteria inherent to 2X Challenge commitments are also more demanding for this phase, in particular for intermediated financings. During 2021, complementary initiatives to the 2X Challenge were launched by 2X members, notably:
2021
Objective Objective in 2021 in 2022
• The 2X Collaborative, a new worldwide network bringing all investors together to promote gender-lens investment. • The 2X Flagship fund, an initiative providing a label and accompanying investment funds delivering solid strategic guidelines and commitments to reducing gender inequalities.
In Nigeria, a loan and a guarantee support high impact SMEs, including those owned by women With a 35 MUSD loan and a 10M€ EURIZ portfolio guarantee made to First City Monument Bank Ltd (FCMB), one of the most active Nigerian banks in terms of financing SMEs, Proparco is supporting the bank’s already well-anchored financing and entrepreneurial support activity. At least 25% of Proparco’s credit line is dedicated to supporting enterprises that fulfill the 2X Challenge criteria. The loan granted by Proparco will enable the financing of almost 1,600 SMEs, 300 of which will be managed or owned by women. The bank has put the SheVentures programme into place, offering dedicated solutions to women entrepreneurs such as interest-free loans and concessionary financing, as well as adapted training sessions and mentoring. As such, the project has qualified 100% to the 2X Challenge. This project saw the day with the support of the European Union and the Organisation of African, Caribbean and Pacific States (ACP).
This project is carried out with the support of the European Union
Proparco’s Sustainable Development Report 2021
Focus
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Our actions for SDGs in 2021
Initiative
Out of 24 projects qualified in 2021, 17 projects have met at least 2 criteria of the 2X Challenge. The 3 main criteria of projects by Proparco qualified and signed in 2021 are Consumption (« Products or services benefitting women »), Women’s leadership and Quality jobs for women. The progression in the number of qualifications in the indirect criteria should also be noted for 2021; this applies to credit lines and investment funds committed to financing businesses that are managed or owned by women or businesses meeting the 2X Challenge’s direct criteria.
Number of projects qualified per 2X Challenge criteria Women’s leadership Quality jobs for women
12
Products and services benefitting women
15
11 Indirect criteria (financial intermediaries)
8 3
Women’s Entrepreneurship
In January 2021, FinDev Canada, AFD and Proparco announced the launch of a project to reinforce the capacity of women entrepreneurs at the time of the Covid-19 pandemic. This project was set up following the 2X Invest2Impact (I2I)3 competition launched in 2019 aiming to identify and support the development of high potential SMEs managed by women in Eastern Africa (Ethiopia, Kenya, Uganda, Rwanda and Tanzania). Women entrepreneurs from I2I participated in group activities organized by a management consulting and finance firm, as well as tailored support and a coaching programme specifically for SMEs looking to improve competitiveness and preparing to invest. One year into launching I2I, 74 businesses took part in the programme’s activities, benefitting from 19 hours individual coaching and 72 hours of webinars; these women met 48 investors and shared 13 business cases defining their financing needs. Today, Proparco is working on connecting them with investors as well as integrating all participants in existing support programmes to continue to help them grow. 3
https://invest2impact.africa/
Women: 90% of clients financed by microfinance institutions in 2021 Through projects signed in 2021, Proparco has participated in improving the financial inclusion of women as well developing female entrepreneurship. Women make up 90% of the clients of the nine microfinance institutions supported by Proparco in 2021. In particular, three projects contribute to this percentage: IndusInd Bank whose microfinance division proposes loans to small groups of borrowers made up of women only (8 million borrowers), Komida in Indonesia with more than 750,000 clients, all women, as well as Kashf, the Pakistani microfinance institution whose portfolio of 573,000 clients is made up of 99.5% women.
Proparco’s Sustainable Development Report 2021
Women’s leadership and quality jobs for women: the example of Leading Star in Vietnam In 2021, Proparco granted a 12 MUSD loan to Leading Star to support the company’s business development. Thanks to its ambitious internal policy in favour of female workers who make up 80% of employees, women are priority candidates when hiring and benefit from working conditions that go beyond local legal requirements. Thanks to an impact-linked premium mechanism (commitments which are formalised within the financial agreement trigger a decrease in the loan cost for Leading Star), Proparco has encouraged the company to increase the representation of women in managerial and leadership positions for it to better mirror the share of women at factory worker level. This mechanism also includes a training programme aiming to increase the capacity women have to take charge of their health (HERHealth programme by BSR)4; in addition, the Environmental and Social (E&S) action plan set up by Proparco includes internal training sessions on gender equality (covering topics like recruitment bias, gender-linked violence and harassment, etc.).
Supporting female entrepreneurship through financial intermediation: e.g. Banco Sofisa in Brazil Alongside Findev Canada, the Inter-American Development Bank (IDB) and other donors, Proparco has contributed 30 MUSD to a total financing of 200 MUSD to Banco Sofisa supporting the development of its SME financing activity in Brazil. With 30% of the credit line provided by Proparco and a target set at 50% further into the partnership, its purpose is to support SMEs managed or owned by women. This financing could support growth in about 15 SMEs in which the majority stake in capital is held by women and/or in which the majority of leaders are women. A technical assistance programme co-financed by the three sponsors was approved in 2021 thereby reinforcing the inclusive character and the positive impact of Banco Sofisa in Brazil, both internally by strengthening its E&S management system as well as a more equally distributed human resources policy, and externally by improving inclusion practices, including access to financing for SMEs owned and/or managed by women.
https://herproject.org/programs/herhealth.
Loan
4
Loan
Loan
25
Financial services promoting the financial inclusion of women: an example with Microfinance Solidaire (MFS) In 2021, Proparco granted a 2 M€ subordinated loan to MFS. Set up by the NGO Entrepreneurs du Monde in 2010, this institution supports twenty or so microfinance institutions (MFIs) working notably towards providing access to energy in Sub-Saharan Africa, Asia and Haiti. As the geographic zones of intervention of these MFIs are marked by significant gender disparities regarding access to credit and ownership of bank accounts, the MFIs incubated by MFS propose financial services mainly to women who make up 85% of their clients. The project has qualified for the 2X Challenge.
Proparco’s Sustainable Development Report 2021
Focus
Our actions for SDGs in 2021
IMPROVING ACCESS TO ESSENTIAL GOODS AND SERVICES By accompanying projects that improve access to essential goods and services by populations, Proparco is participating in reducing inequalities within emerging and developing countries. Thanks to projects signed in 2021, 8.9 million people are set to benefit from new or improved access to essential goods or services within five years, 68% of which through projects located in low-income or lowermiddle-income countries and 58% in Sub-Saharan Africa, excluding multi-country projects. Expected results of projects signed in 2021 regarding access to new or improved essential goods or services within five years corresponds to 160% of the adjusted target for 2021.
Loan
26
Reinforcing African countries’ screening capacity during Covid-19 crisis With a 15 M€ loan, Proparco and the International Finance Corporation (IFC) are supporting Cerba Lancet Africa, the leading pan-African player in medical biology to modernize and develop new laboratories, with a priority in Africa’s most fragile and poorest countries. With Proparco’s financing, 500,000 additional patients will be covered within 5 years. As an ISO 15189 accreditations reference laboratory, Cerba is a key market driver increasing quality standards by making a broader range of tests available locally.
Proparco’s Sustainable Development Report 2021
27 In 2021, almost 9 million beneficiaries are expected to access an essential good or service, 2 million of whom live in fragile countries Together, the 30 projects signed in 2021 should provide access to new or improved essential goods or services: • twelve credit lines in favour of financial inclusion in Senegal, Cambodia, India, Indonesia, Pakistan, Armenia, Georgia, Tajikistan and multi-countries; • seven financings enabling access to clean and reliable energy: three solar photovoltaic power plant projects in Burkina Faso, Chad and Uzbekistan, a solar power hybrid mini-grids project in DRC, two agri-business projects in Ivory Coast (Biomass power plant) and in Brazil (biogas production stations) and a participation in the capital of an enterprise supplying access to solar power to populations enabling them to develop their activities in Kenya, Nigeria, Tanzania and Uganda; • three projects in the telecommunications sector: two infrastructure financings in Latin America (Ecuador for the first, and Guatemala, Nicaragua and Salvador for the second) as well as a participation in the capital of a telecoms tower constructor operating in Sub-Saharan Africa;
medical laboratories, a project supporting a network of pharmacies in Kenya (66,200 beneficiaries of an improved access to a healthcare service within five years) as well as a multi-country project supporting the production of Covid-19 treatments and vaccines on the African continent thanks to which some 300 million people could benefit directly from a Covid-19 vaccine; however, in the absence of an adapted method, the expected number of beneficiaries has not been counted. • two projects in favour of promoting access to affordable housing for low-income populations residing in the eight countries comprising the West African Economic and Monetary Union (WAEMU) for the first and Salvador and Panama for the second. • two financings for public transport infrastructure in Columbia to provide the capital with 259 electric busses to replace the more polluting diesel ones; • one project targeting the improved management and collection of household waste in Morocco.
• three projects in the healthcare sector: a project supporting the biggest pan-African network of bio-
More than three times the number of beneficiaries accessing essential goods or services vs 2020 In 2021, the total expected beneficiaries gaining access to new or improved essential goods or services more than tripled vs 2020 (2.6 million), driven by projects enabling access to energy and telecommunication services totalling 6.1 million expected beneficiaries, i.e. 68% of 2021 access. Projects signed in 2021 should also allow 698,000 people to access a micro-credit, i.e. 75% more than in 2020; 73% of beneficiaries of new or improved access to a micro-credit live in lower-middle-income countries (380,000 expected beneficiaries), excluding multi-country projects.
Number of beneficiaries accessing new or improved goods or services within 5 years, in ‘000 2017
2,200
2018
10,000
2019 2020 2021
8,540
2,990
1,729 3,233
566 698
1,423
2,828
5,000
Energy
Health
Water and sanitation
Education Telecommunications
151 4 10,000
Financial inclusion
15,000
Solid waste collection
Transportation
Affordable housing
Proparco’s Sustainable Development Report 2021
Focus
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Our actions for SDGs in 2021
Via an equity investment of 10 MUSD, Proparco is supporting d.light to expand its solar energy activities (wide range of products available from portable solar lanterns to household solar systems) and Pay-As-You-Go consumption credit facilitating access to solar products to low-income clients. This financing by Proparco means almost 1.2 million people should access a clean, reliable and affordable source of electricity every year and for nearly 400,000 among them, access to PayAs-You-Go credit facilities.
Accompanying Casablanca in improving its waste management Using a 15 M€ guarantee on the financing granted by the BMCI ( Moroccan Bank for Trade and Industry) to Arma Casablanca, company in charge of running the cleaning and collection service of household waste in four of the town’s prefectures, Proparco has contributed in improving the quality and safety of waste collection for almost 1.4 million residents of targeted districts, notably by renewing a portion of the rolling stock, digitising operations (smart-city technologies for real-time management of service performance) and upgrading cleanliness in public spaces.
Proparco’s Sustainable Development Report 2021
Equity investment
Guarantee
Out of 3,233,000 expected beneficiaries gaining access to clean energy within 5 years thanks to projects signed in 2021, 2,015,000 are located in fragile countries (Burkina Faso, Ivory Coast, DRC and Chad), i.e. 95% of beneficiaries accessing clean and affordable energy, not counting multi-country projects (project d.light). 98% of beneficiaries (3,176,000) are located in low-income or lowermiddle-income countries in Sub-Saharan Africa.
Improving access to solar energy for populations in Kenya, Nigeria, Tanzania and Uganda
Equity investment
3.2 million beneficiaries of clean and reliable energy in low-income and lower-middleincome countries, 2 million of whom from fragile countries
Facilitating impact investment in emerging and developing markets: 166,000 additional micro-credits By means of the 7 MUSD equity investment in MFX Currency Risk Solutions (MFX), the company which helps impact investors and beneficiaries of the development financing to hedge their currency risk, Proparco is contributing to strengthening MFX’s solvency and liquidity, ultimately increasing local currency financing of local financial institutions, in particular microfinance institutions. Thanks to the equity capital provided by Proparco, 166,000 additional people should benefit from a microcredit within 5 years.
Loan
29
Improving digital access in Ecuador In 2021, Proparco jointly financed PTIE, a telecoms infrastructure company (a 25 MUSD loan out of a total 117 MUSD financing). This operation aims at contributing to refinancing the acquisition of 1,408 telecom towers as well as financing a CAPEX plan enabling PTIE to continue developing its asset portfolio in the country (new towers, distributed antenna systems, etc.). This project should facilitate access to a new or improved mobile service for 1.5 million people in Ecuador by 2025, and contribute to reducing the country’s digital divide in which connectivity, particularly in the recent pandemic, has been more than ever key to maintaining school, governmental or economic activities.
The expected number of people gaining access to essential goods or services largely above the adjusted target The expected number of beneficiaries of projects signed in 2021 corresponds to 160% of the adjusted target for 2021 and 151% of the initial objective defined in the 2020-2022 roadmap. This overreach is due to expected results of projects enabling access to micro-credits plus those of agribusiness projects, driven by one project for the financing of a biomass power plant (1.2 million expected to gain access). The evolution of expected results in terms of access to new or improved essential goods or services within five years through projects signed since 2017 is laid out below, alongside objectives for 2021 and 2020-2022 as defined prior to the health crisis and following the 2020-2022 strategy guidelines. For the sake of comparisons and relevancy, the analysis has been made excluding atypical projects.
Number of people gaining improved access to essential goods or services within five years 17,599,000 +10,000,000
(2)
Atypical projects
+6,909,000(3) 8,902,000
PROJECTS SIGNED IN
+2,200,000(1) 1,303,000
2017
4,655,000
2018
4,891,000
2019
2,589,600
2020
2021
5,886,000 Adjusted target 5,572,000
2021 Objective
Achieved in 2020-2021 11,491,600
Cumulated objective for 2020-2022
(1) In 2017, the BRS Saglik Yatirim project contributed to 63% of new or improved access to essential goods or services within 5 years. (2) In 2018, the Nachtigal project contributed to 68% of new or improved access to essential goods or services within 5 years. (3) In 2019, the Nepal Waters and Africure projects contributed to 40% and 20% of new or improved access to essential goods or services within 5 years, respectively.
Proparco’s Sustainable Development Report 2021
Focus
Our actions for SDGs in 2021
ACCOMPANYING CLIENT EFFORTS IN MITIGATING AND ADAPTING TO CLIMATE CHANGE The 2015 Paris Agreement reasserted the urgent need to rapidly reduce worldwide greenhouse gas emissions to limit the rise in temperature to 1.5°C versus pre-industrial levels. To participate actively in this colossal challenge, Proparco has placed promoting low-carbon development, resilient to the impacts of climate change, at the heart of its 2020-2022 strategy. Despite the difficult economic context, some 26 projects with climate co-benefits have been signed 2021, i.e. 10 more than in 2020.
Loan
30
In Nicaragua, expanding the capacity of a geothermal plant to supply clean and affordable power With a 21.4 MUSD loan granted to Polaris Energy Nicaragua, Proparco is reiterating its support in the San Jacinto geothermal plant project. The refinancing operation comes with the construction of a 10 MW supplementary binary unit increasing the capacity to 82 MW. Classified as 100% climate, it will enable 175 000 tCO2eq per year of GHG emissions to be avoided throughout the project’s lifespan.
Proparco’s Sustainable Development Report 2021
31 26 projects with climate co-benefits signed, adding up to 1,952,000 tCO2eq avoided per year The projects signed in 2021 aim to avoid emissions up to 1.95 million tCO2eq per year on average, 53% of which through projects located in Sub-Saharan Africa. Representing 561 million euros of climate co-benefits, these correspond to: • ten credit lines fully or partially dedicated to climate change mitigation, with financial institutions in Nigeria, Armenia, Serbia, Turkey, Palestine, Mongolia and Vietnam (168 million euros in climate co-benefits); • nine infrastructure projects: seven energy infrastructure projects in Burkina Faso, Ivory Coast, DRC, Chad, multicountries in Africa, in Uzbekistan and Nicaragua and two public transport infrastructure projects in Colombia, for a total of 252.5 million euros of climate co-benefits. These projects, once operational, represent an installed renewable capacity of 312 MW and an annual expected production of renewable power of 1,150 GWh.
• f our investments: an equity investment in a company supplying decentralised solar energy to help it develop its activities in Kenya, Tanzania, Uganda and Nigeria and an equity investment in a company supplying solar energy to enterprises in Asia (35 million euros of co-benefits, installed renewable capacity once projects are operational of 236 MW and annual production of renewable power of 308 GWh); an investment in a fund dedicated to the development, construction and exploitation of projects to generate or stock renewable energy in Sub-Saharan Africa as well as a subscription of shares in a fund dedicated to purchasing green bonds issued by private-sector companies based in emerging Asian, African and Latin American countries (52.5 million euros of climate co-benefits). • Three “enterprise” projects in the agri-business sector in Brazil and in industry in Morocco and Turkey (53 million euros of climate co-benefits, 4 million euros of which are adaptation co-benefits).
Proparco’s Sustainable Development Report 2021
Focus
Our actions for SDGs in 2021
Loan
32
Supporting a textile leader in Turkey to make sustainable investments In 2021, Proparco granted a 37 M€ loan (25.9 M€ being climate recorded) notably enabling Sanko Textile to equip its factories with 33.5 MW producing solar panels, deploy plastic recovery equipment (76,500 tonnes of bottles reused in the manufacturing process), invest in a water filtering system and replace its coal-fired boilers by natural gas boilers. This project means 466,000 tCO2eq of GHG emissions will be avoided each year.
Increasing financial commitments in favour of private projects that contribute to adapting to climate change: 64 M€ of adaptation co-benefits recorded by projects approved in 2021 In 2021, Proparco approved 28 climate co-benefit projects, totalling 668 million euros in co-benefits.5 Among these, six projects are participating in adapting to or providing improved economic or population resilience to the effects of climate change, representing 64 million euros in adaptation co-benefits:
5
By including FISEA projects, the total amounts to 677 M€.
Proparco’s Sustainable Development Report 2021
• In Brazil, a loan granted to a Brazilian sugar-ethanol producer to build biogas production stations as well as to install wastewater treatment units (4 million euros of adaptation co-benefits; see opposite box); • In South Africa, two credit lines dedicated to climate mitigation and adaptation with a financial institution partnering with the Green Climate Fund (20% of the amount classified as adaptation, i.e. 36 million euros); • In Nigeria, Mexico and China, three credit lines partially dedicated to financing climate projects, with adaptation co-benefits representing 24 million euros.
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The volume of avoided tCO2eq emissions at 128% of 2021 forecast The volume of tCO2eq emissions avoided per year expected by the projects signed in 2021 is 1,952,000 tCO2eq, i.e. 128% of the adjusted forecast for 2021 which takes into account the effective volume of signatures in 2021. This adjusted forecast was surpassed thanks to results obtained in the Energy and Industry sectors, each pulled forward by a project. The evolution of expected results in terms of tCO2eq emissions avoided per year by projects signed since 2017 is presented below.
Number of tCO2eq avoided per year +1,070,000(1)
Atypical projects 1,600,000
1,980,000
1,529,000
1,952,000
719,000
PROJECTS SIGNED IN
2017
2018
2019
2020
2021
1,965,000 Adjusted forecast 1,524,000
[Forecast for 2021]
Loan
(1) In 2019, the Engie Mexico project contributed 35% of the total amount of expected emissions avoided per year.
Supporting sustainable agricultural investments in Brazil In 2021, Proparco granted a third loan to a long term partner, Tereos Sugar And Energy Brazil, amounting to 25 M€. It will enable this company, one of Brazil’s largest producers of sugar-ethanol, to build biogas production stations in 3 of its sugar plants (26 000 tCO2eq avoided per year) and install wastewater treatment units to reduce the volume of water used by 25% by 2024. The project has been classified as 100% climate, with 85% mitigation co-benefits (about 21 M€) and 15% adaptation co-benefits (about 4 M€).
Proparco’s Sustainable Development Report 2021
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Focus
Our actions for SDGs in 2021
Voices from the field FOCUS ON RENEWABLE ENERGIES IN SUB-SAHARAN AFRICA Towards a low-carbon economy Renewable energies hold a specific place within the mission and actions supported by Proparco all over the world. Since 2000, Proparco has financed 125 energy projects in developing countries representing 3.3 Bn€ in financings and 12.9 GW in installed capacity spanning all technologies (solar, wind, biomass, hydroelectric). Its priorities are: develop a low-carbon economy, favour universal access to energy and contribute to sustainable development within the countries it operates in.
Fatoumata Sissoko-Sy Regional Director West Africa, Proparco
Raphaël Ruat Managing Director of BIOVEA Energie
JOINT INTERVIEW Could you talk us through the challenges linked to developing renewable energies in Sub-Saharan Africa? Fatoumata Sissoko-Sy: Access to energy is a catalyser for development, yet it is remains limited in Sub-Saharan Africa where more than two thirds of the rural population do not have access to electricity . The crisis linked to the Covid-19 pandemic has served to remind us of how crucial energy is to all sectors of activity, e.g: for healthcare, the continuity of education or work from home. Fossil fuels continue to dominate the energy mix in Sub-Saharan Africa, which worsens climate change and intensifies a population’s vulnerability to price fluctuations, despite the fact that the region has an abundant supply of renewable energy resources which could make energy affordable, reliable and sustainable. This is why we are mobilised to accompany renewable energy projects and energy efficient ones. What results have been achieved in the region for 2021? Fatoumata Sissoko-Sy: Having accompanied the first solar plants in Senegal a few years ago, 2021 has been an exceptional year in the West Africa zone, notably with four new climate financings signed for a total 171 M€ in climate co-benefits. Among these financings, three are for renewable energy infrastructures that will produce almost 420 GWh of electricity per year and result in avoiding 22,000 tCO2eq each year: - In Burkina Faso, a solar plant will provide access to electricity to almost 300,000 people within 5 years, while contributing directly to the country’s low-carbon trajectory as well as the Government’s objective to increase the share of renewable energies in the energy mix.
Proparco’s Sustainable Development Report 2021
- In Burkina Faso, in the Ivory Coast, in Niger and in Cameroon, a project to install hybrid electric systems will lead to reducing telecom tower dependency on fossil fuels for power generators or unreliable networks by using renewable energies. - And in the Ivory Coast, the BIOVEA project for the first biomass plant in the Ivory Coast and the biggest in West Africa. Proparco is accompanying you in the financing of the first African biomass plant injecting power into the national power grid, can you tell us more about this flagship project and the added value Proparco is bringing? Raphaël Ruat: The BIOVEA project comprises designing, financing, building and operating an electricity producing plant using biomass, based in Ayebo, close to Aboisso, in south-eastern Ivory Coast. It is undertaken by EDF, Meridiam and SIFCA, the local agrobusiness group. With an installed 46 MW of power, it will be the biggest biomass power plant in West Africa. It is a circular economy project which uses biowaste from the agribusiness (of oil palm leaf stalks - petioles) and aims to plough back combustion ashes into the plantations using it at fertilizer. The project has been set up with a BOOT-type contract with the Ivory Coast State Government and has a 25-year operating agreement which began following signature last December. As a key partner to the Ivory Coast State and to SIFCA, the local agribusiness, Proparco has enabled the BIOVEA project to benefit from excellent financing conditions by providing 135 M€ in debt and 5 M€ in subsidies for a global budget of 232 M€ and, as such, supply renewable energy at an affordable price to the Ivory Coast that is targeting 42% REN in its energy mix by 2030.
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How far advanced is the project and what are the expected impacts?
What is the outlook for the Ivory Coast, for the African continent ?
Raphaël Ruat: The project documentation (building, operating and biomass supply contracts) and the financing documentation were signed in 2021. Work on the energy evacuation station began on site at the beginning of 2022. The power station will be put into operation in summer 2025, after around 3 years of construction.
Raphaël Ruat : Beyond biomass stations like BIOVEA and any replications in the subregion and, more globally, in Africa, BIOVEA Energie shareholders such as EDF and Meridiam who are present in fifteen or so African countries, place their activity in a logic that embraces long-term partnerships to develop low-carbon projects, building on the strengths of local economies in partnership with solid local actors, like SIFCA for the BIOVEA project and solid financial partners, well-known and reputed like Proparco. For example, in the Ivory Coast, studies are underway for solar farms and hydroelectric dams.
It’s a project set to have a high economic and social impact: The power station, the first in Africa to produce renewable energy from biomass and inject it into the electricity grid, will be fed by 450,000 tonnes oil palm waste, 70% of which will be supplied by small local planters. As well as enabling 1.2 million people to benefit from an improved electricity service, support 47,000 jobs in the next 5 years and generate 1.8 M€ in additional revenue per year for small planters, the project means around 171,000 tCO2eq per year will be avoided throughout the lifespan of the project, contributing to the low-carbon trajectory of the country as well as the Ivory Coast Government’s aim to increase the share of renewable energies in the electric mix to 42% by 2030.
Fatoumata Sissoko-Sy : AFD group has been involved for many years now in accompanying the low-carbon trajectory of the Republic of the Ivory Coast and the west African sub region. This project is the living proof of this, and we will continue to support other projects that are in line with this positive trajectory in the Ivory Coast as well as in other African countries.
Will it be possible to replicate this project and why do so? Raphaël Ruat: The BIOVEA project can be duplicated in the Ivory Coast and in other countries from the subregion with sufficient biomass resources. In West Africa, the palette of biomass resources also includes the largely available cocoa pods, anacardium/cashew nut shells and cotton stalks. Effectively, Ivory Coast disposes of a significant reservoir of residue from oil palm plantations, traditionally cultivated in the country. Furthermore, the size of the project (46 MW) enables a limited injection of power into the network without needing to reinforce it.
Proparco’s Sustainable Development Report 2021
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Focus
Our actions for SDGs in 2021
Voices from the field INVESTING FOR THE DEVELOPMENT OF SOLAR HYBRID MINI-GRIDS IN THE DRC
Jonathan Shaw Nuru Chief Executive Officer, Co-Founder
Before introducing Nuru, could you say a few words about the Democratic Republic of Congo - where does DRC (ranked as one of the poorest countries in the world) stand in terms of population’s access to electricity? What are the key challenges to improve access to reliable, clean and affordable energy?
and Congo has opened the door for private actors to try and address these enormous challenges gaps.
The population of the DRC is likely the second largest un-electrified population in the world. Less than 15% of Congolese households have access to energy -- and less than 2% to reliable power. Decades of conflict between 1996 and 2003, ongoing instability in the east, challenges of governance and public health crises all combine to create this perfect storm of service failure -- not to mention a country the size of western Europe with less than 2,000 kilometers of paved roads (western Europe has nearly 80,000 km). The former state utility SNEL has proved unable to address the enormous challenge and opportunity
Nuru, Swahili for “light”, believes that the immense challenges of the DRC are linked to huge opportunity. There are large cities -- some people call these islands of people in an ocean of rainforest -- with significant productive loads that are basically unelectrified. These economies are expanding and dynamic, but run on diesel-powered generators that are highly polluting, expensive and unreliable. We believe that building city-scale metrogrids (islanded, renewably powered networks) can unlock the potential of DRC’s most valuable resource: human capital.
In this context, what role can solar hybrid mini-grids play towards reaching the SDG of universal electricity access by 2030? Please tell us about Nuru’s vision and operations.
Voices from the field SUNREF GREEN FINANCE PROGRAM IN PALESTINE
Can you say a few words about the Bank of Palestine? We view the role of Bank of Palestine as a catalyst for change and leadership by example towards true and deep financial inclusion at all levels. We have focused a lot of energy on gender equality inside the bank bringing more women employees to the forefront including leading positions as senior managers, branch managers and department heads. Today 42% of the bank’s employees are women. We are also proud to have achieved 50% -50% gender balance at the level of our board of directors. In 2018, BOP was granted a 12.5 MEUR credit line as part of the SUNREF I Program - a joint program of AFD Group and the European Union launched in 2018 to support local banks in Palestine in increase their lending to green energy projects. In 2021, Proparco and the EU launched the second phase of the Proparco’s Sustainable Development Report 2021
Mahmoud Shawa Banque of Palestine Chief Executive Officer
program, SUNREF II, which includes a 30 MUSD credit line for BOP and focuses more on energy efficiency than the first phase, why is the promotion of renewable energy and energy efficiency particularly relevant in Palestine? Palestine is 90% energy dependent on outside sources of electricity. Often the external suppliers of such energy use this dependency as a political tool to create pressure on the Palestinian government. This makes the electricity supply to the consumer very unpredictable and even more expensive. It is important that Palestine achieves energy independence and as such renewable energy becomes a strategic component of providing energy security and one that is affordable. We are promoting renewable energy and energy efficiency loans as an important component of this strategy.
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In 2021, Proparco invested MEUR 1 in Nuru – an opportunity for Proparco to support an innovative private player committed to improving access to clean and accessible electricity for households and businesses in a fragile country, whilst contributing to the fight against climate change. Could you please explain what Proparco’s added value was in this operation? The team from Proparco has consistently demonstrated their willingness to thoughtfully and carefully engage in unique markets where their investment can have the highest impact. Proparco’s investment has catalyzed Nuru’s ability to firm up our pipeline, engage productively with other investors and manage the complexity of the Congo market. Proparco is an incredible, reliable and dynamic partner for high potential companies in frontier markets like DRC. What are the expected impacts in terms of access to reliable energy and emission reduction?
Recorded impacts for this project :
The company aims to provide 5 million delighted clients with world-class connectivity by the end of 2024. We want each client to enjoy 24/7 reliable, renewable energy in their homes and businesses. We will displace at least 75% of the diesel emissions that would be needed to serve these loads.
Every year, 67,000 additional people are expected to benefit from reliable electricity and 21,700 tCO2eq should be avoided. Mini-grids will supply electricity to 30 schools and health centers and to 85 small businesses.
On top of Proparco’s loan, SUNREF II comprises an EU-financed package of technical assistance (total of 11.5 MEUR for BOP and Cairo Amman Bank which also benefits from SUNREF II) and premiums. How will these tools support BOP’s lending to energy efficiency projects, in particular among SMEs? SMEs are by nature accustomed to certain practices and working models. Introducing energy efficiency requires some change management and investments to help SMEs reduce energy costs. The Technical Assistance component of the program is instrumental in equipping SMEs with the right knowledge and tools to implement energy efficiency projects. This assistance will encourage SMEs to approach the bank for energy efficiency loans and help us in spreading the word. What are the expected impacts of the project ? The impact is multi-fold: this project will help in reducing energy dependency on outside electricity suppliers as well as providing more affordable energy sources especially for machine intensive SMEs. Replacing fuel-powered energy with solar powered energy will also decrease the overall carbon footprint, therefore helping the bank achieve its objectives in meeting its sustainability and ESG metrics. The spread of green clean energy across our client base is an important impact we see stemming from the implementation of SUNREF I and II programs.
This project is carried out with the support of the European Union
Proparco’s Sustainable Development Report 2021
38
Focus
Our actions for SDGs in 2021
MOBILIZING PRIVATE FINANCE AND DELEGATED FUNDS In its effort to re-route investments towards transitions, Proparco is working to increase the mobilization effect it has on the private sector and support innovation to unlock investments.
Mobilizing private finance towards sustainable development investments An ambition within Proparco’s 2020-2022 strategy is to significantly expand its role as catalyser of private actors : it is no longer just about Proparco financing directly or jointly with counterparts but, more fundamentally, it is about facilitating the growth and reorientation of private financing flows towards sustainable development investments (SDIs) in developing countries. Proparco is aiming to double the amount of private financing flows to reach more than 8 billion euros of private finance mobilized over the 2020-2022 period. In 2021, 1,742 million euros of private finance were mobilized by Proparco (OECD method) compared to a volume of projects approved in 2021 and eligible for the calculation of the private sector mobilization of 1,923 million euros, i.e. a ratio of 0.91 (1.00 in 2020). 40% of private finance mobilized in 2021 has emanated from projects with climate co-benefits (690 million euros, compared to a volume of 665 million euros of projects approved with climate co-benefits, i.e. a 1.04 ratio).
A 0.91 mobilization ratio in 2021 In 2021, the mobilization ratio for projects approved by Proparco stands at 0.91 (1,742 million euros mobilized for 1,923 million euros approved and eligible for calculation), representing a slight drop vs 2020 (1.00). This is due to the smaller share of bank credit lines in approvals that are eligible for the mobilization calculation of private finance (47% in 2021 vs 65% in 2020), knowing that the instrument which contributes most to mobilized private finance is credit lines (72% of mobilized private finance in 2021 and 85% in 2020). The progression of private finance mobilized by investment funds can also
Volume of private finance mobilized by approved projects in 2021, by instrument 0,5% Bonds 9% Loans
be highlighted in 2021, contributing 9% of mobilized private finance (1% in 2020), with 153 million euros mobilized and the second highest ratio (1.05). The mobilization ratio of projects in Africa is 0.71 in 2021 vs 1.17 in 2020. This drop is due to a significantly lower weight of credit lines: in 2020, credit lines represented 68% of approvals in Africa and 91% of private finance mobilized by approved projects in Africa, whereas in 2021 they represented 39% of approvals in Africa and 74% of private finance mobilized in approved projects located in Africa.
Ratios of mobilization by instrument (projects approved in 2021)
Bonds 9% Equity - Investment funds 7% Equity - Direct investments 72% Credit Lines
3% Guarantees
Proparco’s Sustainable Development Report 2021
0,28
Loans
0,07 1,40
Bank credit lines Guarantees Equity - Direct investments Equity - Investment funds
0,80 0,85 1,05
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1.742 billion euros of private finance mobilized by projects approved in 2021
located in low-income and lower-middle-income countries, representing a drop in percentage vs 2020 (49% in 2020). This is due to a smaller share of projects approved and eligible to calculation in these geographies (40% of approvals in 2021 compared to 54% in 2020). Excluding multi-country projects, 32% of private finance was mobilized by projects located in Africa, compared to 41% in 2020.
In 2021, the 78 projects approved by Proparco and eligible to the private sector mobilization calculation mobilized a total of 1.742 billion euros of private finance. Excluding multi-country projects, 36% of private finance was mobilized by projects
1,04
A 67% rise in the amount of private climate finance mobilized in 2021 vs 2020
665,3
0,79
In 2021, 690 million euros of private finance was mobilized by financings with climate co-benefits, i.e. 40% of private finance mobilized, both amounts largely progressing vs 2020 (414 million euros and 23%). This can be explained by both a higher volume of approvals with climate co-benefits eligible for the mobilization calculation (665 million euros in 2021 vs 524 million euros in 2020) and by a higher mobilization ratio (1.04 vs 0.79 in 2020). This is due to a greater share of credit lines in the volume of projects with climate co-benefits (59% in 2021 vs 54% in 2020); credit lines contributed to 81% of the private climate finance mobilized in 2021.
690,4
523,6 414,5
2020
Projects with climate co-benefits: Volume of approvals and private finance mobilized in 2020 and 2021, in M€
2021
Volume of approvals with climate co-benefits, in M€ Private climate finance mobilized, in M€ Mobilization ratio
78% of the adjusted target in private finance mobilized In 2021, amounts mobilized from the private sector reached 78% of the adjusted target; this was mainly due to loans and equity investments whose effective mobilization ratios are lower than estimates considered for the target calculation.
Amount of private finance mobilized, in € Bn
8.50
Ratio de 1.01 2.39
PROJECTS APPROVED IN
2019
Ratio de 1.00
1.78
2020
Ratio de 0.91
1.74
2021
2.93 Adjusted target 2.24
2021 Objective
Achieved in 2020-2021 3.52
Cumulated objective 2020-2022
Proparco’s Sustainable Development Report 2021
40
Focus
Our actions for SDGs in 2021
Mobilizing delegated funds for SDGs Deploying blending instruments to unlock investment and increase our impacts
A new delegated financing envelop allocated by the European Union in 2021
The mobilization of funds delegated by Proparco provides greater additionality and increases the impacts of its financing, by exploring new sectors and/or new markets, which have high impacts but are riskier, and by increasing Proparco’s non-financial contribution to the private sector. Proparco’s 2020-2022 roadmap includes a clear-cut ambition regarding the mobilization of delegated funds with an average targeted amount of 50 to 100 million euros in new funds mobilized per year for operations corresponding to the thematic priorities of delegators (European Union and Green Climate Fund).
In 2021, the European Union allocated a new delegated financing envelop to Proparco amounting to 11 million euros in the form of a subsidy to accompany the implementation of two green credit lines similar to SUNREF for a total amount of 50 million euros to support the development of renewable energies and energy efficiency in Palestine.
2021 approvals on delegated funds (EU and GCF)
In total, almost 350 million euros in projects have been made possible through these delegated funds in favour of climate financing and financial inclusion. Beyond accelerating innovation and positive impacts enabled by concessional financing, all these projects impact the mobilization of private finance in favour of SDGs through the momentum instilled by a Proparco investment or the provision of a guarantee and by the transformation enabled by these technical assistance projects. None of these projects would have been possible without the European Union or the Green Climate Fund’s support, both true allies for Proparco in this process.
In 2021, Proparco continued to carry out the EURIZ programme by granting almost 57 million euros in new guarantees targeting high impact sectors, as well as 45 million euros in new guarantees, credit lines and subsidies for the MENA Facility programme, including two impact-premium operations (1 MENA portfolio guarantee of one million euros with a 50 million dollar credit line). This year, Proparco has also granted two new financings to MFIs in the South European neighbouring area through the European EFSD COVID guarantee obtained in 2020, for a total amount of 19 million euros. Furthermore, Proparco has committed Green Climate Fund resources (30 million euros via concessional loan and 2 million euros in subsidies) to launch a significant initiative (166 million euros of deployed financing) in favour of climate financing in South Africa, accompanying two to three local banks in financing projects working on mitigating and adapting to climate change.
Proparco’s Sustainable Development Report 2021
This new envelop comes in addition to those already available to Proparco, with a total of 8 projects financed by the European Commission and 200 million euros of delegated funds managed by Proparco:
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Project name
Year granted by EC
ARE Scale-up Facility
2015
12 M€
Africa
Renewable energies
Equity investment
T&C facility
2017
26 M€
World
Renewable energies
Garanties
Impact investment
Equity investment, AT
Amount
Géography
Sector
Intervention
EFSD FISEA+
2018
35 M€
Africa and neighbourhood
MENA Facility
2019
23 M€
MENA
Financial inclusion
Guarantees, credit lines, performance linked subsidies, TA
Africa
Financial inclusion
Guarantees, TA
ACP Africa and neighbourhood
Cultural and creative industries
Equity investment, TA
Financial inclusion
Credit lines, TA
Palestine
Climate finance
Credit lines, TA
EURIZ
2019
19 M€
CREA Fund EFSD Emergency COVID response
2019
6 M€
2020
71 M€
SUNREF Palestine
2021
9 M€ 200 M€
Furthermore, in 2021 Proparco has participated very actively in the European Commission’s Strategic Programming for external aid and, in particular in preparing the future call for projects for the European guarantee tool ESDF+ FEDD+, to be allocated a 14 Bn euro budget for the 2021-2027 period and launched in 2022. The different exercises involved were carried out working
closely with AFD and also the European network of EDFIs, with whom Proparco is preparing several joint proposals to mobilize guarantees in favour of financing private actors in high impact sectors: renewable energies, circular economy, financial inclusion, agroforestry, start-ups.
National resources
Total
National resources mobilized for blended operations In 2021, Proparco also mobilized more than 110 million euros through national resources excluding FISEA+ (including 76.1 million euros in guarantees) for blended operations in line with Proparco’s thematic priorities (climate, financial inclusion, entrepreneurship, social sectors) and geographies (Africa and fragile countries). These national resources have been used in varying ways: technical assistance, investment subsidies, rate subsidies, grants with back-to-back loans, project preparation (FAPS), partial risk guaranties.
Proparco’s Sustainable Development Report 2021
Focus
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Our actions for SDGs in 2021
SUPPORTING THE TRANSFORMATION OF OUR CLIENTS One of the key objectives for Proparco is to support the transformation of our clients thereby strengthening their Environmental, social and governance (ESG) approach, improving their operational performance and, of course, increasing their positive impacts on SDGs, notably via the support we provide for innovation. To do this, we are constantly developing our range of tools for this purpose, drawing on our international expertise and on the French and international expertise we mobilize, and the technical assistance we finance for the needs and ambitions of our clients.
Strengthening our clients’ environmental and social approach
Supporting a Vietnamese Textile actor to improve its Environmental and Social performance (E&S) As part of the financing for the Leading Star group to build an additional site, an E&S assessment was carried out, followed by an E&S action plan (ESAP). The main aim of the ESAP is to improve Leading Star’s E&S performance; in turn, this depends on setting up a robust E&S management system with both sufficient and competent internal capacities to implement it. Having identified Leading Star management’s solid interest in promoting gender equality, different lines of action were defined and associated with commitments (target ratios for representation of women at various organizational levels, a specific training plan and a dedicated programme in collaboration with external experts).
Proparco’s Sustainable Development Report 2021
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The number of clients we accompany in this field is constantly progressing. In 2021, 46 additional projects/clients underwent an ex-ante environmental and social assessment (E&S). Proparco also oversaw the setting up of 282 E&S action plans (ESAPs). With its intermediated financings, Proparco supports E&S structuring of banks and funds, reinforcing their capacity, in turn, to support tens of thousands of SMEs.
Developing an E&S action plan for a decentralized energy solutions supplier AktivCo is a company that provides decentralized hybrid energy solutions enabling it to supply off-grid telecom towers with quality energy and, if necessary, increased network coverage of operators in 5 African countries. The implementation of these hybrid systems facilitates the partial replacing of fuel generators by PV panels, thereby contributing to a drop in the consumption of electricity. For this project, Proparco carried out an environmental and social (E&S) due diligence focussing on E&S risks of AktivCo operations and the company’s global development strategy. An E&S Action Plan (ESAP) was set up with the company and lenders, specifically related to the implementation of an E&S Management System (ESMS), the recruitment of an E&S resource at group level, the improvement of waste management (e-waste) and structuring of the road safety policy.
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282 E&S action plans (ESAPs) deployed at our portfolio level
Implementation of the 282 E&S action plans
Proparco has collaborated with clients to set up 282 ESAPs providing guidelines to improve their E&S performance. To do so, Proparco shared its expertise, supplied tools and connected its clients up with competent external specialists. At the Proparco portfolio scale, a quarter of action plans have been fully implemented and half have reached a completion rate of around 50%.
27% 47% 26%
Completion rate 100%
A notable improvement over time in our clients’ E&S performance Proparco’s accompanying and monitoring of E&S implementations since 2017 highlights its contribution to improving client E&S performance in all sectors. Over the years Proparco can confirm that the major part of progress is registered within the first three years of financing or investment. Initial changes driven immediately after the signing of financing agreements enable Proparco’s clients to include their transformation in the long term. Progress is observed for both clients receiving direct finance (debt or equity) and for investee
Evolution client E&S management system T0 Monitoring
12% 3% 14%
Low
27%
35% 42%
Moderate
25% 41%
Good
Excellent
> 50%
< 50%
companies of the funds which Proparco has invested in. The Covid crisis over the past years has not only affected our clients’ capacities, it has also intensified certain difficulties. Effectively, some clients have had to suspend certain investments which would have enabled them to improve their E&S management, as they wait for the economic situation to stabilise. The graphic indicators below highlight the increase in “good“ E&S results indicators after several years monitoring, in comparison with the situation prior to signing.
Evolution of client E&S performance T0 Monitoring
33% 19%
Low
30%
23%
13%
29%
33%
20%
Moderate
Good
Excellent
The “E&S management system” indicator reports on both organizational and human resources that the client puts into place to improve its E&S performance. The “E&S Performance” indicator reflects achieved results, in terms of Proparco’s requirements which include IFC standards. Indicators are established ex-ante, at the time of a project’s signing (“T0”) then these are updated during the investment or financing time (“monitoring”).
Proparco’s Sustainable Development Report 2021
Focus
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Our actions for SDGs in 2021
Personalizing how we accompany our high-potential clients via our products offering technical assistance
An E&S action plan devised for Africa’s first biomass station
Alongside the expertise provided by Proparco’s ESG specialists during project appraisal and monitoring as described above, Proparco can roll out “Responsibility” PROPULSE technical assistance projects to strengthen our clients’ E&S practices. Since 2017, Proparco signed 19 projects for a total 1.8 million euros that aim to reinforce E&S capacities of staff to promote gender equality, to implement E&S management systems, to promote performance6 standards within companies or to obtain a certification (ISO 14 001, OHSAS 18 001, SA 8 000, etc.).
An ESAP was included in the financing deal signed in 2021 for the construction and exploitation of Africa’s first biomass station. This robust E&S Action Plan has been developed to structure the integration of the management of E&S challenges at all levels throughout construction and exploitation. Corresponding actions focus in particular on the monitoring and evaluation of potential impacts linked to air and noise emissions, monitoring and evaluation of potential impacts on local communities as well as the implementation of an action plan to reduce gender inequalities.
6
This notion of company “performance” covers both efficacy (production), efficiency (productivity, viability (profitability) or relevancy (economic, social, environmental) of goals.
Improving our clients’ operational performance “Governance” support focussed on client needs
companies in particular, helping them roll out their governance action plan. Monitoring the implementation of governance action plans around 2 pillars highlights the improved functioning of the Board of Directors being monitored vs the situation at the time of signing and an improvement in internal control implemented by clients.
Within the framework of annual financings granted by Proparco and beyond the ex-ante governance analysis carried out for our clients and their projects, we are, to date, supporting 20
19% 37% 19% 25% 100%
70%-100%
< 70%
Not started
Proparco’s Sustainable Development Report 2021
Evolution Governance indicators of total portfolio Control (internal) Board of Directors
Implementation of Governance action plans (20 CGAP in the portfolio)
T0 Monitoring
50% 8% 15%
T0 Monitoring
Basic
46%
44% 0%
28%
54%
Emerging
22%
0%
31%
33% 23%
Advanced
22% 0% 23%
Developed
Technical assistance
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Helping to mitigate the environmental effect of a wind farm project on biodiversity in the Dominican Republic The aim of this PROPULSE project signed in 2021 alongside other funding partners is to finance studies that provide better scientific knowledge on endangered bat populations threatened by the development of wind farm projects on the island, and to adapt measures to be taken regarding the exploitation of a wind farm co-financed by Proparco and possibly the construction of future ones in the country.
Convertible bonds
Accompanying the growth of Nuru, a recent, innovative enterprise in DRC in the urban solar hybrid mini-grids sector
“Performance“: our technical assistance offering to strengthen our clients’ operational performance and sustainability Governance diagnostics and action plans can be combined with a “Performance” categorised PROPULSE technical assistance service which aims to reinforce the company’s sustainability by on-boarding topics linked to good governance and, more broadly, topics linked to operational excellence, product and service quality, talent management, etc. This type of support helps our clients to progress in terms of competencies and practices and can be adapted to a local and international environment that is more and more competitive. Since 2017, 17 projects have been signed in this area, for a total 1.7 million euros.
Technical assistance
Proparco’s investment has led to improved access to clean and affordable electricity in the eastern region of the Democratic Republic of Congo. As its own governance practices entity is still being set up, Nuru benefited from the expertise of Proparco’s governance team. The goal was to render existing procedures operational, simplify and rationalise its internal boards, adapting them to the company’s maturity and its development ambitions.
Improving day to day management through reliable and controlled accounting Within the FISEA initiative framework managed by Proparco, several deployed TA facilities have been financed by investment funds. The mission of these facilities is to strengthen the SMEs in which they have invested. ECAM is a small cooperative of cocoa producers in the Ivory Coast that has been financed by the FEFISOL fund (invested by FISEA). The technical assistance project that ECAM has benefitted from has enabled it to strengthen its accounting management procedures and to train employees in accounting for cooperatives. This was a necessary structuring to ensure the activity could be driven in such a manner to guarantee growth objectives would be reached.
Proparco’s Sustainable Development Report 2021
Focus
Our actions for SDGs in 2021
Engaging our clients to be more impactful and more innovative Our belief is that strategic and/or technical assistance adapted to company needs is essential to leveraging the effects on their activities and meeting SDG challenges and, as such, we have allocated new financial means as well as a dedicated team to our technical assistance activity (TA) within Proparco that became PROPULSE in 2020. Alongside TA offerings for “CSR” or “Performance”, the “Impact” offering aims to commit Proparco clients to have higher impacts on development. In 2021, 5 new PROPULSE “Impact” projects were signed, for a total 1.7 million euros and these are notably geared towards facilitating access to basic services (e.g. microinsurance or agricultural financing) or the participation of Proparco clients in fighting against climate change (e.g. energy audit).
Technical assistance
Training and supporting micro-finance institutions (MFI) in inclusive insurance In partnership with Crédit Agricole’s Foundation, Grameen, and the ILO, the programme means dozens of MFIs will be trained and supported in adding new insurance services to their products, notably, agricultural insurance. In turn, this means that their clients comprising vulnerable people such as low-income households, women, small farmers, micro-enterprises and SMEs, who are often excluded from insurance products, can protect themselves better.
With the aim of facilitating client transformation, in line with their needs and our ambitions, and to accelerate impacts, Proparco is seeking to significantly increase the frequency and the sums invested in deploying the PROPULSE offering. In 2021, Proparco naturally continued its efforts to mobilize and deploy additional funding to its own budget and to FISEA funds available since 2010. At end 2021, Proparco disposes of several envelops enabling it to support targeted clients in specific areas:
Proparco Budget According to needs
French State Resources
Circa 2-3 M€ per year Responsibility/Impact
European Union
Stock : 13 M€ Circa +5 M€ / an Financial Inclusion, Sustainable Infra, Climate Finance
Green Climate Fund
Circa 2 M€ per year Climate Finance
FISEA+ Initiative
21 M€ to deploy over 15 years SME Support and Investment Funds in Africa
Furthermore, in 2021, Proparco strengthened its PROPULSE Expertise offering, which enables our clients and partners to have direct access to experts. Additional resources amounting to 1.7 million euros have been obtained this year from the French Government to increase this type of intervention in favour of Financial Institutions focussing on measures taken for Climate strategy and gender equality, and 3 million euros from the European Union (as part of the FISEA+ initiative). Proparco’s Sustainable Development Report 2021
Facility
46
Pro Climate TA facility In 2021, Proparco decided to support financial institutions from emerging and developing countries in integrating climate change challenges by providing them with technical assistance alongside a credit line that is dedicated or not to co-benefit climate financings. The ambition of this facility is to support a dozen financial institutions as they integrate climate challenges into their strategies and their operations. This is preceded by diagnosing their level of awareness of climate challenges and followed by defining action plans to implement ambitious climate strategies. This support is part of Proparco’s intensification of the deployment of green financing and its Pro Climate approach.
47 Growth in financing technical assistance and in deepening PROPULSE’s Expertise Since 2017, there have been 56 PROPULSE project signings benefiting our clients for a total 6.3 million euros. Amongst these, 6 projects for an amount totalling 2.8 million euros correspond to TA facilities deployed by financial intermediaries who each reach out to several dozen SMEs.
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An updated and broadened offering to better respond to demand
projects signed since 2017 6.3 million d’euros
110 clients
66% in Africa Financial institutions
Performance
- Good governance - Operational excellence - Quality of products and services - Talent management
8 intervention sectors
Agriculture/ Agro-industry
Healthcare
Investment funds
Financial institutions
Agriculture/ Agro-industry
Healthcare
Education
Infrastructures
Start-up
Investment funds
Training
Direct contribution of
30%
42%
Financial institutions
Impact - Facilitating access to fundamental services - Fight against climate change
Responsability - Strengthening E&S capacity among staff - Promoting gender equality - Implementing E&S management systems - Obtaining certification (ISO 14 001, OHSAS 18 001, SA 8 000)
Agriculture/ Agro-industry
Proparco budget Direct contribution of 2014 since
European Union since 2017 Training
Support for larger
Global support for an
expertise
programs
Diversified modes of intervention
development
Healthcare
Investment funds
Greenfor larger Support
Climate Fund programs since 2019
Direct contribution of ecosystem
expertise
Support for larger
programs
development Education
Infrastructures
Start-up
French Global support for an government ecosystem since 2019
Training
development
Global support for an
ecosystem
In 2021, Proparco has also broadened its PROPULSE offering to include training for the benefit of all actors (including Proparco clients, but not only) operating in the same sector or who operate in the private-sector business area.
Initiative
Infrastructu
Manufacturing sector
expertise Multiplication of available resources
28%
Education
Attracting talent to Capital-Investment in Africa To support capital-investment development in Africa which represents a growing alternative to finance African SMEs, Proparco is launching the African Private Equity Fellowship Programme in 2022. This is a training programme as well as an opportunity to network for finance professionals who are seeking to increase their equity portfolio management skills. Lasting 6 months, this programme means 200 professionals, split over 3 successive years between now and 2024, will be trained and benefit from exchanging their experience.
Proparco’s Sustainable Development Report 2021
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MONITORING
Proparco Rapport Proparco’s Sustainable de Développement DevelopmentDurable Report 2021 2020
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IMPACTS OF OUR INTERVENTIONS
Proparco Proparco’s Rapport Sustainable de Développement DevelopmentDurable Report2020 2021
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Monitoring
impacts of our interventions
INTRODUCTION This yearly exercise is geared to monitoring effective economic, social and environmental impacts of projects that are financially supported by Proparco (debt, equity and guarantees excluding ARIZ/EURIZ). The monitoring of Proparco’s portfolio focusses on four key indicators Proparco has embedded in its strategy and makes it possible to compare effective impacts with ex-ante estimates:
Created and/or maintained jobs
Proparco monitors the impact of projects it finances on the creation and maintaining of direct and indirect jobs.
Gender equality
Fight against climate change
Proparco finances projects that contribute to female employment and leadership and access to essential goods and services for women. The 2X Challenge initiative qualifies projects dedicated to these goals.
Proparco finances renewable energies and measures each Ren project’s contribution to the fight against climate change by calculating their carbon footprint (which enables the evaluation of tCO2eq avoided per project).
Access to essential goods and services Proparco monitors how projects impact access to essential goods and services, notably education, electricity, water and sanitation, healthcare services and financial inclusion.
In 2021, our monitoring exercise covered impacts achieved at the end of 2020 through projects signed between 2015 and 2019. In total, 273 projects (for 254 unique clients) were signed over this period for a total amount of 4.9 billion euros.
2019
2020
2021
In 2019, 94 projects signed between 2015 and 2016 were monitored.
Out of 214 projects signed between 2015 and 2018, the average coverage rate for the five indicators is 59%.
This year, out of 273 projects signed between 2015 and 2019, the average coverage rate for the five indicators is 75%.
x 3.6 projects analysed between 2019 and 2021
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In 2021, the availability of indicators varies according to their nature: • 65% of projects for direct jobs; • 80% of projects for indirect jobs (modelized notably using the turnover or the GDP) ; • 53% of projects for access data; • 100% of projects for tCO2eq avoided per year;
• 75% of projects qualified for the 2X Challenge. Therefore, the average coverage rate of the 5 indicators is 75% at the end of 2020, up 16 points compared to the previous year.
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Monitoring
impacts of our interventions
SUPPORTING JOBS Projects financed by Proparco between 2015 and 2019 have enabled 519,328 direct jobs to be supported; in addition, global activity of clients financed by Proparco between 2015 and 2019 has enabled 9.2 million indirect jobs to be supported in 2020. In total, 519,328 direct jobs have been supported in 2020 through 165 projects, vs 402,442 in 2019 through 130 projects (29% increase in absolute value), including almost 158,955 jobs for women, vs 85,938 in 2019 (84% increase in absolute value). Despite the Covid-19 crisis and for those projects with available data, only a 2% drop in staff counts between 2019 and 2020 has been noted (minus 7,997 direct jobs registered). In 2020, we have observed an improvement in the number of direct jobs supported per million euros invested vs 2019. Furthermore, global activity of clients financed by Proparco between 2015 and 2019 has made it possible to support 9.2 million indirect jobs in 2020. 46% of these indirect jobs are held by women, i.e. 4.2 million women supported.
150 direct jobs supported on average per M€ invested vs 143 in 2019 (+ 5%).
2,215 indirect jobs supported on average per M€ invested in 2020.
The agribusiness, water and sanitation as well as investment funds are the activity sectors that contributed the most to supporting direct jobs per million of euros invested. For the projects where data is available: clients from energy, funds and industry are those who have created the most direct jobs in 2020 vs 2019. Financial institutions and the agribusiness are the sectors which have registered the least direct jobs in 2020 vs 2019.
Financial institutions and investment funds are the clients that have most contributed to supporting indirect jobs per million euros committed.
Direct jobs supported per M€ invested, by sector
Indirect jobs supported per M€ committed, by sector
Agribusiness Water and sanitation Funds Financial Institutions Housing, construction Healthcare Industry Tourism Transportation Education Energy Telecommunications
Financial Institutions Funds Agribusiness Transportation Industry Eau et assainissement Energy Housing, construction Healthcare Tourism Education Telecommunications 0
100
200
300
0
1,000
2,000
3,000
4,000
53
82%
Direct jobs – 2020 monitored jobs vs ex-ante forecasts:
519 K
Projects for which an ex-ante estimation was carried out enabled 519,247 jobs to be supported, i.e. 82% of the estimated 634,677 when assessed, despite the Covid-19 effect on jobs that hadn’t been anticipated at the time projects were being assessed (at the latest in 2019).
0
635K 650K
95%
Direct jobs held by women – 2020 monitored jobs vs ex-ante forecasts: 115 K 0
121K 130K
Projects for which an ex-ante estimation was defined enabled 114,934 jobs held by women to be supported, i.e. 95% of the estimated 120,999 at the time of appraisal.
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Monitoring
impacts of our interventions
One third of direct jobs and three quarters of indirect jobs supported in 2020 are concentrated on the African continent, whereas it only represents 32% of signed amounts. This is explained by a greater intensity of indirect jobs in this region, as modelized by the Joint Impact Model
(JIM). As an example, according to the JIM, the indirect job average supported per million euros in revenue is 107 in Eastern Africa, 38 in Western Africa and 30 in South East Asia.
Direct jobs supported in 2020 by region
Indirect jobs supported in 2020 by region less than Multi-country 4% 1% Europe Latin America
1% Europe
Latin America
6%
14% 34% Multi-country
Asia
Africa
15% 75%
24%
Africa
27% Asia
7 For each million euros invested, the projects financing African MSMEs have contributed in 2020 to supporting 4,282 indirect jobs vs an average of 1,758 for the
other projects being monitored. This gap vs the rest of the cohort is due to a higher intensity of indirect jobs in Africa.
Indirect jobs Indirect jobs
Jobs/M€
1,000,000 100,000
1,758
4,282
10,000
1,000 10,000 1,000
100
100 10 10 1
7
Other projects
Choose Africa
Choose Africa projects represent 22 projects out of the 2020 monitored cohort.
Proparco’s Sustainable Development Report 2021
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For each million euros invested, projects in fragile countries have had a slightly higher impact on direct jobs vs the rest of the cohort and significantly higher on indirect jobs. This high intensity of indirect jobs in fragile countries vs the rest of
the cohort is linked to the fact that 65% of projects in fragile countries within the perimeter of this monitoring exercise are located on the African continent.
Direct jobs
Indirect jobs
Direct jobs
Jobs/M€
1,000,000
10,000
10,000,000
1,000 10,000
10,000
5,113
114
105
1,316
100,000
100
100 10 10 1
Jobs/M€
1,000,000
100,000
1,000
Indirect jobs
10,000
1,000
100
1,000 100
10
10 Fragile countries
Other countries
1
1
Fragile countries
Other countries
1
Beyond the effect on jobs, in more global terms of economic added value produced, it has been estimated, using the JIM modelling tool, that global activity of clients financed by Proparco between 2015 and 2019 has contributed a total of 227 billion euros in added value8 generated in 2020. Almost 66% of the added value created by our clients is located in Africa (149 billion euros). This very significant level shows the extent of Proparco client participation in the economic activity of countries, more especially in Africa.
8
According to the JIM methodology, it is the national added value corresponding to the sum of salaries, taxes and profits.
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Monitoring
impacts of our interventions
PROMOTING GENDER EQUALITY 2X Challenge: 16 projects monitored in 2020 have contributed to strengthening gender equality. Launched in 2018, the 2X Challenge facilitates the heightening of the economic role women play in developing countries and has more than doubled its initial 3 billion dollar goal. Over 200 enterprises in developing countries have benefited from investments within the framework of this initiative during the last 3 years. Qualification of projects for the 2X Challenge is based on five criteria set out below.
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In 2020, 83% of projects qualified for the 2X Challenge with available data, i.e. 10 projects out of 12, have maintained their level of performance in each of the criteria they were qualified for within the guidelines of the initiative.
Number of projects qualified per 2X Challenge criteria Criteria 4 : Access to essential services
9 Criteria 2 : Female leadership
4 9
Criteria 3 : Female employment Criteria 5 : Projects strenghtening gender equality via financial intermediation 3
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2
Criteria 1 : Female entrepreneurship
Monitoring of Banesco S.A. Panama, qualified for the 2X Challenge As part of a Friendship Facility operation led by DEG, Proparco granted a 30 MUSD credit line to the Banesco S.A. Panama bank in 2019; the operation is aiming to support SMEs and to contribute to reducing gender inequalities in Panama. Half of the credit line amount is dedicated to financing SMEs managed or owned by women in line with 2X Challenge criteria. Results monitored for 2X criteria at end 2020 : • Criteria 2: 67% of women in senior management (vs 60% at the time of qualification) • Criteria 3: 62% of jobs held by women (vs 59.6% at the time of qualification) • Criteria 5: 60% of credits granted to women (vs 50% at the time of qualification)
Proparco’s Sustainable Development Report 2021
Monitoring
impacts of our interventions
FIGHTING AGAINST CLIMATE CHANGE In 2020, renewable energy infrastructure projects (28 operational projects) have made it possible to avoid 3.4 million tCO2eq/year via a 2.9 GW installed capacity. These avoided emissions have, for the majority, been enabled by solar projects (76%) and, to a lesser degree, wind (24%). These projects have enabled a slightly lower total of avoided CO2 emissions in 2020 than the corresponding ex-ante estimation (88% of forecast). This gap is mainly due to difficulties encountered by two clients (one solar and one wind) to deploy the projected capacities at the time projects were assessed.
Monitoring of Azure Power: a slightly higher volume of avoided emissions vs forecasts Equity investment
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In 2015, Proparco’s subscription for the second time to Azure Power’s capital aimed at supporting the development and construction of additional solar projects in India for an installed capacity of 290 MW. This project is part of the national framework to develop solar energy and reduce the country’s dependence on fossil energies. In 2020, the monitoring of the project highlights a slightly higher volume of avoided emissions per year than forecasted, linked to a higher load factor than estimated ex-ante.
Ex-ante (2020)
2019
2020
427,000 27 20 290
447,000 27 21 290
447,000 27 21 290
tCO2eq/year avoided Project lifespan Average load factor Installed capacity (MW)
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Split in avoided emissions by technology
Progression in terms of 2020 monitoring vs ex-ante estimation for avoided CO2eq emissions
88%
24%
76%
3,40 M tCO2e
0
Wind 827,868
Solar 2 571,300
avoided (Total/year) Achieved
3,87 M
Forecast
Proparco’s Sustainable Development Report 2021
Monitoring
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impacts of our interventions
SUPPORTING ACCESS TO ESSENTIAL GOODS AND SERVICES Access to essential services is one of the major challenges developing countries face and is central to SDGs. Proparco, by virtue of its mandate, is committed to supporting access to essential services within the countries it operates in.
Through its financings, Proparco has supported access to essential services in 2020 to almost 13.7 million9 people, primarily in the energy sector, for 54% of beneficiaries, followed by healthcare, financial inclusion, water and sanitation, education and telecommunications.
9
Access to essential goods and services: 53% coverage rate in 2020 (48 projects with access data available for 90 from education, healthcare, energy, microfinance, telecommunications, and water and sanitation sectors).
Number of beneficiaries accessing essential services, by category
Energy 7,402,161
Healthcare 3,155,531
Microfinance 1,753,155
Water and sanitation 805,600
Education 481,567
Telecommunications 90,000
Access to healthcare: 3.1 million people have benefitted from access to improved healthcare services
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Regarding healthcare, clients accompanied by Proparco have supported 3.1 million consultations and as many improved accesses to a healthcare service, via 4 projects . Furthermore, Proparco financings have supported access to 14.6 million pharmacy clients and access to 8.3 million laboratory analyses11.
Monitoring the BURSA hospital: supporting the construction of a hospital in Turkey under a public-private partnership In 2017, Proparco’s financing (15M€) for the benefit of the project owner company BRS Saglik Yatirim AS, set up at the initiative of Meridiam and Rönesans, is for the design, construction and maintenance of a public hospital offering 1,355 beds in Bursa. Costing a total 515 M€, the hospital has enabled an improved quality, accessibility and diversity of hospital services in the province of Bursa (cancer treating services, cardiology, radiotherapy, maternity and paediatric healthcare, emergency and intensive care), thereby accompanying Turkey in its policy to improve its public healthcare offering as well as access to care for populations.12 In 2020, almost 760,000 consultations were carried out at the hospital and more than 50,000 patients were hospitalized for an average 5-day stay during the year.
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Access to education: 481,567 students benefitted from improved access to education Projects financed by Proparco between 2015 and 2019 have supported access to education, notably in countries where the rates of completing secondary education is the lowest (54% in Colombia, less than 50% in Thailand and in Cambodia, less than 30% in Sub-Saharan Africa according to a World Bank study). According to UN study, Covid-19 has generated a 20-year loss of progress in terms of access to education10. In total, 9 projects (5 funds and 4 enterprises) have enabled 481,567 students to be supported, including more than 400,000 thanks to an on-line course platform.
10
https://sdgs.un.org/goals/goal4
Pharmacy clients and laboratory analyses clients are not currently considered as people accessing a healthcare service according to the methodology developed by Proparco. 12 O NU, https://sdgs.un.org/goals/goal3
11
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Monitoring
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impacts of our interventions
Access to energy: 7.4 million people have gained improved access to energy In 2020, 33 energy production projects (solar, wind, hydroelectric and gas) have enabled more than 7.4 million people to enjoy improved access to electricity. In total, 31 of the projects monitored in 2020 were renewable energy infrastructures and made it possible for 2.7 million people to benefit from improved access to electricity. These solar projects reach out to beneficiaries mainly located in low/middle-income countries. The map below highlights the location of beneficiaries13 alongside different country needs in electricity. The projects financed by Proparco and monitored in 2020 are mostly located in zones lacking access to electricity, notably Africa.
13
This monitoring includes 33 projects dedicated to the production of electricity for which data monitoring access in 2020 was available.
Financial inclusion: 1.8 million micro-credit beneficiaries
Access to drinkable water and to telecommunication services
Access to financial services for very small businesses is a strategic priority for Proparco. In 2020, 1,753,155 people accessed a micro-credit thanks to microfinance institutions supported by Proparco.
In 2020, a project led by China Water Affairs Group enabled improved access to water for 805,600 people in the Jiangxi and Hubei provinces.
Financial institutions made the most significant impacts in terms of financial inclusion. Additionally, at least 1.6 million credits dedicated to small and medium sized enterprises (SMEs) were granted in 2020 by Proparco’s clients14.
Furthermore, just one project enabled improved access to telecommunication services in 2020: the Sawari Ventures fund, signed in 2018. This fund, through its investee Moneyflows that offers on-line loan and savings solutions in Egypt, enabled 90,000 people to access a telecommunication service.
The microfinance institutions supported by Proparco with available data in 2020 were located in Asia and in low/middleincome countries (41.8% accesses, i.e.: 930,565 microcredits).15
14 15
Loans allocated to SMEs are not considered as access to a financial inclusion service according to the methodology developed by Proparco. Among the 20 microfinance projects monitored in 2020, 9 projects provided a reporting concerning access (number of micro-credits granted) throughout 2020. Furthermore, other financial institutions which are Proparco clients but not specialized in microfinance have reported more than 200,000 micro-credits in 2020.
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Share of population with access to electricity in 2019 and access to electricity in 2020 made possible by Proparco financing
Bujagali, hydroelectric station in uganda (signed in 2018)
100%
83%
Supporting the Bujagali project in Uganda, a fragile zone in terms of access, has enabled 837,415 people to access electricity in 2020.
from 50% to 99,9% from 10% to 49,9% Less than 10% 20 countries with greatest “access deficit”
Number of electricity access (2020)
Source : Banque mondiale © Connaissance des Énergies
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PROMOTING
Proparco Rapport Proparco’s Sustainable de Développement DevelopmentDurable Report 2021 2020
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SUSTAINABLE DEVELOPMENT IN EACH OF OUR OPERATIONS For 45 years, Proparco’s mission has been to support the private sector thereby facilitating growth and sustainable development by (i) financing companies and financial institutions to contribute to the economic, social and environmental development of emerging and developing countries, (ii) accompanying these actors in improving the social and environmental management of their activities and the governance of their establishments, (iii) developing support tools that provide an added value to these financings and (iv) using concessional resources mixed with market instruments for additional and transformational impacts.
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Promoting sustainable development in each of our operations
SELECTING PROJECTS FOR THEIR IMPACTS As a development financial institution and for the purpose of accountability, Proparco evaluates and accounts for the impact of its actions by measuring and reporting the results and impacts of its financings. This approach is integrated into the project cycle, and, first of all, aims to inform the financing decision by characterising expected impacts of financings, notably, with regard to Proparco’s three main strategic goals: to amplify the direct impacts it has in supporting jobs and improving access to essential goods and services, to strengthen the mobilization of private financings towards SDIs, and to accelerate Proparco’s contribution to the emergence of tomorrow’s actors and sectors.
1 Measuring impacts within the project cycle from identification to ex-post evaluation
Identification Pre-identification of impacts
2
3
4
5
Appraisal
Decision
Monitoring
Evaluation
Annual reporting on the main results indicators
Ex post study on the results and impacts of projects
Analysis of the contribution to the impact objectives and sustainable development
A new step in implementing the ‘100% Paris Agreement’ commitment in 2021 Since 2018 and in addition to estimating expected results for projects in relation to impact indicators, an analysis of potential inconsistencies in Proparco’s financings and direct investments vis-à-vis the Paris Agreement is systematically carried out to ensure a better integration of climate issues and sustainability within supported projects. To achieve this, Proparco analyses the risk of its operations being misaligned with the Paris Agreement; this risk can lie in a project’s high level of emissions, in potential structural effects on a country and/or the industry in question which do not tie up with low-carbon trajectories, or in inconsistencies with national or sectorial climate commitments, or in crowding-out effects for less emissive alternative options. 2021 has been marked by the new step taken by Proparco in implementing its ‘100% Paris Agreement’ commitment, with risk
Proparco’s Sustainable Development Report 2021
Presentation of the results of the analysis to the Project Committee and Investment Advisory Committee
analysis on misalignments of its financings with the Paris Agreement being extended to intermediated operations, notably those in favour of banks. Proparco has analysed this risk since end 2021 and helps partner banks and funds that are particularly exposed to the main emissive sectors to improve their awareness of climate challenges. To do so, Proparco has developed its Pro Climate technical assistance facility to support developing climate financings by partner banks as well as integrating climate challenges into their strategies and their operations.
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Evaluating expected impacts of each project Expected effects of each project are assessed in relation to indicator data collection which is informed through project studies and discussions with clients. The analysis of ex-ante impacts is presented through the more global angle of a project’s contribution to SDGs.
Our key impact indicators
Number of jobs created and/or maintained
Number of tons of CO2 eq avoided
Theoretical number of people who will have new or improved access to an essential good or service
Gender equality: Percentage of signed amounts qualified for the 2X Challenge
Amounts mobilized from the private sector for SDIs
2021: Ongoing strengthening of project result monitoring To measure effective impacts of financed projects, to identify the most efficient means to support impact goals and to respond to growing accountability demands vis-à-vis its partners and its Board of Directors, Proparco also collects key indicators during the impact monitoring stage and contributes to ex-post project or regrouped project evaluation studies for capitalization purposes. Following an initial exercise in 2019 to monitor impacts achieved by 96 projects then a second in 2020 covering 214 signed projects, Proparco monitored results achieved by 273 projects signed between 2015 and 2019 (see chapter “Monitoring impacts of our interventions“).
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Promoting sustainable development in each of our operations
A constantly improving impact measurement system In 2021, to improve the prospective knowledge of impacts by sector and by type of operation, the impact measurement unit moved forward in developing sectorial analysis frameworks, in close collaboration with the operational divisions. These guidelines are designed for investment officers and offices and aim to support operational staff
Proparco’s Sustainable Development Report 2021
during project identification and appraisal, by apprehending potential impacts of projects more rapidly and more relevantly as well as identifying additional impacts that can be sought in the case of access to blended resources and/or technical assistance. After cement, building materials, offgrid and textile sectors in 2020, 12 additional frameworks were developed in 2021.
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Proparco, very active alongside its partners in 2021 This year again, Proparco has been very active working alongside EDFIs and other key partners to contribute to harmonizing approaches in terms of valuating the effects of projects on climate and reducing gender inequalities (see insert below). More broadly, Proparco has intensified its presence on the impact-driven investment scene to participate in establishing standards and good practices in terms of impact as part of an unprecedented international momentum within the private sector. As such, Proparco sits
on the Impact Principles Advisory Board (see insert below) as well as the Investors’ Council for the GIIN (Global Impact Investing Network), that provides a tribune for seasoned impact investors to strengthen market practices of impact finance actors. In 2021, Proparco, together with AFD, also participated in the ”Impact Finance” TaskForce launched by Finance for Tomorrow, to draw up an ambitious definition of impact finance and a methodology to measure impact to accelerate the fair and sustainable transformation of the real economy.16
The launch of the new 2X Challenge phase in 2021 provided the opportunity to make adjustments to the 2X Challenge criteria and their interpretation by 2X Challenge members. These adjustments, to which Proparco contributed, focused on finding a fair balance between the necessity to fix ambitious thresholds to reward good performances and to encourage long-term progress at client level, and the necessity to maintain realistic criteria for investors. A new reference guide with 2X Challenge criteria was published in June 2021. Furthermore, ongoing work to align the 2X Challenge criteria with international standards has progressed in 2021 thanks to an alignment with the OECD’s gender equality markers, for which Proparco was a driving force, and with the United Nation’s Women Empowerment Principles.
Standards
Initiative
16
https://financefortomorrow.com/finance-a-impact/
Proparco has joined the Impact Principles Advisory Board In June 2021, Pierre Forestier, Director of Proparco’s Sustainable Development Department, was elected member of the Advisory Board of Operating Principles for Impact Management (“Impact Principles”) for the 2021-2023 period, alongside 10 other signatories amongst 152. The Advisory Board advises the Impact Principles Secretariat on matters relating to the implementation and evolution of the Principles. Impact Principles comprise nine principles, the formulation of which has been driven by the International Finance Corporation (IFC, World Bank Group), to establish a new market standard for impact investment, providing greater transparency, credibility and discipline in practices. With this is mind, Proparco published its third Disclosure statement in June 2022, a memorandum to report on the alignment of its processes and procedures for each principle.
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in each of our operations
MANAGING ESG RISKS Our approach to ESG By nature, development operations present a risk to a population’s environment and to governance. Proparco’s approach aims to identify and address environmental and social (E&S) risks as well as governance risks (G). This approach also enables us to assist our clients in managing the ESG risks. The aim? Avoid, reduce, or even compensate a financed project’s negative impact and reduce Proparco’s financial risks related to these ESG risks. Our approach, which is similar to AFD’s and to international financial institutions best practices, is based on IFC Performance Standards, the norms of the International Labor Organization (ILO), the Voluntary Guidelines on the Responsible Governance of Tenure of Land of the Food and Agriculture Organization (FAO), the United Nations Guiding Principles on Business and Human Rights as well as the resources of the Corporate Governance Development Framework (CGDF). This approach consists in evaluating environmental, social and governance risks of each project that is submitted to Proparco’s decision making bodies. Based on internal or external expertise, we then propose to our financing beneficiaries actions for implemention to manage E&S risks and improve their environmental, social and governance practices. During the operation phase, we monitor the implementation of these actions and ensure that the project properly manages any risk and unforeseen negative environmental and/or social contingencies. Finally, when necessary, we can set up specific, in-depth client support to strengthen its capacity to drive and implement environmental, social and governance performance.
Ex-ante assessment of ESG risks for projects signed in 20211 Estimated ESG risks for projects signed in 2021 are split as illustrated in the graphics below.
Ex-ante E&S risk categorization of projects signed by Proparco in 2021 and of the portfolio
Governance risks on projects signed in 2021 5% 2%
40% 30%
0%
High risk
20%
Major risk
10%
Low/moderate risk
0%
A
B+
B
C
IF-A
IF-B
IF-C
93%
Negligible risk or not applicable
% of Proparco portfolio projects at 31/12/2021 % of projects signed in 2021
The E&S profiles of projects financed in 2021 shows a lower proportion of high risk projects (IF-A and A) in favour of less risky projects. Regarding governance issues, it should be noted that changing the scope of application for governance analyses (focusing on equity projects from now on ) has reduced the number of analyses carried out vs 2020.
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Human Rights due diligences
• Indigenous populations’ rights and the requirement to obtain their free agreement following a prior informed, transparent and inclusive consultation ahead of projects being implemented;
Applying recognized international standards to its due diligences enables Proparco to apprehend human rights questions, in particular regarding: • Worker rights: i.e. to work and job conditions, labour protection (notably against forced labour or child labour, discriminations, etc.); • Community rights, in particular, to health and safety of communities potentially affected by projects (notably potential acts of violence towards these communities); to the acquisition of land and against involuntary resettlement (notably to avoid forced evictions);
• Environmental rights, in particular the preservation of ecosystems, pollution prevention, etc. Since 2019, Proparco’s complaints mechanism set up jointly with its DEG and FMO counterparts completes and reinforces the operational system by inviting people affected by a project financed by Proparco to use an independent channel to collect and deal with their claims.
Methodology: ESG risk management tools
Tools
Proparco supports the implementation of E&S actions plans (ESAP) and corporate governance action plans (CGAP) and the achievement of better results in the field by providing its clients with advice, introductions and tools.
Methodology: ESG risk management tools Proparco disposes of a selection of client ESG assessment and support tools. Contextual research using external databases together with Proparco’s local knowledge is undertaken around a project’s/client’s activities. E&S and G assessment of project/client activities can be done using questionnaires and interviews or by externalizing indepth due diligences. After financing and agreeing to the E&S and G action plan, internal and/or external reporting is set up between Proparco and the beneficiary of the financing to monitor evolutions in ESG performance. To screen and propose improvements in corporate governance practice to certain clients, Proparco primarily uses: • Rapid Risk Screening (rating tool for pre-analysis); • The progress matrix (tool to measure governance maturity); • Ad hoc questionnaires; • Results matrix (rating tool for diligence results); • Model documents for companies (e.g. bylaws of a Board of Directors).
Proparco’s Sustainable Development Report 2021
Promoting sustainable development in each of our operations
Methodology: ESG monitoring indicators Proparco also uses a series of client E&S and G monitoring indicators. These indicators are calculated ex-ante, i.e. upon project appraisal, and are monitored throughout the financing/investment life span by Proparco teams.
E&S risk indicators: • The E&S categorization measures the potential risk at the appraisal phase. This indicator is the only one which does not evolve with time. It ranges from A (high risk) to C (low risk), to which the prefix IF is added for financial intermediaries. Projects noted IF-A, A, B+ as well as certain IF-B rated investment funds undergo an in-depth due diligence. • The residual risk accounts for the E&S risk to date, by comparing the E&S performance and the categorization. It is rated from very high to low.
Training
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Training ESG practitioners The community of donors has flagged the fact that ESG practitioners working the closest to clients is insufficient. Training in this field is rare and comes at a cost. Proparco, in partnership with the IFC, the consultancy firm Ramboll and the association, RSE et Développement, launched an innovative programme: a hybrid training programme that is free and that has an integrated practical part destined for current or future IFC standards practitioners in French-speaking Africa. The programme has been followed by one hundred or so practitioners (consultants, clients, partners…) from a dozen French-speaking countries and includes theoretical lessons, B2B (business to business) meetings within the community, workshops, exchange of documents, on-line working groups, as well as field practice. For more information: More informations here: https://www.youtube.com/watch?v=qvY3w6s9eos https://www.youtube.com/watch?v=8aDNSwAwRWA
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E&S performance indicators
Governance indicators
These reflect the resources which the client deployed and the evolution of its performance. An initial assessment of these indicators is carried out when the project is signed (T0) thereafter regular up-dates are made:
These indicators not only make it possible to track governance risks more efficiently (risk monitoring matrix), they also measure improvements in governance by monitoring governance maturity (progress matrix). Effective implementation of the main commitments provided for in the Governance action plan is also driven by Proparco by keeping an annual governance monitoring scorecard enabling a better qualitative follow-up grounded in the five main pillars of the governance approach:
• E&S organisation: measures the level of maturity of the E&S organisation within the companies being monitored. Scores range from 0 (poor) to 3 (excellent); • E&S management system: measures the level of maturity of a monitored project’s management system. Scores range from 0 (poor) to 3 (excellent); • E&S performance: measures the evolution of a project’s compliance with IFC Performance Standards and Proparco requirements. A score of 0 (poor) to 3 (excellent) is attributed based on a series of key questions.
• commitment to good governance; • structure and functioning of the Board of Directors; • environment and control procedures; • transparency and dissemination of information; • minority shareholder rights.
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Promoting sustainable development in each of our operations
SUPPORTING CLIENTS FOR MORE POSITIVE IMPACTS Alongside its financial operations (debt, guarantee or equity stake), Proparco offers its clients capacity-building services to strengthen their competencies and their practice and, in so doing, adapt to a local and international environment where competition is more and more present, and take on or deepen a responsible approach regarding social and environmental issues. PROPULSE, that is Proparco’s technical assistance offering is of particular relevance in contexts that are often characterized by a lack of training, of information or of know-how. PROPULSE makes it possible for its clients to set themselves up for sustainable and lasting growth, and, by extension, contribute to economic and social development.
Beyond the support provided by its experts, PROPULSE, Proparco’s Technical Assistance service PROPULSE, the Technical Assistance (TA) or capacity-building service of Proparco, consists in providing external expertise and know-how to Proparco’s clients. It is complementary to the more global support provided by Proparco’s experts within the framework of their relationship with clients. PROPULSE comes in answer to competency and/or transformational issues that Proparco’s clients face.
Our mission: “We engage our clients to achieve more positive impacts by providing them with expertise and knowhow tailored to their needs. We help them develop their strategies and practices and support their commitment to innovation.”
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Proparco supports clients from the beginning to the end of a project
Support from Proparco’s experts (human resources)
PROPARCO network Financing/Investment Division • Understanding needs according to type of partner and stage of development • Searching and proposing solutions tailored to partner’s needs
Mobilization of different areas of expertise to design the project Governance expert Improving partner’s governance • Identifying strengths and weaknesses • Designing an action plan • Building capacities
Project identification
Financing/Investment officer • Financial and sectoral expertise • Coordination of all Proparco’s in-house areas of expertise
Due diligence
External skills and expertise
Co-financing feasibility studies to better define market needs and appropriate tools upstream of the project
Environmental and social • Improving partner’s practice • Identifying E&S risks within project • Coordinating required external areas of specialist expertise • Designing an action plan
Formalization
Mobilization of experts for the implementation phase of the project Investment officers • Advice to client • Participation in decision-making bodies • Coordination of in-house expertise Governance Support in implementing corporate governance action plan Environmental & Social Support in implementing E&S action plan
Implementation
Accelerator of impacts
Possibility to mobilize Technical Assistance (TA) to accompany the evolution in clients’ strategies and practices, and to support their desire to innovate, thereby accelerating positive impacts on their activities
PROPULSE can be delivered directly to Proparco clients or delegated to investment funds in which Proparco has invested. Different forms of support can be co-financed by Proparco: • consultancies; • implementation of internal projects carried out by one or several 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. Often co-financed by the beneficiary company, these activities may be financed via Proparco’s operating budget, by resources coming from the French Government, the European Union or the Green Climate Fund (as an accredited entity, Proparco is able to mobilize delegated funds).
PROPULSE has proven to be essential to companies that: • develop products that are less common or are at a very early stage of development (venture capital/digital or start-up); • propose products with a high social impact (social or inclusive enterprises); • operate in countries where the support ecosystem is particularly weak (priority poor countries or fragile countries). There are three types of TA: TA responsibility, TA performance and TA impact, broken down by sector of activity and/or by type of actor: financial institutions, agriculture / agribusiness, manufacturing sector, investment funds, infrastructures (energy, water, transportation, sustainable cities), healthcare, education, start-ups.
As PROPULSE is generally coupled with the financial support Proparco provides to its clients, TA programmes must match Proparco’s overall impact goals and also those of the different financing/investment programs/tools they are paired with.
Proparco’s Sustainable Development Report 2021
Promoting sustainable development in each of our operations
PROPULSE is a catalyser, making Proparco clients: • greener and more inclusive: environmental and social responsibility, energy efficiency, green finance, gender, etc. • and perform better, therefore more sustainable: operational excellence, product and service quality, governance, talent management, etc. and in fine generate more positive impacts.
Thematic areas of intervention Management & Organization Environment & Social
Strengthening your team’s capabilities in terms of financial management, HR management, your performance – technical and operational (e.g.: quality certifications) and/or marketing Setting up E&S management systems and/or obtain certification processes
Strengthening your enterprise’s governance in compliance with International financial partner requirements: division of the distribution of powers, control procedures, transparency,…
Governance Climate & Biodiversity Diversification/innovation
Improving your references in terms of ecology and sustainable development, e.g. by developing green financing products, carrying out energy efficiency audits, taking measures that contribute to mitigating or adapting to climate change, etc. Developing new products to diversify or conquer new markets. Implement production modes and innovating organizations adapted to local and international markets
Accessibility
Launching new product(s) or service(s) that correspond to the needs of very low-income populations, MSMEs, cooperatives, agri-farmers
Inclusion
Ensuring sustainable and responsible practices throughout your value chain to support sustainability and promote inclusive development
Technical assistance
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Facilitating access of African school leavers to international universities. Between 2019 and 2021, Proparco supported Enko Education in setting up an orientation service to support school leavers throughout the university admission process. In two years, 15 guidance counsellors have been recruited and trained within Enko schools. Enko Education has set up communication, information and management tools, enabling school leavers to better understand the pre-requisites of targeted universities and to manage their applications via a dedicated platform. Some 300 school leavers supported in this way have been admitted into more than sixty universities in 15 different countries over the world.
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Proparco’s role in technical assistance projects
Identification Defining the client’s need either during appraisal or monitoring of financial operations
Appraisal Specifying the content of the technical assistance and most appropriate area of expertise needed
Decision Agreeing on the content and terms of technical assistance and maximum amount covered by Proparco
Monitoring Supporting the recruitment of the service provider, monitoring the quality of the service provider and the impact of the TA within the company
On top of its classic PROPULSE offerings to clients by means of financing TA, Proparco now deploys PROPULSE’s Expertise (providing clients with specialist consultants recruited by Proparco) and PROPULSE Training. In 2021, Proparco upgraded its methodology as well as its impact monitoring and results control for PROPULSE. From now on, there is a new indicator system that is transversal and specific to PROPULSE projects, aligned with Proparco’s strategic indicators. It enables indicators to be aggregated, like the number of people trained, the number of strategies-procedures-tools created or improved, or even the number of market / feasibility studies carried out aiming at deploying new products and/or penetrating new markets.
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Promoting sustainable development in each of our operations
DIVERSIFYING INSTRUMENTS TO ACCELERATE TRANSITIONS: CONCESSIONAL FINANCING To accelerate transitions, private sector and investor access to concessional resources is more and more integrated into international donors’ strategies: the resources they allocate to these activities is growing. For a number of years now, Proparco has seized this opportunity to blend concessional resources with market instruments to diversify and adapt its instruments to needs and to risk levels of the projects and enterprises it wants to finance and support while seeking additional and transformational impacts.
Principles for the good usage of concessionality – international references
Group Date of creation
Definition of blending
Principles
OECD-DAC blended finance principles for unlocking commercial finance for the sustainable development goals
DFI enhanced principles for blended concessional finance in private sector projects
Adoption of common principles for blended finance in October 2017
2013 (Principles) puis 2017 (Enhanced principles)
"Blended finance is the strategic use of development finance for the mobilisation of additional finance towards the sustainable development goals (SDG) in developing countries"
"Combining concessional finance from donors or third parties alongside DFIs' normal own-account finance and / or commercial finance from other investors, to develop private-sector markets, address the SDGs, and mobilise private ressources"
- serve development; - increase private-sector finance mobilization; - be adapted to local context; - strengthen transparency and impacts; - strengthen partnerships between private-sector actors and development actors.
- additionality - minimum concessionality - business sustainability - business strenghtening - high standards
Proparco’s Sustainable Development Report 2021
79 Proparco has access to various sources of concessional financing Since 2015, Proparco has the “7 pillar” accreditation and is therefore entitled to manage the European Commission’s delegated funds. Proparco is currently implementing eight delegated funds, directly or in partnership with AFD and EDFIs, by means of facilities to be used in several financial operations. Moreover, Proparco has also been accredited since 2016 to mobilize funds from the Green Climate Fund. This partnership represents a strategic opportunity for Proparco to further strengthen support it is providing to the private sector to transition to low-carbon. The accreditations received from these institutions are a mark of recognition for Proparco. They are the acknowledgment of a capacity to efficiently appraise, implement and manage financings for a wide range of possible operations (in terms of the nature of instruments, risk-sharing and amounts). They positively reflect Proparco’s institutional capacities (banking institution, international mandate management), its technical capacities (fiduciary, oversight, human and logistical capabilities) and its global, thematic and geographic know-how. With the purpose of building an in-depth, global partnership with these entities, facilitating the mobilization of funds through capitalization and feedback from lessons learnt as well as making sure
requirements on a very high level of accountability imposed by these delegating authorities are respected, a specific role and means were allocated as early as 2016 to Proparco’s unit in charge of technical assistance, which then became the TA and Resource Blending Unit. Since 2019, Proparco is also in a position to mobilize funds coming from the French Government through grants and interest rate subsidies which it can use to provide differentiated funding for projects generating additional positive impacts. These different concessional resources are complementary and make it possible to supplement the incentive nature of its own financings thanks to the blending of resources.
Specific analyses on good usage of concessionality Proparco’s operations using concessional resources require a specific analysis regarding the justification for the use of subsidies / concessionalities in favour of private-sector actors. This activity is guided by the doctrine memorandum on the use of concessionality validated by the Board of Directors of the AFD Group at the end of 2018, which complies with international principles and best practices in terms of blending, as formulated by the OECD or the MDBs/ DFIs Working Group on Blended Concessional Finance.
Between 2020 and 2022 Proparco, in line with its new strategy, aims to increase its capacity to mobilize concessional resources which will be used primarily for: • redirecting investment flows and private-sector finance towards sectors, products and services key to economic, social, environmental, territorial, digital… transitions, adding premiums and interest rate subsidies, where appropriate, in relation to the effort and additional impact achieved; • supporting our clients, where necessary, by means of technical assistance and funds to support (i) their progress towards better practices in terms of Corporate and Social Responsibility and (ii) their capacity to innovate, implement and support transitions; • the emergence of tomorrow’s actors and solutions (venture capital; social economy..) including within fragile countries, knowing that concessional resources make it possible to take on risk or innovative nature.
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A WORLD IN COMMON
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June 2022 N° ISSN : 2679-5043 Editor: Proparco Design: Patrick & Stéphanie Monnier-Martin / www.edeo-design.com Photos credits: iStock P. 6: Marcella Barbieri P. 23: Proparco P. 25: Entrepreneurs du Monde P. 26: Cerba HealthCare P. 28: D.light / Rights reserved P. 29: Anthony Surace P. 30: James Keogh - AFD P. 32: Sanko P. 33: Karim Akadiri Soumaïla P. 34: Proparco
P. 36: Arine Rinawi Photography P. 37: Nuru /Sunref - Ahed Izhiman P. 42: Leading Star / Rights reserved P. 44: Proparco / Johan Swanepoel - Fotolia P. 45: Injaro P. 46: Reza Akram - AFD P. 57: Azure Power / Rights reserved P. 61: Marie Tihon - Proparco P. 63: BEL / Rights reserved P. 76/77: John Wesley - Proparco
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Proparco is the private sector financing arm of Agence Française de Développement Group (AFD Group). It has been promoting sustainable economic, social and environmental development for 45 years. Proparco provides funding and support to both businesses and financial institutions in Africa, Asia, Latin America and the Middle-East. Its action focuses on the key development sectors: infrastructure, mainly for renewable energies, agribusiness, financial institutions, health and education. Its operations aim to strengthen the contribution of private players to the achievement of the Sustainable Development Goals (SDGs) adopted by the international community in 2015. To this end, Proparco finances companies whose activity contributes to creating jobs and decent incomes, providing essential goods and services and combating climate change. For a World in Common.
Proparco’s Sustainable Development Report 2021
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