SUSTAINABLE DEVELOPMENT REPORT

#BusinessInCommon

SUSTAINABLE DEVELOPMENT REPORT ANALYSIS OF THE RESULTS AND IMPACTS OF PROJECTS FINANCED IN 2019

Business in Common For over 40 years, Proparco has been serving the private sector and sustainable development. As a subsidiary of Agence Française de DÊveloppement, Proparco invests to support private and financial actors mobilized to contribute to the economic, environmental and social development of developing and emerging countries. We provide funding to businesses and financial institutions whose activity helps create jobs and decent incomes, supply essential goods and services and fight climate change. In this way, our actions aim to strengthen the contribution of private actors to achieving the Sustainable Development Goals.

CONTENTS

Sustainable Development Report Editorial

2

Strategy and ambitions

4

Main results in 2019

22

The expected impacts of financed projects . . . . . . . . . . . . . . . . . . . . . . . 22 Our impact on the transformation of actors. . . . . . . . . . . . . . . . . . . . . . 35

Our operating methods

8

Our impact on mobilizing financing flows and on unlocking investment in countries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Impact monitoring of projects signed in 2015 and 2016

Measuring and analyzing project impacts . . . . . . . . . . . . . . . . . . . . . . . . . 8 Taking environmental, social and governance risks into account and assisting our clients . . . . . . . . . . . . . . . . . . . . . . . 12 Engaging clients toward more positive impacts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Concessional financing to scale up our clients’ impact and support their risk-taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

48

BUILDING TOMORROW’S RESILIENT SOLUTIONS G r é g o r y C l e m e n t e, Chief Executive Officer of Proparco

Supporting a responsible and committed private sector to assist with sustainable transitions in developing countries is at the heart of Proparco’s mandate. Our mission is strengthened today by a global health and economic crisis which exposes our societies’ weaknesses even more.

In the context of these challenges, private investment in developing countries is one of the ways to find tomorrow’s resilient solutions and foster a sustainable rebound.

Proparco is guided by this vision of supporting these

Our aim is to support responsible and committed private stakeholders toward positive and sustainable transformations in the countries where we operate.

countries toward more sustainable and equitable models, equal to the ambitions of the 2030 Sustainable Development Agenda and the Paris Climate Agreement.

These results confirm the relevance of Proparco’s 2017-2020 strategy. In the period, the range of financial instruments

2019 was a turning point for Proparco. The results achieved

also broadened with new blended tools, specially tailored to

allow it to play a key role among European development

the financial and extra-financial needs of clients working

financial institutions and to actively take part in the

in fragile contexts. Building on this and with the goal of

creation of good practices and in fostering the emergence

strengthening our development impact, Proparco has

of actors proposing high-impact solutions. Thanks to the

adjusted its strategic and operational road map for 2022,

trust our clients and partners have in us, we have exceeded

consistent with Agence Française de Développement’s

our objectives and increased our impact on the ground:

strategic orientation plan (SOP) (see pages 4 to 7).

 2.5 billion euros of financing commitments in 2019, including 1,285 million euros in Africa;  1.62 million jobs created and/or maintained worldwide by 2024;

In 2020, we will pursue this focus while remaining flexible and responsive to the needs of our clients and prospects.

Our imperative remains intact in each project we finance:

 7 17 million euros in climate commitments and 3.05

to propose adapted and sustainable solutions to our clients

million tons of CO2 equivalent avoided yearly thanks to

which support ecological and social transitions, the

projects signed in 2019;

improvement of people’s living conditions and countries’

 11.8 million people with improved access to an essential

economic development. It is this commitment as well as

good or service within five years, of whom 70% inhabit

the trust of our clients and partners which drive us to

low and lower middle income countries.

stride toward the future with ambition and optimism.

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Strategy and ambitions Over the years, the private sector has taken on a decisive role in countries’ development trajectories. It is now a key element in official development assistance. In line with the orientations of AFD Group, Proparco has given itself new impetus with its 20202022 strategic road map.

“With adequate, predictable, sustainable fun-

of life, the environment and societal life have

ding, everything is possible,” declared António

become more apparent in recent years through

Guterres, Secretary General of the United

corporate social responsibility (CSR) approaches,

Nations, at the opening of the General Assembly’s

which are increasingly in favor among profes-

High-Level Dialogue on development financing

sionals, regulators and clients. With the SDGs,

in September 2019. Significant progress has been

the Paris Agreement on climate change and

made in recent years in several key domains of

the major international negotiations on trade,

development, but the answers brought forth

prosperity and biodiversity, a universal tran-

to reach the Sustainable Development Goals

sition of our methods of production and modes

(SDGs) remain insufficient. From now to 2030,

of consumption toward more sustainable and

the international community

equitable models has set in.

is summoned to react fast and

The private sector, a key actor in the transition

ambitiously.

Momentum toward universal transformation Private and corporate investments were first considered for their benefits to economic growth and jobs, but their impact on the quality

+€2.5 bn

in commitments authorized by Proparco in 2019

The private sector is a major driver behind those transformations. As an investor, it can influence the majority of investment dynamics.

As a direct actor in the quality of life and in social well-being through

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employment, it also acts, more and more, as a manager of public services and an actor in the

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Sustainable transitions, at the heart of Proparco’s mandate

territorial fabric and in public policy. Lastly, it is a producer of quality and innovative goods and

Through its support for the private sector,

services, able to stimulate ecological, social and

Proparco’s mission is to promote transitions

economic transitions.

toward inclusive and carbon-free models of sustainable and balanced growth, in developing

This new challenge requires a complete renewal

and emerging countries. Through its experience,

of international aid. From now on, its task must

network and new resources, Proparco confirms

be not only to close the gap with the poorest

its role as a dedicated and strategic entity of AFD

among us, but also to stimulate, reorient and

Group to deploy and implement the group’s

regulate investment, especially private, to better

SDG and Paris Agreement ambitions. Today, it

support these transitions.

has reached a critical size, allowing it to be a motor among European Development Finance

WHY A NEW STRATEGIC ROAD MAP?

1

Transfer of private sector activity

100% Paris Agreement • Reaffirmation of climate priority

2 3

New growth trajectory

AFD SOP: new perspectives for 2022

Factors justifying an update of Proparco’s strategy

100% social links

• Sharp turn toward financial inclusion

3D Approach

Partnership reflex

• Pro-active action in fragile areas

• Objective: double the amounts mobilized from the private sector

• Implementation of a new gender indicator • Renewed ambition in health and education

Purposely design of Proparco’s 2020-2022 strategy within the overall orientation of AFD’s SOP

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A new road map for 2020-2022

Institutions (EDFI) and beyond, actively participating in the creation of good practices and the emergence of new actors who can provide

Proparco finished 2019 with convincing results:

high-impact solutions.

it surpassed its strategic, operational and impact goals set in its 2017-2020 strategy. It is now in

Fulfilling Proparco’s mandate is now closely tied

the lead group of DFIs in its areas of operation.

to that of participating in sustainable transitions.

Thanks to these strong results and bearing

At stake is favoring and orienting financing and

market evolutions in mind, Proparco has given

investment flows so that they contribute more

itself new impetus with its 2020-2022 road map,

significantly to the SDGs and to countries’ needs

in line with AFD Group’s strategic orientation

for transition, beyond the financial commitments

plan (SOP), whose trajectory is based on five

of development finance institutions (DFIs).

structuring commitments and a new positioning: to become the bilateral platform of French development policy. With this new road map, Proparco is pursuing three objectives supported by operational priorities.

N E W S T R AT E G Y: F O C U S O N 2022

Strengthen the private sector’s contribution to reaching the SDGs Our strengths: A successful, balanced economic model with more than €2.5 bn in financial commitments reached in 2019 A strengthened international network A multi-sectoral and geographic expertise

Guide our clients toward more sustainable impacts

Double the impacts on development in terms of access to jobs and to essential services The climate issue at the heart of our mandate A much more heightened ambition in terms of gender equity Priority on financial inclusion and microenterprises/SMEs financing

Together, invent tomorrow’s actors and markets

Double the mobilization of private financing Foster the emergence of new private actors Become more involved in fragile areas, with a priority on Africa

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T H R E E A M B I T I O U S S T R AT E G I C O B J E C T I V E S OBJECTIVE 2

OBJECTIVE 3

DOUBLE THE DIRECT IMPACTS ON SUSTAINABLE DEVELOPMENT

DOUBLE THE MOBILIZATION OF PRIVATE FINANCE

FOSTER THE EMERGENCE OF TOMORROW’S PROJECTS AND ACTORS

 Proparco is pursuing the ambition of its

 Proparco aims to catalyze private actors

 Beyond the objective of mobilization,

2017-2020 strategy: it aims to double its

by doubling the amounts mobilized

Proparco seeks to foster the emergence

impacts on employment and on improved

from the private sector for sustainable

of projects and actors in high-impact

access to essential goods or services in the

development investments (SDIs).

sectors.

OBJECTIVE

1

2020-2022 period relative to 2016-2018.

To do so, it will seek to:  consolidate its actions in the highest impact sectors;

This objective is part of AFD Group’s

This objective is in line with the main

ambition to become the French platform

aspect of Proparco’s mission: to support

of development policy, positioning itself

the emergence of projects and actors

as the entry point for providers of deve-

that contribute to sustainable econo-

lopment solutions. It will be achieved

mic development in their countries or

through two complementary actions:

regions. Thus, Proparco will strengthen

 and maximize project impact, thanks

its positioning on the structuring of

to increased mobilization of conces-

 rolling out a wide range of highly

financial markets, the financing of

sional resources and to strengthened

catalytic instruments such as equity

venture capital and the emergence of

support for clients in order to promote

investment and guarantees;

new sectors (off-grid energy, agribu-

adoption of best CSR practices on the

siness, etc.).

one hand, and to support their capacity

 redirecting investment and financing

to innovate and implement transitions

flows toward projects which contribute

This ambition will rely on deliberate

on the other.

the most to sustainable transitions.

action in fragile areas where 80% of poverty will be found by 2030 and where

Proparco will rely on operational

This ambition will rely on the develop-

strategies which:

ment of asset management. Proparco was approved as an investment company in

 favor green investments, thereby

2019 and plans to develop a strategy of

reinforcing its commitments to climate

asset management internally, to parti-

while directing market financing flows

cipate more directly in the reorientation

toward low-carbon investments;

of private capital toward the financing of the SDGs and transitions.

 and stress financial inclusion and the financing of microenterprises/SMEs, the main actors in economic growth in Proparco’s areas of operation.

the private sector is often fragile.

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Our operating methods To provide greater support to private stakeholders toward more sustainable and inclusive development, Proparco is strengthening its own evaluation and impact measurement practices and is developing ever more effective support tools.

Measuring and analyzing project impacts As a development financial institution and for the purpose of accountability, Proparco eva-

An impact measurement integrated into the project cycle

luates and reports on the impact of its action through an approach which measures the results

Proparco’s framework for measuring results and

and impacts of its action. For this, Proparco

impacts is integrated into the different stages

has been constantly developing, adapting and

of the project cycle in order to help determine

strengthening its tools and procedures since

the results and impacts of Proparco’s financing,

2006, in line with international practices and

notably with regard to the three main strategic

its strategy.

objectives (see page 7).

The measuring of results and impacts aims to:

The expected impacts of each project are assessed

 assist financing decisions by assessing, during

with regard to quantitative and qualitative

project examination, the expected impacts on

indicators obtained via project studies and dis-

sustainable development;

cussions with clients. The indicators, gathered

 strengthen the impact of projects by identifying the drivers making it possible;

in a data base, produce an aggregated score which in theory allows the impacts of projects

 act in helping to develop Proparco’s strategies;

to be compared with each other. The ex ante

 improve knowledge and capitalize on know-how.

analysis of impacts, carried out by the Impact

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OUR KEY IMPACT INDICATORS

Number of direct and indirect jobs created/ maintained

Number of tons of CO2 equivalent avoided

Number of people who in theory will have improved access to an essential good or service

Measurement unit in conjunction with the project

accounted for in projects supported. Analysis is

team, is presented from the broader perspective

carried out systematically to identify potential

of project’s contribution to the SDGs.

inconsistencies between direct financing and investment by Proparco (excluding interme-

In 2019, the methods associated with the cal-

diation) and the Paris Agreement.

culation of the indicators related to the number of direct and indirect jobs created/maintained

To measure the real impact of funded projects,

and to the improved access to essential goods or

identify the most effective ways to support

services were refined, with a view to harmo-

impact objectives and respond to the growing

nizing practices across financial institutions.

challenges of accountability, Proparco also collects key indicators at the impact measurement

Regarding climate issues, the “100% Paris

monitoring stage. Furthermore, it carries out

Agreement” dimension was fully integrated

ex post evaluation studies of projects or cluster

into the project examination phase to ensure

projects for capitalization purposes.

that climate and sustainability issues are better

Amounts mobilized from the private sector for SDIs

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2020: strengthened international coordination for impact measurement

In 2019, Proparco carried out an impact evaluation of projects signed in 2015 and 2016, which had been in our portfolio for two or three years (see pages 48 to 52).

Proparco, which was very active in 2019 among EDFIs on the subject of the accounting of direct

Our good practices in impact management recognized

and indirect jobs as well as on climate, will pursue this work in 2020 in collaboration with the IFC, the African Development Bank (AfDB)

In April 2019, Proparco signed the Operating

and other special partners.

Principles for Impact Management (OPIM), a series of good practices whose development

Since May 2019, the EDFI secretariat has started

was overseen by the International Finance

working groups in order to harmonize member

Corporation (IFC) with the aim of granting

approaches to assessing the value of clients’

the investment impact sector the transparency

effects on employment, climate, the reduction

and the credibility which it needs. The nine

of gender inequality and the mobilization of

principles encourage investors to put impact

private finance. The Joint Impact Model (JIM)

management at the center of their activity,

is the result of efforts by FMO, CDC, BIO and

from the investment strategy design stage

Proparco, in collaboration with the AfDB and

to the management of the project’s exit. The

FinDev Canada, to model the impact effects

consulting firm EY verified that Proparco’s

of projects financed in our operation areas, in

impact management framework was in line

terms of indirect jobs and added value. Among

with the OPIMs in 2020.

other things, this modeling takes into account the trickle-down effect in economies.

IMPACT MEASUREMENT IN PROPARCO’S PROJECT CYCLE from identification to ex post evaluation

1 IDENTIFICATION

2 EXAMINATION

3 DECISION

4 MONITORING

5 EVALUATION

Pre-identification of impacts

Analysis of the contribution to impact objectives and to sustainable development

Presentation of the analysis of results to the project committee and the investment advisory committee

Annual reporting on the main results indicators

Ex post study of project results and impacts

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1 Define strategic impact objectives consistent with the

Strategic Intent

investment strategy.

2 Manage strategic impact and financial returns at portfolio level.

3 Establish the investor’s contribution to the

OPERATING PRINCIPLES FOR IMPACT MANAGEMENT ©

Origination & Structuring

achievement of impact.

4 Assess the expected impact of each investment, based on a systematic approach.

5 Assess, address, monitor and manage the potential

Portfolio Management

risks of negative effects of each investment.

6 Monitor the progress of each investment in achieving impact against expectations and respond appropriately.

Impact at Exit

A constantly improving impact measuring tool

7 Consider sustainability of impact when finalizing project exit.

8 Review, document and improve decisions and processes based on the achievement of impact and lessons learned.

 Strengthen support prior to project examination To improve the prospective knowledge of impacts

In 2020, Proparco will work on strength-

by sector and by type of operation, notably in

ening the implementation of certain principles

bordering countries and in fragile areas where

following the 2019 signing of the Operating

it wishes to take action proactively, Proparco

Principles for Impact Management, for example

wants to draft sectoral analysis frameworks

in terms of impact monitoring, in a spirit of

and tools for project teams.

transparency and dialogue. This requires to improve data collection from clients over the life

 Improve the tools and process

of projects in order to track their contributions

of evaluation and analysis

to the SDGs as well as their financial performance more closely. Beyond the strengthening

A certain number of rating tools have been

of monitoring of impacts achieved in projects,

developed by AFD and its counterpart DFIs to

Proparco is pursuing the improvement of its

support their strategies. Proparco is examining

tool measuring results and impacts in line with

them in order to align its own tools with them,

two objectives:

with the goal of harmonization.

9

Independent verification

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Taking environmental, social and governance risks into account and assisting our clients Development operations have risks by nature with

tenure, the guidelines relative to companies and

regard to the environment and to people. Proparco’s

to human rights as well as the resources of the

approach aims to master environmental and social

Corporate Governance Development Framework.

(E&S) risks as well as governance (G) risks. The goal?

This approach consists of evaluating the envi-

To avoid, mitigate or offset the negative impacts of

ronmental and social risks and impacts of each

projects financed.

project presented to Proparco’s decision-making

Our ESG approach

bodies. Based on internal or external expertise, we then propose to the financial beneficiaries’ actions to implement in order to manage these

Our approach, similar to that of AFD and to best

risks and to improve their environmental and

practices of international financial institutions, is

social practices. During the operation phase, we

based on the performance standards of the IFC, the

monitor the implementation of these actions and

norms of the International Labour Organization

we ensure that the project properly manages any

(ILO), the guidelines of the United Nations Food

risks and unforeseen negative environmental and/

and Agriculture Organization (FAO) on land

or social contigencies. Finally, if necessary, we can provide specific in-depth support for the client to strengthen their capacities in the management and implementation of their environmental, social

Environmental and social issues in projects financed by Proparco

and governance performances.

ESG: added value for every project

These are all subjects concerning or possibly having an impact on the

Common sense says that a project/client which

environment and people. Based on IFC performance norms, E&S issues

masters the full set of its ESG risks according to the

include the following main themes:

best standards is a financially more viable project/

A ssessment and management of E&S risks and impacts;

client. And this has now been proven by crosscutting

L abor force and working conditions;

studies on the consequences of applying the best

R ational use of resources and prevention of pollution;

environmental, social and governance practices in

H ealth, security and safety of communities;

enterprises. Beyond better risk management, the

A cquisition of land and involuntary resettling;

project creates additional value. This added value

 Conservation of biodiversity and sustainable management of living

appears in the form of coherence in decisions,

natural resources;

access to new markets via certifications, greater

 I ndigenous peoples;

attractiveness thanks to securing new financing,

C ultural heritage.

better productivity and competitiveness, and finally, a contribution to the improvement of

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Corporate governance in projects financed

by Proparco Corporate governance refers to all the relations between the management of a company, its Board of Directors, its shareholders and the other stakeholders. It is also the framework in which the company’s objectives are set, the means to achieve them are determined and performance is monitored. Its evaluation is based on the analysis of five main components:  The structure and operation of the Board of Directors;  The control environment and procedures;  The transparency and dissemination of information;  Shareholders’ rights, conflicts of interest and related party transactions;  The company’s commitment to good governance.

people’s living conditions and to protection of

team is involved in the appraisal and monitoring

the environment. By maximizing the integration

phases of all projects financed, according to

of ESG dimensions into the life of the enterprise/

the issues (risks and support) determined in a

project, the project/client becomes more resilient

standardized and shared approach.

when facing environmental and/or social crises in the coming years.

Monitoring ESG performance throughout the project life

Proparco is preparing specific tools adapted to sectors, types of enterprises and contexts with the IFC and other development finance institutions, notably EDFIs. These harmonized tools allow for better ownership of the standards of

Respecting best practices over the long term requires monitoring the implementation of ESG recommendations. Such monitoring is subject to indicator calculations, regularly produced and managed by Proparco teams. This way, it

reference by all.

The ESG risk management tools (screening, evaluation, monitoring, support)

makes it possible to identify trends in ESG performance and levels of residual risk for the life

Proparco has several tools at its disposal for client

of each project. In some cases, depending on the

assessment and support. Iterative research is

indicators and the relationship with the client,

carried out on the E&S situation, focusing on the

it can be decided to give specific support to the

activities of the project/client. This contextual

project. This support, whether E&S and/or G, is specific to each project, depends on each client, and may include technical assistance.

In early 2020, Proparco strengthened its ESG division with a 16-person team focused on the proper implementation of ESG approaches. The

Proparco has several tools for client assessment and support.

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With Proparco’s support, the NEOEN company is carrying out a photovoltaic project of 200 MW at an altitude of 4,000 meters in Argentina (see page 15).

BIOSIDUS: good governance and gender promotion In 2018, Proparco invested in the capital of the company Biosidus, alongside FMO and the ACON IV fund. This Argentine family company develops, produces and distributes so-called biosimilar medicine, which is based on living matter, in thirty emerging and developing countries. On the basis of a detailed assessment of Biosidus carried out by Proparco and FMO experts, a governance action plan was formalized in 2019, with a focus on gender promotion at the level of the company’s board of directors. This plan has brought the governance of Biosidus closer to international standards, notably concerning its general assemblies, its board of directors and the appointment of independent administrators.

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research is based on external data bases as well as

To assess the company’s governance practices

Proparco’s local knowledge. The E&S assessment

and propose improvements, Proparco mainly

of project/client activities may be carried out

uses:

in the form of questionnaires and interviews

 Rapid Risk Screening (a pre-analysis rating

or by subcontracting thorough due diligence studies. After financing and agreement on an E&S action plan for the project/client to carry

tool);  t he progression matrix (a measure of the maturity of governance);

out, internal and/or external reporting is set

 ad hoc questionnaires;

up between Proparco and the beneficiary of

 a results matrix (a tool for rating diligence

the financing to monitor the evolution of E&S performance.

results);

15

NEOEN: developing solar energy at high altitude In 2019, Proparco granted a 50-million-

 a nd model documents targeting enterprises

dollar (USD) loan to

(company regulations for a board of directors,

the French company

for example).

NEOEN to carry out the photovoltaic project

A guide to good practices for entrepreneurs, among

Altiplano – La Puna

others, has also been written.

(200 MW) located 4,000 meters high in Argentina. In the

PROPARCO’S ESG RISK MANAGEMENT TOOLS Total project portfolio, sorted by their E&S ranking

Proparco supports the developer and builder

Projects signed in 2019, sorted by their E&S ranking

9%

IF-C

scope of this financing,

in the management of E&S issues, notably

16%

in improving the

IF-C

17%

practices of supervising

A

subcontractors or in

15% 28% IF-B

A

541 projects

38% 18%

IF-B

conditions, water

12% B+

IF-A

8% B

14%

management plans for road traffic, working

76 projects

B+

20%

determining detailed

5% B

IF-A

Note: Of the 593 portfolio projects in the information system on 31 January 2020, 52 projects are unranked (projects entered before 2012). The portfolio considered here thus consists of 541 projects.

resources and waste management.

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Samia Ragued, head of partnership management at Enda Tamweel “Proparco has contributed to the development of our activity by financing loans, through equity investment (€ 8 million contribution), and also by financing technical support in the scope of a Gender program.”

Engaging clients toward more positive impacts Along with its financing operations (debt,

more globally by Proparco experts as part of

guarantee or equity stake), Proparco offers its

their relations with these clients. This assistance

clients capacity-building services in order to

proves essential for enterprises which:

strenghten their expertise and know-how and

 develop less common products or are at a very

to develop their practices. Thus, they adapt to

recent stage of development (venture capital/

a more and more competitive local and inter-

digital or start-up);

national environment and take on or deepen a

 offer high social impact products or services

responsible approach from both a social and an environmental perspective.

A strengthened technical assistance offer

(social or inclusive enterprises); o perate in countries where the assistance ecosystem is particularly weak (priority poor countries or fragile countries).

The Proparco TA offer is classified by sector and by type of actor. It acts as a catalyst to make

Technical assistance (TA) projects consist of

clients more competitive, responsible, green

providing external expertise to Proparco clients

and inclusive, and thus generate more positive

and are complementary to the support proposed

impacts.

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PROPARCO’S SUPPORT TO CLIENTS THROUGHOUT THE PROJECT LIFECYCLE Mobilization of expertise to design the project Governance - Identification of strengths and weaknesses

Advice/coordination - Advice to client

Support from Proparco experts

- Design of action plan - Capacity building

Proparco network Financing/Investment Divisions

External competence and expertise

Financing/Investment - Financial and sectoral expertise - Coordination of all Proparco’s internal expertise

nderstanding of need based U on partner’s nature and their stage of development

Environmental and social - Identification of project’s E&S risks

esearch and proposal of solutions R adapted to partner’s needs

- Coordination of required specialized external expertise - Design of an action plan

Project identification

Cofinancing of feasibility studies to better define market needs and adapted tools, prior to project

Due diligence

Mobilization of expertise in project’s execution phase

Formalization

- Participation in governing bodies - Coordination of internal expertise Governance - Support for setup of governance action plan Environmental and Social - Support for setup of E&S action plan

Implementation

Potential mobilization of technical assistance to accelerate positive impacts of client activities Support for the development of client strategies and practices Assistance for their commitment to innovation

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APPRAISAL CYCLE OF TECHNICAL ASSISTANCE PROJECTS

IDENTIFICATION

APPRAISAL

DECISION

MONITORING

Determining client’s need during appraisal or monitoring of financial operations

Clarification of the content of the technical assistance and of the most appropriate expertise to meet the need

Approval of the content of technical assistance and of the maximum amount covered by Proparco

Support in recruiting service provider, monitoring the quality of the service and of the impact the technical assistance has in the company

Propulse will provide greater visibility for Proparco’s technical assistance offer.

Technical assistance: multifaceted support Technical assistance is either provided directly to Proparco clients or it is delegated to investment funds which Proparco finances. The assistance mechanism may take the form of:  consultancy services;  i mplementation of internal projects carried out by one or more experts;

Propulse: a brand dedicated to Proparco’s technical assistance offer

 t raining (thematic workshops, university degree program, external training, etc.);

In 2019, after a decade of providing assistance, and

 exchange visits between companies and practitioners;

following its capitalization exercise carried out in

 studies (feasibility, market, products and diversification, audits,

2018, Proparco worked on promoting the technical

etc.);

assistance offer available to clients. This offer is

 seminars and crosscutting events.

taking shape in the form of the dedicated brand

Often cofinanced by the beneficiary enterprise, these activities

“Propulse”, which will be launched in 2020.By

may be financed from Proparco’s operating budget or from French

showcasing its results and impacts, Propulse will

State resources or those of the European Union. Proparco has been

bring greater visibility to Proparco’s technical

accredited to mobilize European funds since 2015.

assistance offer.

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

19

ENDA TAMWEEL: assisting a microfinance institute with its gender approach in Tunisia Since 2016, Proparco has been supporting the Enda Tamweel microfinance institute in the improvement of its gender approach. This assistance aims to develop a strategy on gender and to adapt the institutional offering of financial and non-financial services. Furthermore, it focuses on capacity building for its personnel, notably in its network, to contribute to defending women’s economic and social rights, thanks to the implementation of good practices and specific tools.

Enda Tamweel proposes academic support programs for children.

Enda is a pioneer of microfinance in Tunisia. For 30 years, it has been showing that microcredit is a powerful tool for poverty reduction and economic development.

Boosting female entrepreneurship is also at the heart of its mission.

20

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

Concessional financing to scale up our clients’ impact and support their risk-taking To accelerate transitions, private sector and

institution, manager of international mandates)

investors’ access to concessional resources

and technical capacities (fiduciary, control,

is increasingly integrated into international

human and logistical) as well as its global,

donors’ strategies, and their resources devoted

thematic and geographical know-how.

to these activities are growing. For some years, Proparco has been mobilizing this opportunity: it has been using concessional resources

Proparco, partner of the Green Climate Fund

blended with market instruments. The goal is to diversify and adapt its instruments to

Furthermore, Proparco has been accredited since

project and company needs and risk levels that

2016 to mobilize funding from the GCF. Approved

it wishes to finance and support in the search

by Proparco’s board of directors on October 5,

for additional and transformational impacts.

2018, the partnership with the GCF was signed

Provided that they are well used and in com-

in the form of a Framework Agreement in April

pliance with the principles stated in the AFD

2019. This partnership is a strategic opportu-

Group positioning notes, concessional financing

nity for Proparco: it reinforces its capacity to

opens real opportunities of additionality in

support the private sector in its low-carbon

certain operations.

transition. Access to the GCF moreover opens

The management of four delegated funds, a sign of recognition for Proparco

possibilities for Proparco to manage grants or to become a manager of subsidized loans or capital investments with a risk profile. These tools are complementary and make it possible to round out the attractiveness of Proparco’s own

With the “7 pillars” accreditation, Proparco has been able to manage delegated European Commission funds since 2015. Today it manages 4 delegated funds, directly or in partnership

financing thanks to the mixing of resources.

Stronger links with its partners

with AFD and the EDFIs, in the form of facilities which can be used for several financial

In order to deepen the partnerships with these

operations. The accreditation received from

entities, in 2016 Proparco allocated specific

the European Commission is recognition of

resources to its TA unit, which—tasked with a new

Proparco’s work. It testifies to Proparco’s

role—became the “TA and Resource Blending”

capacities for appraisal, implementation and

unit. This new arrangement has facilitated the

effective management of EC financing for a wide

mobilization of funds via capitalization and

range of operations, instruments, risk-sharing

feedback on experience, and it has enabled better

and amounts. It also highlights the relevance

compliance with the stringent accountability

of its many institutional capacities (banking

demands imposed by these delegators.

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

A regulated mobilization of concessional resources

21

Between 2020 and 2022, as part of its new strategy, Proparco is targeting an increase in its capacity to mobilize concessional resources.

Since 2019, Proparco has also been able to

These will be prioritized for:

mobilize French government funds: it uses

Reorientation of investment flows and

grants and subsidized interest rates to provide

financing toward the sectors, products and

differentiated financing to projects generating

services that are part of economic, social,

additional positive impacts. The operations

environmental, territorial and digital

using these concessional resources follow the

transitions. These flows will be backed up

usual appraisal and decision process of other

with bonuses and subsidies to reward the

financial operations, with a specific analysis

additional effort and impact carried out.

produced to justify their use for private actors.

S upport for our clients in the form of

The mobilization of these resources is regulated

technical assistance and support funds, to

by the positioning note on the use of conces-

assist with:

sionality approved by the AFD Group board of

- their evolution toward better social and

directors at the end of 2018. This positioning

environmental responsibility practices;

note complies with international principles and

- and their capacities to innovate, imple-

best practices in terms of resource blending

ment and support transitions.

as expressed by the OECD and the DFI and

Fostering the actors and solutions of tomor-

MDB Working Group on Blended Concessional

row (venture capital, social economy, etc.),

Finance.

particularly in fragile countries, where access to concessional resources would be more helpful for taking on the risk or innovative character of their operations.

PRINCIPLES OF THE PROPER USE OF CONCESSIONALITY GROUP

OECD-DAC has blended finance principles for unlocking commercial finance for the sustainable development goals

DFI enhanced principles for blended concessional finance in private sector projects

DATE OF CREATION

2017

2013 (principles) then 2017 (enhanced principles)

DEFINITION OF BLENDING

“Blended finance is the strategic use of development finance for the mobilization 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 resources”

PRINCIPLES

Serve development Increase the mobilization of private finance Be adapted to the local context Strengthen transparency and impacts S trengthen partnerships between private actors and development actors

Additionality Minimum concessionality Business sustainability Markets strengthening High standards

22

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

Main results in 2019 In 2019, Proparco demonstrated its ability to ensure an ambitious growth trajectory of its activities, with more than 2.5 billion euros in financial commitments, 1.7 billion euros in projects signed and increasing impacts on sustainable development.

The expected impacts of financed projects The impact of each project is evaluated on the basis

To improve our estimations, the calculation methods

of an ex ante analysis of its impacts using three

for indicators related to employment and impro-

key indicators: jobs created and/or maintained,

ved access to essential goods and services were

greenhouse gas emissions avoided and people’s

refined. The numbers presented in this chapter

improved access to essential goods and services. In

were estimated ex ante in compliance with these

2019, 72 projects were evaluated ex ante for impacts.

new methods.

PROJECTS ANALYZED EX ANTE RECORDED IN 2019

35

financial institutions

12

infrastructure projects

13

investment funds

12

corporate projects

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

23

IMPACTS EXPECTED FROM PROJECTS FINANCED BY PROPARCO IN 2017, 2018 AND 2019 Ex ante analysis based on new methods of calculating indicators (see pages 8 to 11)

JOBS directly and indirectly created and/or maintained 427,000 1,314,000 1,618,000

TONS of CO2 equivalent avoided

2017

2017

1,600,000

2018

2018

2019

2019

1,529,000 3,050,000

PEOPLE who will theoretically have improved access to an essential good or service 2017 2018 2019

3,503,000 14,655,000 11,778,000

24

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

Objective: jobs and gender equality

TA RGETED IMPACT Number of direct and indirect jobs created and/or maintained

Ensuring the creation of quality jobs and access to

As these results sometimes depend on a few particu-

decent work for the entire working-age population

lar projects, an analysis excluding atypical projects

is a major challenge. Proparco stresses its role with

was therefore conducted. It shows, in terms of

regard to employment dynamics.

jobs, steady growth in line with the 2020 objective.

The evolution of results expected from projects

The results were estimated using new calculation

signed by Proparco in 2015, 2017, 2018 and 2019

methods of the number of direct and indirect jobs

in terms of direct and indirect jobs supported

created and/or maintained. To enable a relevant

is presented below, using both former and new

comparison, 2017 and 2018 results were updated

calculation methodologies (see pages 8 to 11).

using the new calculation methodology.

PROJECTS SIGNED IN 2015

PROJECTS SIGNED IN 2017

PROJECTS SIGNED IN 2018

PROJECTS SIGNED IN 2019*

Former method New method

1,619,000

1,405,000 896,000

1,618,000

OBJECTIVE IN 2020

1,700,000 1,588,000

1,314,000

560,000

* In 2019, one project contributed to 25% of total direct and indirect jobs created and/or maintained.

427,000

EVOLUTION OF EXPECTED RESULTS EXCLUDING ATYPICAL PROJECTS New method Atypical projects 2017 2018 2019 2020 Objective

396,000

+ 31,000 978,000 1,209,000

+ 336,000 + 410,000 1,588,000

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

25

In Bhagalpur, Rekha, 36 years old, benefited from a loan with Sonata in order to create a grocery shop. Proparco has been supporting Sonata since 2016 in its mission to provide poor women with microfinance services transparently, rapidly and effectively.

1. Support the creation and maintenance of direct and indirect jobs  41,700 direct jobs of which 10,000 created within five years by our clients in 2019  1,577,000 indirect jobs created and/or maintained in five years

Our actions in 2019 will enable the creation or

clients, which are included in the indicators. In

maintenance of more than 1,600,000 jobs among

this context, financial institutions accounted for

our clients within five years. This figure is up by

43% of indirect jobs in 2019, the total number of

23% compared to last year.

indirect jobs supported representing 38 times the number of direct jobs supported, a ratio far

More than two-thirds of direct jobs created and/

greater than that of 2018 (11). The ratio of the MAS

or maintained among our clients came from com-

sector, going from 5 in 2018 to 16 in 2019, is the

panies in the manufacturing, agribusiness and

main contributor to this rise. Indeed, companies

services sector (MAS), led by a few large agro-food

in the MAS sector contribute to 95% of total direct

companies. This year, a large share comes from the

jobs in 2018 and 71% in 2019, and to 47% of total

ETG group, an African agricultural products mer-

indirect jobs in 2018 and 30% in 2019. The ratio of

chant, and from Tereos Açùcar e Energia Brasil SA,

the energy, digital and infrastructure sector (ENI)

a Brazilian trader of sugar, ethanol and bioenergy,

was also a factor in the global increase, rising from

with an expectation of 9,000 and 8,000 direct jobs

17 to 37, whereas the ratios of other sectors dropped

supported respectively within 5 years. “Indirect”

in 2019 relative to 2018, all while remaining high

jobs refer to the jobs supported among Proparco’s

(359 for investment funds in 2019). The evolution

conterparties’ suppliers, sub-contractors and

of the ratio in the MAS sector is explained by the

26

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

stable number of indirect jobs supported in 2019

carried out in low income or lower middle income

relative to 2018, whereas the number of direct

countries: a growing number compared to the

jobs supported fell, declining from 86,000 in 2018

37% of 2018.

to 30,000 in 2019. This decline is explained by the fact that the SIFCA company, a West African

Proparco’s 2019 investments should moreover

agro-industrial actor, alone contributed half of

open the way for the creation of more than 385,000

direct jobs in 2018.

direct and indirect jobs by our counterparties and their value chain within five years, which would

Consistent with the positioning of Proparco, 53%

be 52% more than in 2018 (253,000 direct and

of direct and indirect jobs come from projects

indirect jobs).

2. Supporting equality and women’s economic empowerment  Women will represent more than 50% of employees among 29% of our clients within 5 years  8,300 direct jobs created or maintained occupied by women within 5 years

Women’s employment is a key issue world-

That is why Proparco is participating in the

wide and even more so in Africa. Despite being

strengthening of women’s financial inclusion

dynamic and powerful economic agents, women

and access to job opportunities, as well as in

face numerous barriers to job access and to

the development of female entrepreneurship.

conditions equal to that which men enjoy.

Promoting decent work In the absence of a harmonized definition of decent work

from social protection for themselves and their families

across development finance institutions, Proparco assesses

that go beyond local legal requirements.

the quality of direct jobs created and/or maintained using

Non-discrimination policies are set up in 89% of banks

four social and working conditions criteria: the social

and in 75% of “corporate” projects and infrastructure

protection proposed to employees and their families, the

projects financed in 2019.

existence of a non-discrimination policy, the implemen-

P revention measures against infectious diseases are

tation of prevention measures against infectious diseases

implemented in 42% of “corporate” projects, in 33% of

(HIV, malaria, tuberculosis) and a pay level higher than the

infrastructure and in 26% of banks, in conjunction with

country’s legal minimum wage (or what is customary in the

the prevalence of diseases in the concerned countries.

area and activity sector concerned).

W ages are above market average in 63% of banks and

In 94% of financial institutions, 67% of MAS-sector comp-

50% of “corporate” projects and infrastructure projects

anies (“corporate” projects) and 33% of infrastructure

financed in 2019.

projects financed by Proparco in 2019, employees benefit

27

With the loan that Proparco granted in 2019 to the Imon International microfinance institution, around 23,000 additional people should be able to access quality microfinance products and services in Tajikistan.

In 2019, women account for the majority of

In 2019, the projects located in East Asia and

clients in microfinance institutions supported

the Pacific hired the most women, with 44%

by Proparco. Their financial inclusion is fostered

of direct jobs occupied by women. In those of

by the fact that a large majority of the supported

Sub-Saharan Africa, 32% of direct jobs were

institutions offer financial products or services

occupied by women. As for indirect jobs,

which are adapted to their needs.

three-quarters of jobs occupied by women are in the value chains of projects operating in low

In the investment funds supported by Proparco

income and lower middle income countries.

and their underlying assets, women account for 39% of direct and indirect jobs.

IMON INTERNATIONAL: responsible microfinance In 2019, Proparco renewed its support for IMON INTERNATIONAL, a major responsible microfinance actor in Tajikistan. The project was initially launched in 1999 by the National Association of Business Women of Tajikistan with the support of the NGO Mercy Corps. In 2019, IMON INTERNATIONAL served over 110,000 clients, 40% of whom are women who benefit from relevant products and services. Its leadership is majority female. In addition, women represent 38% of the 1,500 employees.

For these reasons, this operation is eligible for the 2X Challenge initiative (see pages 28-29). Thanks to this loan of around 6 million dollars in local currency, the IMF will be able to develop its credit portfolio: about 23,000 additional people will gain access to microfinance products and services.

28

FOCUS

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

2X Challenge: mobilizing funds for gender equality entrepreneurs, employees and investors, from the angle of affirmative action. This initiative

At the G7 summit in Canada in 2018, Proparco and five other development finance institutions (DFIs) committed to the 2X Challenge initiative. The objective: invite the DFIs to mobilize funds and to unlock resources for gender equality.

aims to mobilize 3 billion dollars by 2020 for projects reducing gender equality.

A year and a half after its launch, 2.47 billion dollars have already been committed and mobilized for gender equality. In 2019, six new DFIs became members, and a multilateral development bank supported the initiative. Proparco’s total contribution to 2X projects reached 504 million dollars at the end of 2019.

Common criteria for gender equality projects The 2X Challenge seeks to improve women’s access to leadership positions, quality jobs,

Criteria to identify investments which benefit

sources of financing for their company as well

women were also adopted in 2019. They contribute

as various goods and services. Participation in

to establishing a common language for DFIs and

the 2X Challenge is greater in some sectors, such

specialized organizations in determining indic-

as financial services. There is still much to do for

ators to qualify gender projects. This increasingly

the inclusion of women in companies or sectors

acknowledged framework of very specific criteria

where they are traditionally under-represented,

is useful in developing financing devoted to gender

such as renewable energies.

equality and in determining strategies.

3 billion dollars for gender equality

Invest2Impact, supporting women entrepreneurs on the ground

The approach of financiers participating in the

Since 2019, Proparco has been participating

initiative is now two-fold. It consists on the one

in the Invest2Impact initiative, which is a

hand of taking into account gender inequalities

business plan competition designed specifi-

in the projects they finance and to minimize the

cally for women-owned SMEs and which aims

risks of maintaining or strengthening them.

to identify and support the development of

Additionally, it makes conscious efforts to

high-potential, women-owned SMEs in certain

increase the share of financing favoring women

Sub-Saharan African countries. Supported

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

by FinDev Canada, Proparco, OPIC, CDC and

In October 2019, the program selected, from

Mastercard, this initiative falls squarely within

among 800 candidacies, 100 companies belon-

the 2X Challenge initiative.

ging to women in East Africa (Kenya, Uganda, Tanzania, Rwanda and Ethiopia), where the first

Invest2Impact targets women-owned businesses

phase of the program is taking place. This selection

at the growth stage. It provides them with deve-

was confirmed at the Global Gender Summit in

lopment support for their strategy and investment

Kigali the following month with the awarding

as well as post-financing mentoring. It also serves

of prizes. The continuation of this program, also

to rally and mobilize a wide range of impactful

supported by Proparco, will consist of assisting

investors and development financiers involved in

these 100 companies in capacity building to meet

Africa, beyond DFIs, to give participating SMEs

the main challenges which women entrepreneurs

increased visibility and greater financing options.

face. Proparco mobilized 150,000 dollars for the structuring of the initiative. Recently, it approved a grant of an additional 500,000 dollars to finance support activities.

CAPITAL BANK: encouraging women’s entrepreneurship in Panama

Strategy 2020-2022: new ambitions for equality

29

The categories of 2X eligibility criteria  women’s entrepreneurship  women’s leadership  women’s employment  offer of goods and services designed to benefit women specifically  criteria devoted to clients or assets for intermediated financing

In line with the AFD Group’s strategic orientation plan, Proparco’s new strategy for 2020-2022 confirms the implementation of a new gender

Proparco, at the end of 2019, approved a

indicator corresponding to the 2X Challenge

Read the Private Sector

20-million-dollar loan to Capital Bank to

criteria. Its main objectives are to:

& Development issue

support growth in its SME portfolio and to

Support the growth of Proparco’s financial

on gender inequality: :

encourage women’s entrepreneurship in

commitments to reach 25% of yearly signa-

English: bit.ly/SPD-VA

Panama. 30% of the credit line will be dedicated

tures labeled “gender”.

French: bit.ly/SPD-VF

to SME financing managed or held by women

Increase the visibility of Proparco’s activities

according to the 2X Challenge criteria. The

on the subject both internally and externally.

bank has committed to financing transactions

A nd thus develop our partnerships and

which respond to at least one of the four criteria

influence.

concerning entrepreneurship, leadership, employment or consumption. As a complement

2019 was the opportunity to reflect upon the

to the loan, Proparco will deploy a technical

importance of the private sector in the reduction

assistance program in order to create financial

of gender inequalities through producing the

and non-financial products aimed at promoting

magazine SP&D.

access to company financing where women play a predominant role.

30

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

Objective: fight against climate change TA RGETED IMPACT

Number of tons of CO2 equivalent avoided

PROJECTS SIGNED IN 2015

PROJECTS SIGNED IN 2017

PROJECTS SIGNED IN 2018

OBJECTIVE IN 2020

5,000,000 3,050,000 1,650,000

1,600,000

1,529,000

Proparco puts the promotion of low carbon

SCALING SOLAR: two new solar power stations in Senegal

PROJECTS SIGNED IN 2019

of co-benefits):

growth at the heart of its strategy: in 2019, the

• one fund devoted to financing companies

number of projects with climate co-benefits

active in the fields of energy efficiency,

signed increased by 20% over 2018. On average,

clean energy and optimization of natural

more than 3 million tons of CO2 equivalent will

resources, mainly in India;

be avoided each year over the life of the 19 “cli-

• and one Africa investment fund in the

mate” projects signed by Proparco, representing

fields of renewable energies and energy

434 million euros of co-benefits:

efficiency.

Eleven renewable energy infrastructure proIn Senegal, as part

jects in Senegal, Nigeria, Guinea, Argentina,

In terms of authorizations, 32 projects with

of the Scaling Solar

Guatemala, Mexico, Brazil, India, Nepal and

climate co-benefits were approved in 2019

initiative, Proparco

Ukraine (252 million euros of co-benefits).

(23 mitigation and/or adaptation projects in

participated in the

Four dedicated or partially dedicated climate

infrastructure, energy efficiency, construc-

financing of two

lines in financial institutions in Nigeria, Ecuador,

tion and agriculture, 2 investment funds and

solar power stations

Paraguay and Turkey (121 million euros of

7 dedicated lines) for 717 million euros, which

in Kahone and

co-benefits).

increased compared to 2018 (536 million euros).

Touba. These power

Two “corporate” projects in the field of renewable

stations produce the

energy and biomass production, notably in

equivalent of the

Brazil (38 million euros of co-benefits).

annual consumption

Two investment fund projects (22 million euros

of 595,000 people theoretically and make it possible to avoid 86,800 tCO2-eq per year on average for 25 years.

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

31

In Senegal, two solar power plants were financed with Proparco’s support. 86,800 tCO2-eq per year on average can thus be avoided for 25 years.

Supporting adaptation and mitigation strategies  Proparco’s 2019 investments will annually avoid the emission of 3.05 million tCO2 equivalent (+99% relative to 2018)  A renewable energy installed power capacity of 1 ,896 MW (886 MW in 2018) once the projects are operational

The projects with climate co-benefits financed

power capacity of 1,896 MW (886 MW in 2018)

by Proparco are expected to avoid the emission

and an expected annual energy production of

of nearly 3.05 million tons of CO2 equiva-

6,971 GWh, versus 3,870 GWh in 2018.

lent on average each year during the life of the projects. To calculate this estimation,

In 2019, Proparco also approved three climate

Proparco uses the AFD Group procedure

change adaptation projects:

and tools, the latter being aligned with the

In Egypt, Proparco granted an 18-million-euro

international standards used by the majority

loan to the T&C Garments SAE company, a

of international financial institutions in the

jeans production factory, with the objective

transport, renewable energy and energy

of recycling 90% of its waste water.

efficiency sectors.

In Zimbabwe, Proparco granted a 25-million-euro loan to Seed Co Ltd, the leading

The climate change mitigation projects are

African seed supplier, in order to develop

essentially renewable energy efficiency pro-

hybrid seeds that are more resistant to climate

jects. Proparco supports the energy transition

vagaries and to limit harvest losses through the

while also improving access to businesses and

use of corn driers.

local populations. The 11 renewable energy

In Kenya, the Kenya Nut Company was granted

infrastructure projects signed by Proparco in

a 17-million-dollar loan, 4 million of which is

2019 involve solar, hydroelectric and wind power

for setting up a drip irrigation system which

installations. They account for a future installed

will help save water.

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P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

Objective: improved access to essential goods and services

TA RGETED IMPACT Number of people who theoretically will have improved access to an essential good or service

By supporting projects which improve people’s

2017, 2018 and 2019 in terms of improved access

access to essential goods and services, Proparco

to an essential good or service is presented

works toward the reduction of inequalities in

below based on both former and new calculation

emerging and developing countries. The projects

methods (see pages 8 to 11). Since these results

signed in 2019 are being deployed in the health,

sometimes depend on a few particular projects,

education, energy infrastructure and financial

an analysis excluding atypical projects was

inclusion sectors. The evolution of expected

therefore conducted. It shows steady growth in

results of projects signed by Proparco in 2015,

access, in line with the 2020 objective.

PROJECTS SIGNED IN 2015

PROJECTS SIGNED IN 2017

PROJECTS SIGNED IN 2018*

22,638,000

PROJECTS SIGNED IN 2019**

OBJECTIVE IN 2020

22,370,000

Former method New method

12,000,000 14,655,000 5,156,000

4,100,000

3,503,000

11,800,000

5,780,000

* One project in 2018 contributed to 68% of results. ** One project in 2019 contributed to 40% of results, and a second project 20% of results.

EVOLUTION OF EXPECTED RESULTS EXCLUDING ATYPICAL PROJECTS

New method

Atypical projects 2017 2018 2019 2020 Objective

1,303,000 + 2,200,000 + 10,000,000

4,655,000 + 6,909,000

4,870,000 5,780,000

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

In 2019, 24 projects were signed in order to

According to the impact calculation methods

improve people’s access to essential goods and

revised in 2019, these projects should ensure

services. The beneficiaries include:Â

improved access to 11.8 million people within five

Two blood testing services for 666,000

years, of whom 70% of the beneficiaries are in low

additional consultations by 2024: analysis

income and lower middle income countries. The

laboratories in the MENA region and one

total number of beneficiaries of improved access

company whose activities are related to the

to an essential good or service for projects signed

collection of blood, serological exams and

in 2019 is 20% lower than in 2018 because the

blood transfusion in Brazil.

China Water operation in the field of water and

One producer of generic pharmaceutical

sanitation contributed very significantly to results.

products targeting patients in Ivory Coast,

Thanks to projects signed in 2019, 8.5 million

Ethiopia, Cameroon, Burkina Faso, Botswana

people should be able to benefit from improved

and Namibia.

access to electricity within five years, which is

Twelve energy infrastructure projects in Nigeria,

four times more than for projects signed in 2018.

Ivory Coast, Senegal, Mozambique, Kenya,

This year, three-quarters of the contribution

Ukraine, India, Nepal, Argentina and Guatemala.

comes from two projects:

Seven microfinance institutions in Cambodia,

The construction of a hydroelectric power

Myanmar, Tajikistan, Pakistan, Georgia and

station by the Nepal Water and Energy

Haiti, and one multi-country fund (Accion

Development Company.

Venture Lab), to support the emergence

And the extension of a thermal power station

of fintech firms that will help structure

in Ivory Coast.

the development of financial inclusion for individuals.

As for financial inclusion, we estimate that

One education project in Sub-Saharan Africa

230,000 people should benefit from a micro-

(Zambia, Uganda, Kenya, Mozambique,

loan from a microfinance institution thanks to

Senegal and Mali) benefiting around 21,000

projects supported by Proparco in 2019, versus

students in the next five years.

95,000 for projects signed in 2018.

RENSOURCE HOLDINGS: affordable off-grid energy In 2019, Proparco signed an agreement to acquire 3 million dollars in equity stake in the Rensource Holdings company, an innovative actor proposing the production of off-grid solar energy in Nigeria.

By 2024, 250,000 SMEs and merchants should be connected to more affordable, reliable and clean electricity via more than 100 new mini networks installed at markets. In terms of climate, the project falls entirely within the 100% Paris Agreement mandate with an expected effect of 30,000 tCO2-eq avoided per year compared to pre-existing diesel generators.

33

34

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

In addition to microfinance institutions,

via cellphone. With this agreement, the number

Proparco signed an equity-stake agreement in

of beneficiaries of a financial inclusion service

2018 with JUMO World Limited, a South African

reached 1,470,000, with the fintech firm alone

fintech firm which proposes real-time financial

contributing to 1,343,000 beneficiaries.

products to unbanked people, mainly nano-loans

BENEFICIARIES OF IMPROVED ACCESS TO AN ESSENTIAL GOOD OR SERVICE IN 2017, 2018 AND 2019 Expected number of beneficiaries, in thousands Health 2017 2018 2019

Education

2,200 680 1,160

2,020

Energy

Financial inclusion

Ex ante analysis based on indicator calculation methods revised in 2019 (see pages 8 to 11)

Water and sanitation

620 1 ,470

2,990 20

10,000 8,540

230

AFRICURE: local medicine production in Africa Painkillers... treatments against malaria, gastro-intestinal illnesses, diabetes... antiretrovirals and vaccines‌ The 10-million-dollar loan granted to the Africure Pharmaceuticals company will enable the development of two new generic medicine production units in Ivory Coast and Ethiopia. Il will also help increase current production capacities in Cameroon, Burkina Faso, Botswana and Namibia.

Thanks to this project, more than 2 million additional patients will have access to generic medicine in Cameroon, Ethiopia and Ivory Coast. Proparco backed up this loan with a technical assistance project aiming at supporting the company in its efforts to comply with the World Health Organization’s principles of good manufacturing and distribution practices.

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

Our impact on the transformation of actors  120 clients have benefited from environmental, social and/or governance support (ESG) from Proparco since 2017 (38 out of 51 clients supported in 2019), in the form of an ESG assessment, a corporate governance action plan (CGAP), an Environmental and Social Action Plan (ESAP), and/or negotiated E&S clauses.

Since 2017, Proparco has set a strategic objective

not yet fully available in many infrastructure

of strengthening its clients’ CSR, their gover-

and energy projects.

nance capability as well as their capacities to

The negotiation and monitoring of an E&S

innovate, implement and support transitions.

action plan for nearly 200 projects in portfolio

Our experts’ support for our clients’ CSR

(37% of projects in portfolio).

The monitoring of the effective implementation of these action plans: around one project in two with an E&S action plan has at this

The implementation of sustainable patterns of

time implemented more than 50% of their

consumption and production is a real opportu-

plans’ actions.

nity for companies. It allows them to respond

Of the projects signed in 2019, 51 (representing

to investors’ expectations, gain access to inter-

68% of projects signed in 2019) were sup-

national markets and to be more competitive.

ported, notably through the implementation

At the same time, they can maintain decent

of a specific E&S action plan.

working conditions and establish positive relations with local communities, all the while

Taking into account the above considerations,

limiting their impact on the environment. It is

Proparco supports the implementation of ESAPs

in this perspective that Proparco supports its

and the achievement of better results in the field

clients in improving their environmental and

by supplying its clients with advice, networking

social practices and that in 2014 it implemented

possibilities, tools…

dedicated performance indicators. In analyzing these indicators, in general we note: A significant improvement of means imple-

Our experts’ support for our clients’ governance

mented by our clients, especially in the first three years of financing.

Proparco assesses corporate governance for

An E&S organization and management system

some of its clients, negotiates action plans and

which is comparatively better in equity stake

monitors the implementation of contractua-

projects (principally investment funds).

lized improvement measures. This process

E&S management systems of infrastructure

goes beyond a risk-based approach: it is in line

and energy projects which are less mature at

with Proparco’s search for added value for its

signature than those of other sectors. This is

clients in that it offers them an assessment and

explained by the greenfield situation Proparco

personalized support which may be paired with

finds itself in upon arrival, where procedures are

technical assistance.

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36

DATA

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

EVOLUTION OF E&S ORGANIZATION At signing

MAS: manufacturing, agribusiness and services

22% 45%

16%

26%

37%

Excellent

44%

41%

36%

50%

Weak

28% 19%

28%

45%

57%

Moderate

38% 33%

and infrastructure

5%

18%

17%

MAS

ENI

Banks

Equity: investment funds

38%

Good

ENI: energy, digital

Banks

Best date

39% 38%

23% 21% 7% Equity

MAS

9%

8% 7%

4%

ENI

Banks

Equity

EVOLUTION OF E&S MANAGEMENT SYSTEMS At signing 13% 28%

9% 27%

26%

Best date 36%

31%

21%

48%

60%

Good Moderate

40% 48%

Excellent

55%

36%

Weak

64% 51% 37%

17% 10%

9%

MAS

ENI

17% Banks

36% 15% 13% Equity

1%

18%

15%

14%

4%

MAS

ENI

Banks

Equity

IMPLEMENTATION OF E&S ACTION PLANS (ESAP) IN THE TOTAL PORTFOLIO OF PROPARCO (202 PROJECTS)*

29%

47%

IMPLEMENTATION < 50%

IMPLEMENTATION > 50%

* 18 projects for which an ESAP was negotiated have to be updated in the information system,

24%

IMPLEMENTATION 100% COMPLETED

representing a total of 220 ESAP in the portfolio on January 31, 2020

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

37

FOCUS The E&S indicators in the Proparco project cycle Some indicators are designed to assess E&S

The indicator uses scores from 0 (weak) to 3

project risks.

(excellent).

 Th e E&S classification measures potential risk

 E&S management system (ESMS) assesses the

upon project appraisal. The risk level which is

management system’s maturity of monitored

set upon appraisal is not reviewed afterwards.

project. The indicator uses scores from 0 (weak)

The classification goes from A (high risk) to C

to 3 (excellent).

ENGIE: an evaluation and E&Senhanced risk management As part of the

(low risk), to which the prefix IF is added for

 E&S implementation performance measures the

Financial Intermediaries. The projects rated IF-A,

evolution of the compliance of projects with IFC

renewable energy

A, B+ as well as investment funds classified IF-B

standards and Proparco requirements. A score

platform in Mexico,

are subject to more detailed due diligence. An

of 0 (weak) to 3 (excellent) is calculated using

Engie developed and

an Excel form.

implemented an E&S

environmental and social action plan is usually negotiated with the client and its implementation

 E&S effectiveness is a combination of the

development of a

management system

previous three indicators. It is calculated using

to facilitate a proactive

 Th e residual risk evaluates the E&S risk to date,

the following formula: E&S effectiveness = E&S

approach in the

crossing the effectiveness rating (see below)

performance x (E&S organization + ESMS). The

identification, evaluation

with risk potential. It is classified into four

result is then adjusted for classification on a

and management

categories for direct projects: very high (0),

0-to-3 scale.

of E&S risks of each

is monitored by the ESG division.

project (two wind

high (1), moderate (2) and low (3). It is updated annually or biennially depending on the level of

When an unforeseen event occurs involving signif-

projects and four solar

monitoring assigned to the project (moderate

icant negative ESG impacts for a project, or when

projects). In line with

or sustained/reinforced).

a project lags significantly behind its E&S action

international standards,

plan, it is in “ESG alert”.

this approach resulted

The E&S performance indicators measure the

in the design of specific

evolution of the performance of the means implemented by the client and the results obtained.

The monitoring of these risks is carried out as part

operational procedures

Their characterization varies depending on the

of projects E&S monitoring and as part of active

for each project with,

type of counterparty (FI, non-FI). An initial state is

supervision conducted thanks to screening tools.

inter alia, heightened

realized upon the signature of the project (t0) then

When identified, these risks may generate an est-

monitoring of

they are updated annually or biennially depending

ablished non-compliance with commitments made

biodiversity impacts and

on the level of monitoring assigned to the project

by Proparco in its sustainable development strategy,

a strong commitment to

(moderate or sustained/reinforced):

the deterioration of the financial health of the pro-

communities.

 E&S organization, measures the maturity of the

ject, or an external reaction by the media or NGOs

E&S organization of the monitored companies.

which can potentially harm Proparco’s reputation.

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P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

Since Proparco ratified the Corporate Governance

agreement. Moreover, the implementation of

Development Framework (CGDF) in 2011, it has

ten action plans for portfolio project gover-

been committed to this approach

nance is being monitored by Proparco. The key

along with 33 banks and develop-

highlights of the assessment and monitoring

ment finance institutions. This

carried out are as follows:

40

framework agreement strives for

Concerning family companies, issues of

the implementation of a common

succession and family terms of employment

policy and methodology for good

are recurrent.

governance, inspired in large

Board of administration committees (audit,

part by the work of the IFC on its

risk, appointments and remuneration, and

performance standards.

E&S) are not always created.

In 2019, 40 projects underwent

without internal regulations, without a

corporate governance evaluation.

secretary to the board and nearly always

Among the projects signed this

without a self-evaluation procedure.

year, four have seen a specific governance

Internal control is often undersized.

PROJECTS EVALUATED on corporate governance in 2019

Boards of administration often function

plan of action annexed to the commitment

Good governance as the operating framework of the company Corporate governance provides the decision-making framework within which company objectives, the means to reach them and performance monitoring are set. Today, good corporate governance is also understood as the respect of business ethics and E&S commitments. It also contributes to strengthening and rationalizing the exercising of power in the company and thus acts as an instrument to limit risk and drive growth.

Additionally, it promotes transparency and aims to establish an atmosphere of trust, which is vital to attracting investors and lenders. Good governance is therefore a key factor in improving access to financing. It is essential to the creation of wealth and the development of employment.

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

AL AMANA: the Moroccan MFI expands its product range In 2019, the microfinance institution Al Amana developed a new activity with support from Proparco: mesofinance. In the context of the regulatory evolution of microfinance in Morocco, the goal of this support is to adapt the MFI’s service offering and to position it on a new segment of clientele: micro and small enterprises. An expert mission is planned to support Al Amana in the design of a financial and non-financial services offering and, during a pilot phase, in the uptake of this new offer.

Results of financing our clients’ technical assistance With its technical assistance offer, Proparco leads its clients toward more positive impacts by providing them with adapted expertise and know-how. It supports the evolution of their strategies and practices as well as their drive to innovate. Since 2010, Proparco has financed

€3.3m

since 2010 for technical assistance

61 technical assistance projects for a total of 3.3 million euros on its own budget. Half of these focus on improving ESG practices and complement the expertise brought by Proparco during the appraisal and monitoring phases of projects.

Growth and diversification of technical assistance financing

In the context of its 2017-2020 strategy, Proparco has allocated 3 million euros from

With the goal of accelerating impacts and

its own resources over four years to ensure the

promoting a transformation of clients in line

deployment of technical assistance. In 2019,

with their needs and our ambitions, Proparco is

483,000 euros were disbursed to cofinance

seeking to increase the frequency and amounts

outsourced services and capacity- building

of its technical assistance projects. In 2019, it

activities for 19 clients. Ten new techni-

thus pursued its efforts to mobilize additional

cal assistance projects were also signed in

financing from its own budget and from FISEA

2019 for a total amount of 659,000 euros.

funds available since 2010. As of the end of 2019, it has several financial packages at its disposal to support target clients on specific topics:

39

40

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

659,000 EUROS OF NEW TA PROJECTS FROM OWN RESOURCES IN 2019 COUNTRY

CLIENT

TYPE OF SUPPORT

Morocco

Al Amana

Impact

Multi-country

Africure

Performance

Sri Lanka

Several domestic MFIs

Impact

Mali

Baobab Mali

Performance

Georgia

CREDO

Performance

Multi-country

Enko

Impact

Cambodia

GRC

Impact

Multi-country Africa

SIFCA

Impact

Niger

Sonibank

Performance

Morocco

TGCC

Performance

ARE Scale Up Facility: 700,000 euros have been made available by the European Union to support African companies in the energy sector. The first TA projects to be provided to companies in which Proparco invested were

GOLDEN RICE: a responsible Cambodian rice

identified in 2019.

Financial inclusion: Proparco can use two

Golden Rice is one of the main Cambodian

financial packages from the European

rice exporters, specialized in processing,

Commission to strengthen capacities of

milling and sale, notably of jasmine rice.

banks or MFIs that wish to increase their

Recognized for the quality of its rice, the

SME financing and support these clients

company received the prize for the worldâ&#x20AC;&#x2122;s

to become more attractive in the eyes of a

best rice for two consecutive years. To help

financier. These funds, which will be deployed

Golden Rice diversify its offering while

at the same time as guarantees granted to

making its supply chain more sustainable

financial institutions, are available in Africa

and responsible, Proparco implemented a

(3.5 million euros) and in the MENA area (2

technical assistance project. Thanks to the mapping of Golden Riceâ&#x20AC;&#x2122;s supply chain, concrete solutions were proposed to improve sourcing practices from rice growers and to better master E&S risks, notably in the areas of deforestation and child labor.

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

41

Organic rice producers in the province of Preah Vihear, in the north of Cambodia.

The Golden Rice company benefits from Proparcoâ&#x20AC;&#x2122;s technical assistance to improve its supply chain and to better master E&S risks.

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P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

Our impact on mobilizing financing flows and on unlocking investment in countries To simulate the reorientation of investment toward transitions, Proparco aims to increase its effect on private sector mobilization and to support innovation to unlock investments.

Our effect on the mobilization of private finance  In 2019, 2.39 billion euros of private finance was mobilized by Proparco (OECD method). The volume of projects authorized by Proparco and eligible for the calculation of the mobilization from the private sector was 2.36 billion euros, making a mobilization ratio of 1.01.

In the scope of its 2020-2022 strategy, Proparco’s

level associated with the finance mobilized.

ambition is to expand its role as catalyzer of

The methodology consists of identifying the

private actors in aiming to double the mobili-

private flows mobilized and allocating them

zation of private financing flows.

consistently among the DFIs while avoiding any double counting among the DFIs co-

The concern is more largely to channel private

financing a project.

financial flows toward sustainable development investments (SDIs). Proparco would thus like

In 2019, the global estimate of amounts mobilized

to strengthen the contribution of other private

by Proparco was 2.39 billion euros. In contrast,

actors in sustainable transitions and, in so

project volume authorized and eligible for the

doing, better respond to the issues raised in

calculation of private sector mobilization was

financing the SDGs.

2.36 billion euros.

A rising mobilization ratio since 2017

Africa, the top continent in mobilizing private finance

In order to measure its spillover effect on pri-

The volume of Proparco’s 2017 and 2018

vate financing, Proparco uses a mobilization

private sector mobilization was calculated

ratio whose methodology, developed by the

based on the amounts of signed projects. The

OECD along with development finance insti-

graph entitled “Evolution of the amounts

tutions (DFIs), is recognized worldwide. This

mobilised from the private sector from 2017

ratio makes it possible to measure the amounts

to 2019” therefore shows the 2019 data with

mobilized from the private sector by Proparco’s

regard to projects signed in 2019. In 2019, the

financing, by emphasizing a multiplier effect

mobilization ratio reaches 1.34, indicating an

resulting from both instrument type and risk

upward trajectory since 2017.

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

EVOLUTION OF THE AMOUNTS MOBILISED FROM THE PRIVATE SECTOR FROM 2017 TO 2019

DATA 2,022

Amounts signed over the year (€M) mounts of private finance mobilized A

by Proparco (€M)

1,503

1,504

1,276

1,033

1,026

1.34

1.18

1.01

2017

2018

MOBILIZATION OF PRIVATE FINANCE

BY INSTRUMENT IN 2019 (%)

20%

LOANS

2019

COEFFICIENT MULTIPLIER BY INSTRUMENT IN 2019 EQUITY – DIRECT

8%

BANK CREDIT LINES

1.37

EQUITY – FUNDS

EQUITY – DIRECT

51%

1.27

BONDS

9%

BONDS

1.02 1.49

GUARANTEES

8%

EQUITY – FUNDS

BANK LINES OF CREDIT

5%

LOANS

GUARANTEES

1.35 0.53

MOBILIZATION OF PRIVATE FINANCE BY GEOGRAPHIC AREA IN 2019 (€M)

Europe

30.2

Middle East Latin America and Caribbean

475.4

101.6 Africa

1,158.7

43

Multiregional

247.3

Asia

373.2

44

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

ACCION VENTURE LAB: the fintech firm promoting financial inclusion In 2019, Proparco invested in the Accion Venture Lab (AVL) fund, one of the best fintech specialists in Africa, Asia and Latin America. The Accion Venture Lab fund aims at supporting the emergence of structuring startups for the financial inclusion of individuals.

Proparco participated in the second closing with an amount of 1.8 million euros, alongside private investors mostly. For both successive closings, the private amount mobilized reached 7.1 million euros, self-financing was 8.9 million euros and public cofinancing was 24.9 million euros (FMO, the Dutch counterpart of Proparco and foundations). The FMO and Proparco invested in the riskiest financing tranche of the investment vehicle.

According to the OECDâ&#x20AC;&#x2122;s calculation method, Proparco can attribute itself 50% of the private finance mobilized in equal proportions with the FMO, a public co-financier which participated in the riskiest tranche of the CIV, and 50% of the private finance to the prorata of participation of public cofinanciers, amounting to 4.5 million euros. The mobilization ratio is thus 2.5.

In 2019, Proparco invested in the Accion Venture Lab fund (AVL), a fintech specialist in Africa, Asia and Latin America. The fund will support the emergence of structuring startups for the financial inclusion of individuals.

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

Among the different instruments used in 2019,

(guarantee tools and technical assistance

loans contributed the most to mobilized private

envelope ARE Scale Up).

finance (71%) due to their significant weight in

Contribute to the stability and resilience

the total amount of 2019 authorizations (76%).

of renewable energy projects in countries

Guarantees play a particularly important role

which may have non-convertibility risk or

in mobilization, as the multiplier coefficient of

non-transferability of local currency into

this instrument is 1.49.

foreign currency (risk-sharing tools from the T&C Facility).

Consistent with Proparcoâ&#x20AC;&#x2122;s positioning, Africa is the top continent for Proparcoâ&#x20AC;&#x2122;s mobilization

In 2019, as part of its new initiative CreatiFI,

of private finance, with 1.2 billion euros of

the European Union granted Proparco funds in

private finance mobilized in 2019, 49% of total

the form of guarantee and technical assistance

mobilization in 2019. 34% of private finance

to facilitate access to finance for cultural and

is mobilized in climate co-benefit projects,

creative industries (CCI): the new CREA Fund

amounting to 801 million euros.

facility.

Our results in the deployment of blending instruments

Three programs for private financial institutions

Since its European Union accreditation in 2016,

Furthermore, Proparco is responsible for acti-

Proparco has been granted two delegated finan-

vities deployed to private financial institutions

cing allocations which Proparco dedicated to:

in three programs which use funds initially

Increase its investments in companies developing solutions for access to energy in Africa

delegated to AFD: The EURIZ mechanism signed in April 2019

CREA FUND: facilitate the financing of cultural and creative industries The CREA Fund initiative is designed for financial intermediaries seeking to explore opportunities in the cultural and creative industries (CCI) in Africa and the Caribbean. A technical assistance package of 1.4 million euros has been allocated for carrying out market studies and for capacity building of financial intermediaries and SMEs. A guarantee of 5 million euros will also be deployed to encourage investment funds to take an equity share in companies in the sector. The facility was granted in December 2019 as part of the CreatiFI initiative, launched by the European Commission. Formalization of the contract is underway, and the initiative should begin in the second semester of 2020.

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P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

With a 65-million-euro financing, Proparco supports the modernization and expansion of the French Lay Mission network, notably in non-Frenchspeaking countries such as Ethiopia and Egypt.

Over 60,000 students are enrolled in 39 countries.

THE MISSION LAÏQUE FRANCAISE is modernizing Proparco is supporting the Mission Laïque Française (MLF) with a senior loan at market conditions totaling 60 million euros and a grant of 5 million euros. This financing will enable MLF to modernize and expand its network, notably in Africa and the Middle East, to enroll 1,500 new schoolchildren and to cope with the competition. The loan will finance infrastructure, whereas the grant will support two high-impact operations seeking to create two regional training centers for teachers and an energy efficiency program.

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

with the European Union (EU) and the Africa, Caribbean and Pacific (ACP) group of States. It is composed of a financial instrument which partially covers the credit risk (19 million euros) and a technical assistance grant (6.8 million euros) to support financial institutions and micro-enterprises targeted by the program. The EURIZ mechanism targets so-called “priority” SMEs, located in ACP countries, which have difficulty gaining access to sources of financing due to their risk profile. Five portfolio and individual guarantee projects were signed in 2019.

The MENA SME Facility consists of an enve-

An investment from Proparco or the provision of a guarantee generates a spillover effect on the mobilization of private finance in favor of the SDGs. A reinforced ambition for the mobilization of delegated funds

lope of 24 million euros of European funds to improve SME access to finance in seven

Proparco’s 2020-2022 strategy reaffirms its

countries in the MENA region. Proparco is

ambitions in terms of mobilizing delegated funds.

in charge of deploying two financial instru-

It aims to increase the volume of new funds

ments: credit lines and portfolio guarantees.

mobilized each year, in line with the strategic

These instruments are complemented by a

objectives of fund delegators (EU and GCF).

rate-subsidy scheme, impact-based incen-

All these projects have an effect on the mobiliza-

tives, a first-loss guarantee mechanism and

tion of private finance for the SDGs, beyond the

technical assistance. The facility should be

acceleration of positive impacts and innovation

operational in 2020.

enabled by concessional financing. In investing

The TFSC program, approved by the Green

or providing a guarantee, Proparco produces

Climate Fund in 2018, aims to support the

a spillover effect on the mobilization of private

evolution of practices in both public and pri-

actors, an effect which is strengthened by the

vate bank and non-bank financial institutions,

transformation generated by technical assistance

in 16 African countries and in Ecuador. The

projects. These projects could not have been

objective is to reorient financial flows toward

implemented without the support of the European

climate mitigation and adaptation projects.

Union or the Green Climate Fund, which are

Proparco proposes credit lines accompanied

genuine allies for Proparco in this approach.

by incentives, which are made available according to criteria drawn up for a climate

In 2019, Proparco also mobilized nearly 50 mil-

financing offering. It also offers technical

lion euros of national resources (grant and rate

assistance to support the identification of eli-

subsidies) for blended operations in line with its

gible and profitable projects and the design and

thematic priorities (climate, financial inclusion,

implementation of climate strategies, gender

entrepreneurship, social sectors) and geographic

equality policies, E&S risk management, and

priorities (Africa and fragile countries). These

marketing and communication activities. The

national resources have been used for technical

overall budget of this program is 653 million

assistance, investment subsidies, rate subsidies,

euros, of which 240 million euros has been

grants with back-to-back loans, project pre-

granted by the Green Climate Fund (GFC).

paration (FAPS) and partial risk guarantee.

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P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

THEMATIC FOCUS

Impact monitoring of projects signed in 2015 and 2016 In 2019, Proparco carried out an evaluation of the impacts achieved by projects signed in 2015 and 2016, thus after two to three years in portfolio. The study especially focused on jobs created and maintained, CO2 equivalent emissions avoided as well as improved access to essential goods and services.

The monitoring of impacts, a strategic work-in-progress

commitments to its partners and board of directors. Lastly, it contributed to the common endeavour of EDFIs to monitor more closely

Proparco seeks to strengthen the monitoring

the effective achievement of project impacts.

and evaluation of impacts to better understand the results reached by the projects it finances.

In order to carry out this monitoring, Proparco

This first exercise conducted in 2019 by the

used data from the regular contractual

unit in charge of the measurement of impacts

reporting of impact results, E&S reporting,

compared the results achieved by the 96 pro-

operational documents, reporting from other

jects signed in 2015 and 2016 as of December

DFIs as well as data publicly released by the

31st, 2018 with ex ante impact estimates made

projects. It was possible to collect 58% of the

upon appraisal. This monitoring and evalua-

necessary data. This first exercise required

tion work aimed at collecting the number

a particular upgrading effort but remained

of jobs created or maintained, the number

incomplete despite all efforts made.

of beneficiaries of an improved access to an essential good or service and the greenhouse

It represents the start of more regular moni-

gas emissions avoided by the projects. It thus

toring which will be facilitated by particular

enabled the comparison of results reached

attention given to the effective collection of

with estimated forecasts based on a scope of

contractual impact reporting. To simplify

projects which is large enough to be repre-

that, a limited number of strategic indicators

sentative and further monitored on a regular

will be collected, and collaboration between

basis. This exercise was carried out as part of

operational and expertise teams will be

Proparcoâ&#x20AC;&#x2122;s accountability and transparency

intensified.

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

The impact on jobs Proparco measures jobs direc-

of 2018. This is why Proparco, in

tly supported among clients

its 2020-2022 strategy, aims to

and projects financed as well

devote 25% of its commitments

as jobs indirectly supported

to projects supporting gender

by these projects. At the end of 2018, we counted nearly 200,000 direct jobs and 270,000 indirect jobs supported by clients and projects signed by Proparco in 2015 and 2016. In all, 467,000 jobs were supported around the world, compared to 461,000 jobs estimated ex ante.

467,000

equality.

jobs in developing and emerging countries supported thanks to projects signed in 2015 and 2016, in line with ex ante estimates

Nearly 198,000 direct jobs supported

270,000 indirect jobs supported The projects signed in 2015 and 2016 supported nearly 270,000 indirect jobs in 2018, which is 105% of ex ante estimates (255,000 jobs). These figures were calculated based on 30 projects signed in 2015 and 2016,

representing 31% of the projects under study.

Monitoring data was collected for 2018, or

Regarding direct jobs, the projects signed in

the most recent available date. The impact on

2015 and 2016 created more than 20,000 direct

indirect jobs varies depending on the sector.

jobs which can be added to over 177,000 jobs

Banks and multi-sector investment funds are

maintained since the signature date. These results

the largest contributors. Currently, Proparco

are close to the ex ante forecasts.

is investing in an evolution of the methodology

Nearly 70% of projects signed by Proparco in 2015 and 2016 directly create jobs. On average, companies create 399 direct jobs per project,

DIRECT JOBS SUPPORTED

BY PROPARCO

financial institutions 375 and infrastructure 78.

+ 20,630

Infrastructure and companies supported more jobs

direct jobs

than expected, whereas financial institutions are slightly below forecasts. For investment funds, most of the jobs created are counted as indirect,

177,432

206,192

197,578

Ex ante*

2018 Monitoring

as they are created in the fund’s assets.

The projects also supported 55,000 direct women’s jobs, which correspond to 28% of overall direct jobs supported. The growth of women’s employment is less vigorous than that

T-0

of men’s. Women held 39% of direct jobs created

* Monitoring carried out on 68 projects, correspon-

by projects signed in 2015 and 2016 at the end

ding to 71% of projects signed in 2015 and 2016.

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P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

to calculate indirect jobs with other EDFIs. The

the multi-sector investment fund assets, the

objective is in particular to take better account of

three most important sectors for indirect jobs

the indirect effects of the agro-business, manu-

are the social (26%), trade (17%) and industry

facturing and infrastructure sectors. Among

and manufacturing (14%) sectors.

GEOGRAPHIC DISTRIBUTION OF JOBS SUPPORTED

BY PROJECTS SIGNED IN 2015 AND 2016

0-500 jobs created 501-2,000 jobs created 2,001-5,000 jobs created 5,001-10,000 jobs created 10,001-30,000 jobs created

EVEX HOSPITALS: support for scaling-up Since 2014, Evex Hospitals, which is part of the Georgia Healthcare Group, has been growing strongly: there have been rapid increases in number of beds, in income and in staff. To support the substantial increase in the social impact of the project, Proparco has invested in the scaling-up of Evex. The number of employees increased from 9,410 in 2015 to 11,544 at the end of 2018. Nearly 80% are women.

As for beds, the number has risen by 297. The project reached 99% of its estimated ex ante objective.

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

51

1.8 M t CO2-eq were avoided thanks to renewable energy projects signed in 2015 and 2016, 50% more than ex ante forecasts.

Impact on CO2 emissions Proparco supports projects contributing to

Renewable energy projects well exceeded ex ante

low-carbon development trajectories, in par-

estimations. While it was foreseen that the projects

ticular renewable energy projects. For each of

would avoid the emission of 1.2 million tons of

them, a carbon audit is conducted using the

CO2-eq per year, monitoring showed a result of

carbon footprint estimation tool developed by

1.8 million tons of CO2-eq avoided, nearly 604,000

AFD. This tool provides an estimate of CO2 and

additional tons of CO2-eq and the equivalent of the

other greenhouse gas emissions avoided by the

annual consumption of 271,000 French people.

project each year and during the entire life of

This result is mostly due to the increase in capacity

the infrastructure.

of certain renewable energy sites.

In 2015 and 2016, 17% of Proparcoâ&#x20AC;&#x2122;s commit-

The renewable energy projects supported by

ments were devoted to the fight against climate

Proparco are located in seven countries which

change through renewable energy infrastructure

are 41% to 74% dependent on coal or oil products

projects. Most of the projects were wind farms

for their energy consumption. Proparco supports

or solar energy production sites.

their energy transition and demonstrates the feasibility of implementing green solutions in these countries.

TONS OF CO2-EQ AVOIDED Monitoring 2018

Ex ante

1,805,245 1,201,380

52

P R O P A R C O - SUS TAINABLE DE VELOPMENT REPORT

1.4 million people have improved access to health services thanks to projects signed by Proparco in 2015 and 2016.

The impact on improved access to essential goods and services In 2015 and 2016, Proparco signed 35 projects

Energy projects reached fewer beneficiaries

which targeted improved access to essential

because the average energy use in the countries

goods and services for 527 million euros, repre-

rose during the period of the projects. Each

senting 31% of the amounts signed during the

project, while producing the volume of energy

period. In total, 5.8 million people had access

forecasted, was unable to satisfy the energy needs

to essential goods or services thanks to projects

of the ex ante estimated number of people. Nine

financed by Proparco, which corresponds to 97%

projects signed in 2015 and 2016 now produce

of ex ante forecasts. Although energy access and

2,254 GWh per year. This energy meets the basic

education performed below ex ante forecasts,

needs in electricity of 2,551,000 people per year.

access to finance far exceeded the estimates.

The six financial inclusion projects signed in 2015 and 2016 enabled an increase in the number of

THEORETICAL BENEFICIARIES OF IMPROVED ACCESS TO AN ESSENTIAL GOOD OR SERVICE (IN THOUSANDS) 4,523 4,402

Monitoring 2018

whom are women. More than one million of projects supported by Proparco. Two financial institutions in Cambodia, AMK and Amret, lost clients following the introduction of stricter

2,551 1,576

regulation in 2017.

1,831

Over the 2015-2016 period, Proparco signed

29 Energy

for a total of 1.8 million in 2018, a majority of them have had access to microcredit thanks to

Ex ante

2,918

active microfinance clients from 156,500 clients

Finance

three education projects in order to strengthen

20

Education

access to quality education for more than 20,000 Total

pupils and students.

Proparco coordination: Valérie Blanchard, Anne-Gaël Chapuis Writing: Proparco Editorial and graphic design, drafting, creation and printing: Iconographic credits:

Cover: Backdrop Agency Inside front cover, p. 16, 19, 25: Oriane Zerah P. 2: Fabien Dubessay P. 3: Alain Goulard P. 14: Thomas Bonnisseau P. 27: Gennadiy Ratushenko

P. 31: Félix Vigné P. 41: Nicolas Axelrod P. 44: Chiara Frisone P. 46: Mission laïque française P. 51: Marc Le Chélard P. 52: Marie Tihon

Printed in France PEFC certification of paper provides traceability from the tree to the paper, as well as the guarantee that the wood used to produce paper fibers does not contribute to deforestation and respects the environmental and social functions of the forest.

ISSN: 2677-8068 Copyright: September 2020

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