writing

TABLE 9.1 FONSIS projects approved from inception in 2013 to the time of writing

PROJECT SECTOR

Biosoy

Agriculture FONSIS SAED Financial services

FONSIS

EQUITY STAKE (%) DESCRIPTION 37 2,000-hectare farm

100 Fund launched by FONSIS in partnership with SAED (a local development agency), targeting agri-business SMEs in northern Senegal

Jambaar Immo Infrastructure (real estate) 100 Newly established company in charge of redeveloping real estate assets (total project cost: US$64 million)

MF Touba Health care

Parenterus Pharmaceuticals

Polimed Health care

Scaling Solar Senegal Energy

Senergy Energy — Construction and equipment of a five-floor building within Mathlaboul Fawzani National Hospital of Touba, in order to house its new medical platforms

23 Newly established, Senegal-based provider of intravenous solutions, with FONSIS contributing as a minority shareholder to the CFAF 9 billion (US$16 million) investment cost, together with the company’s promoter and other local investors

100 Medical imaging facility within the Mbour Public Health Center 20 Construction and operation of two solar plants with a cumulative nominal capacity of 60 MW in co-investment with Meridiam and ENGIE Development

15 30 MW solar project; co-investment with Meridiam infrastructure fund

SIAA Infrastructure

SOGENAS Livestock

Solarys Energy 49 Development and management of special economic zones in Senegal

100 Newly established company launching high-productivity livestock in Senegal and developing dairy value chain; project solicited by the Ministry of Livestock and Animal Production in line with the sector priorities of the PSE 100 Construction and operation of photovoltaic solar power plants for self-consumption (coupled with energy storage units) with a cumulative capacity of 17 MW (peak), on behalf of the National Water Company of Senegal

Ten Merina Energy Teranga Capital Financial services 10 30 MW solar project; co-investment with Meridiam 22 SME-focused private equity fund, externally managed

Source: Information provided by FONSIS management. Note: CFAF = West African CFA franc; FONSIS = Fonds Souverain d’Investissements Stratégiques (Sovereign Fund for Strategic Investments); MW = megawatt; PSE = Plan Sénégal Emergent; SAED = Société Nationale d’Aménagement et d’Exploitation des Terres du Delta du fleuve Sénégal et des vallées du fleuve Sénégal et de la Falémé (National Society for the Development and Exploitation of the land of the Senegal River Delta); SME = small and medium enterprise; — = not available.

ADDITIONALITY AND MULTIPLIER CONSIDERATIONS

FONSIS aims to deliver additionality and to avoid crowding out other sources of private capital in several ways.

• As a project developer or codeveloper. In this role FONSIS prioritizes greenfield projects and gets involved well before any other source of commercial capital. Through its preparation work, it opens the door for the subsequent entry of investors and lenders. For example, FONSIS mentioned its launch of a livestock company focused on introducing new breeds to Senegal; FONSIS at the time of writing was the only shareholder in this novel business and had budgeted five years of development work before the company is ready for

external investments. FONSIS also invested in Parenterus, a newly established

Senegal-based manufacturer of intravenous solutions, contributing as a minority shareholder to the CFAF 9 billion (uS$16 million) investment cost, together with the promoter and other local investors; the project is seen as highly consistent with the PSE because of its potential to reduce imports of the products manufactured, create employment, and contribute to improvements in health care. • By generating demonstration effects. Through its activities, FONSIS can demonstrate that certain projects with high development impact can be run as commercial enterprises, aiming to attract further commercial capital as a result. For example, FONSIS seeded Polimed, a diagnostics and laboratory business structured as a PPP and housed within an existing hospital. Polimed charges the same prices for its services as the Mbour public hospital, does not enjoy any subsidies, and employs doctors and nurses from the attached hospital (in addition to contractors hired ad hoc). FONSIS invested the equivalent of uS$1.7 million to purchase equipment, build the facility, and hire contractors, and obtained a pilot concession from the hospital to run the facility starting in December 2015. The project is meeting FONSIS’s IRR targets and could be used as a template for other similar projects in the health care sector. • As an intermediary between the government and private investors. As a fully government-owned entity, FONSIS is well positioned to entertain new project ideas with ministries and other government bodies, even when projects challenge the institutional status quo. For instance, FONSIS was able to push the Polimed PPP idea despite initial resistance to a for-profit service provider expressed by the Ministry of Health. Meridiam, as a co-investor and codeveloper, also recognized the value added of FONSIS as an intermediary with government stakeholders.

As previously discussed, maximizing the capital multiplier is a core element of FONSIS’s mandate, even if no hard targets are set. FONSIS justifies this approach with the large funding gaps necessary to support Senegal’s economic development and the need to extend the search for capital beyond public and donor finance.

GOVERNANCE

FONSIS’s main supervisory body is the Strategic Orientation Council, which has not yet been established. This council is mandated to advise on investment strategy and strategic direction and must meet annually under the chairmanship of Senegal’s president or, if the president declines, the prime minister. Pending implementation of the council, the board performs these functions. The council will be composed of representatives of the local and international business, political, and academic communities, and civil society.

As a limited liability company and under private OHADA business law,5 FONSIS’s main supervisory body is the board of directors. The board is composed of FONSIS’s CEO; chairman; two representatives of the Ministry of the Economy, Planning and Cooperation; and one representative of the presidency (see table 9.2). Its roles and responsibilities are described in Article 13 of the FONSIS Law as follows: “The Board deliberates on all measures concerning the