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AFD MEDITERRANEAN AND MIDDLE EAST DEPARTMENT

Promoting investment in the MENA region

through the use of risk mitigation tools

March 2013

Benoît Mauduit

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AFD activity in the MENA region 2002-2013Slowdown / stabilisation of volumes since the Arab revolutions at around € 1 Bn / year

Engagements totaux zone MED 2002-2013(en millions)

166 224341 296

453

636527

853 918 909

5482

11385

71

138198

263

230

20281

901

-

-

--

-

--

-

-

-

-100

1120

1655

0

200

400

600

800

1000

1200

1400

1600

1800

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2013

Engagements nets AFD Engagements nets Proparco

Prév. Engag. nets AFD Prév. Engag.nets Proparco

Prèv Engag. nets AFD avec foisonnement

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Authorisationsper countries 2002-2012

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Authorisationsby sectors 2002-2012

Secteur productif ; 9%

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Strategy for 2012-2014

3 finalities:

Economic growth and employment

Social and territorial cohesion

Quality of life

5 intermediary objectives : Create added value and quality jobs

Accompany urban growth

Reduce social exclusion Contribute to energy safety Adapt to increasing scarcity of natural resources

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Risk-sharing instruments

AFD – mitigating the risks of local banks

ARIZ guarantee scheme MENA SME Facility

PROPARCO – mitigating the risks of depositors

Credit enhancement to mobilise finance from institutional investors or from the public, ex. :Securitisation of a real estate loan portfolio (Morocco)Launching of a public investment vehicule (Tunisia)

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ARIZ : principles

Beneficiaries Local banks

Loans to SMEs and MFIs,

All business sectors (except real estate)

Start-ups or development projects

Modalities New loans financing medium term investments

Loans denominated in EUR, USD or local currency

Two products :

Single guarantee

Portfolio guarantee

All risk covered including political risk and natural catastrophes

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Ariz : main conditions Target Guaranteeing any type of medium term investment loan

Maximum Amount & Quota

ARIZ guarantees a maximum of 50% of the loan (up to 75% for MFIs) with an upper limit of €2m (i.e. 50% of €4m loan)

Term of guarantee From 2 to 12 years maximum guarantee (starting at 1 year for MFIs)

Extent of risk covered

The guarantee covers 50% of the Final Loss on a Defaulting Loan. The Final Loss being defined as :

Principal outstanding amount, + due and unpaid interest calculated at the normal rate of interest due on the loan

at such date (up to a maximum of one year's worth of interest due) - all sums recovered either from the borrower, or from calls on guarantees and

indemnities, or the enforcement of security interests provided by the borrower to underwrite the loan.

Fees An annual fee computed on the outstanding guaranteed amount

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MENA Guarantee Facility• Objective : promote SME access to credit from local

banks through partial guarantee of loan portfolios

• USD 200 Mn commitments by IFC, EIB, AFD and OFID supported by the NIF with a junior tranche of USD 30 Mn

• Leverage : the facility will enable extension of up to USD 800 Mn of new loans in Morocco, Tunisia, Egypt, Jordan and Lebanon

• Implementation through risk sharing agreements with selected banks

• Management by IFC

• Additional commitments by IFC and EIB for USD 100 Mn each already secured

• Expected start early 2013

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Thank you for your attention