NDF Presentation 2000

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MANAGEMENT AND STAFF
Jens Lund Sørensen PresidentCarin Wall Senior
Vice PresidentPer Eldar Svik Vice
President AfricaMats Borgenvall Regional
ManagerThor-Jürgen Greve Lberg Regional Manager
Magnus Magnusson Regional Manager Arnthor
Thordarson Regional Manager AsiaBengt
Moreau Regional Manager Leena
Saavalainen Regional Manager Latin America and
the CaribbeanRasmus Holm Lauridsen Regional
Manager Marina Unnérus Regional Manager Loan
Adminstration and Corporate AffairsSiv
Ahlberg ManagerJoakim Holmström OfficerAdmin
istration and InformationStella
Eckert Executive Assistant, Administration
and Information Ann-Christin Lundin SecretaryHe
idi Dettmann Secretary
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PARTNER COUNTRIES
AfricaAsiaLatin America and the
Carribbean
Benin, Burkina Faso, Ethiopia, Ghana, Kenya,
Malawi, Mozambique, Rwanda, Senegal, Tanzania,
Uganda, ZambiaBangladesh, Cambodia, Lao PDR,
Mongolia, VietnamBolivia, Honduras, Nicaragua
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Guidelines for NDFs activities within the
private sector
 (1). General   As an integrated and permanent
part of NDFs operations, NDFs financial support
without government guarantee for private sector
activities will supplement its lending with
government guarantee for the public sector.
Private sector activities will become part of a
coherent strategy, which will contribute to
promote economic and social development in
developing countries and poverty
reduction. NDFs financial engagements in the
private sector area will be based on generating a
catalytic effect and additionality, among other
things by contributing to the promotion of
private capital transfer, technology and
know-how.   The framework for development and
administration of private sector activities will
be flexible in order to make it possible to
respect new development trends within the private
sector and to draw on the Funds enhanced
experience in this field.   Private sector
activities will constitute a minor part of the
Funds financing of development projects which
means that the granting of interest-free loans to
the public sector will still be the dominant
financing form.   (2). Areas of
Operation   NDFs financing will be oriented
towards the following main areas   - Direct
investments (joint ventures) These will include
participation in the establishment of new
businesses and the development of existing
enterprises. Special focus will be directed
towards financing of economic infrastructure,
which will be carried out with private
participation in close collaboration between the
private and the public sector, as well as in
connection with privatization. These activities
will supplement NDFs main activities and aim at
creating a connection between the Funds public
sector and private sector activities. These
activities are also expected to benefit from the
development which is taking place within
public-private partnerships.   - Credit lines for
sub-regional and national development banks By
using the institutional capacity and local
knowledge of sub-regional and national
development banks, credit lines will contribute
to promoting the development of small and
medium-sized private enterprises in developing
countries.   - Participation in venture capital
funds NDFs participation in venture capital
funds in developing countries will contribute to
the promotion of the private sector and to the
development of the local financial sector. The
main target group for these activities, which in
terms of volume is expected to be more modest
than the two other initiatives mentioned above,
will be small and medium-sized private
enterprises in the developing countries.
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    (3). Geographic area   In general, NDFs
geographic area for private sector activities
will be the same as the geographic area for
credits with government guarantee, which means
that the poor countries, especially in Africa,
will have priority. When particular circumstances
apply, NDF will be able to participate in direct
investments in other developing countries, where
per capita GDP does not exceed the limit for
LMICs.   In its geographical orientation NDF will
consider the possibilities of supporting private
sector activities which include regional
cooperation.   (4). Nordic interest   NDFs
financing of direct investments (joint ventures)
will require that at least one Nordic company,
together with NDF, is ready to make a long-term
direct investment in the project in the form of
equity capital, and to contribute knowhow.
  The Nordic interest related to credit lines
granted by NDF to sub-regional or national
development banks will mainly be safeguarded
through deliveries from the Nordic region.   The
Nordic interest in NDFs participation in venture
capital companies will be safeguarded by NDFs
participation, which strengthens Nordic
participation in the venture capital fund
concerned.   (5). Local participation   NDF will
focus on and stimulate attracting local partners
to the activities supported by NDF. Local
participation will contribute to building up
capacity and to activities taking root in the
local community.   (6). Co-operation with
multilateral and bilateral development
institutions   NDFs participation in private
sector activities in the form of direct
investments, extension of credit lines and
participation in venture-capital companies will
be based on collaboration with another
multilateral financing institution or a Nordic
bilateral development institution.   Cooperation
with the institution concerned shall be regulated
through an agreement, which establishes
respective responsibilities regarding promotion,
appraisals, monitoring, board representation,
exit mechanisms and evaluation activities. Such
agreements have already been concluded by NDF
with IFC and IIC, respectively.
 
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  (7). NDFs financial participation The
financial instruments, which NDF will be able to
provide will depend on the type of operations as
described above in paragraph (2).   In the case
of direct investments (joint ventures) or other
forms of cooperation, where a Nordic company
participates with equity capital and know-how,
NDF will be able to offer a subordinated loan
without a guarantee. The features of these loans
will correspond to the equity capital or the
subordinated loan, which may be extended by other
development institutions for the project. NDF
will not seek representation in on the board of
directors of the company or other engagements,
which imply or can be considered as a management
responsibility.   NDFs participation in this
type of project will normally require that the
total equity capital should cover at least 35
of the total investment, including working
capital. NDFs financing will normally not exceed
15 of the total equity capital of the project
company.   As a rule and within these limits, NDF
will not contribute a higher amount than its
institutional partner.   When evaluating NDFs
participation in a project, special attention
will be given to ensuring that the contribution
of development assistance funds in projects does
not play a dominating role, and normally does not
exceed 50 of the total finance. These
considerations will include an evaluation of the
planned utilization of development assistance
funds in investments and activities which are not
related to the commercial activities of the
project.   In connection with financing of credit
lines without government guarantee for
sub-regional and national development banks, NDF
will extend its normal concessional loan. The
maturity and the grace period will be agreed on a
case-by-case basis. In each case a decision will
have to be made regarding the use of the
concessional element, on a basis which is
satisfactory for NDF.   In the case of
participation in venture capital funds NDF will
be in a position to offer subscription to shares
or another form of equity capital.   In the
agreement for each engagement, NDF will seek to
ensure appropriate exit arrangements in terms of
timing and conditions.The Funds exit shall in
principle take place simultaneously with the exit
of its institutional partner.
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(8). Risk factors   NDF will seek to ensure
cooperation with partners which have a long-term
interest in developing the activity in a
profitable way. NDF will attach importance to the
distribution of risks in relation to each
partners possibilities for assuming the risks
connected to the project. In its capacity as a
development institution, NDF will in its risk
sharing assess the best way to contribute to
creating a catalytic effect and
additionality.   NDF will aim at obtaining a fair
distribution of risks by participating in
projects/activities, which are geographically and
sectorally well balanced.   Based on regular
evaluation of the project portfolio, NDF will
make reservations in the Funds accounts, which
shall reflect the political as well as the
economic risks related to the project
portfolio.   (9). Social aspects and the
environment   Projects, which are supported by
NDF both directly (joint ventures) and indirectly
via credit lines or through venture capital funds
must be established and managed on a commercial
basis. Furthermore these projects shall
contribute to economic and social development in
the host country. NDF sees profitability for its
private sector financing as consistent with the
Funds objective of promoting development and
contributing to poverty reduction.   NDF will pay
special attention to ensure that projects which
will benefit from NDF-financing are established
and managed in a way which minimizes negative
effects on the external environment and the
working environment (including considerations
regarding avoidance of child labour) and respects
the host countrys environmental regulations. The
projects possible negative effects shall be
avoided or minimized and its positive effects
encouraged. NDFs precautions and requirements
will in this respect be coordinated with those of
its institutional partners and will be carried
out in accordance with their guidelines.