Swiss Investment Forum Africa and the Middle East

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Swiss Investment ForumAfrica and the Middle East
DEGs Business in Africa
Winfried Nau, Head New Business Africa,
DEGZürich, June 20, 2007
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DEG member of KfW Bankengruppe.
Investment assistance in Germany and Europe
Promotion of developing countries
Export and project finance
Consultancy and other services

Business areas
Promotion of housing, environment and climate
protection, education, infrastructure and social
issues
Export and project finance, investment and
corporate finance
Promotion of developing countries KfW
Entwicklungsbank FC, governmental
institutions DEG private sector
Consultancy to the federal government with regard
to privatisation and other issues
Promotion of SMEs and start-ups
Tasks
Brand names
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DEG at a glance

• Mandate and working method
• The German development finance institution for
  the promotion of
• private companies in developing and
  emerging-market countries.
• Long-term investment capital for private
  enterprises on market- oriented conditions.
• Financing of projects that keep with the
  principles of sustainable development in the
  sectors agribusiness, manufacturing industry,
  services, infrastructure and in the finance
  sector.
• Ecological and social acceptance according to
  international guidelines are a vital condition.
• Contributions to sustainable economic growth and
  poverty reduction.

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DEG at a glance.

• Corporate data
• Seat Cologne
• Founded 1962
• Employees 370
• Shareholder KfW, Frankfurt
• Equity 1,251 million euros
• Total assets 2,794 million euros
• New business 2006 930 million euros
• Portfolio 2006 3,050 million euros

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Tailor-made finance.Financial instruments

• Long-term loans
• Mezzanine finance
• Equity capital
• Guarantees
• Solutions suited to project and risks
• Terms suited to the individual project
• Market-oriented conditions
• Comprehensive country and sector know-how

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DEG new commitments 2006.Sectors

• Investments in all sectors of industry
• Agribusiness
• Manufacturing industry
• Infrastructure
• Finance sector

New commitments by sector as per 31 December 2006
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DEG business 2006.New commitments and
disbursements

• New commitments
• 930 million euros (918 million euros at own risk,
  12 million euros risk subparticipations)
• Risk capital 273 million euros (30 )
• Disbursements 788 million euros
• Products
• Loans 748 million euros, of these mezzanine
  financings 150 million euros
• Equity participations 123 million euros
• Guarantees 47 million euros.

New commitments by region as per 31 December 2006
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Financing criteria.

• Important factors for a decision in favour of an
  investment
• Qualified management
• Credit standing
• Proven track record
• Sound business plan
• Corporate Governance, transparency
• International environmental and social standards
  (World Bank)

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DEG portfolio by region.
Total volume 3.05 billion euros Projects with
496 companies in 80 countries
Europe 604 million euros
Asia 1,273 million euros
Africa 557 million euros
Latin America and Caribbean 579 million euros
Supraregional 37 million euros
Portfolio, Stand 31.12.2006
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Portfolio.Africa

• DEG commitments EUR 557 million
• of these supraregional EUR 93 million
• Investment countries 21
• Companies 105
• Total investment volume EUR 9.9 billion

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DEG commitment in Africa
Others 16.8
in million EUR (as of 31 Dec 2006)
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Examples of project financing in 2006
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DEG Example of guarantee for a long term loan in
local currency

• Financing of a sugar producer in Cameroon
• - Investment programme in expansion of the sugar
  cane plantation and modernisation of the sugar
  mill
• - Long term financing (including grace period)
  required to match debt service with expected cash
  flow generation
• - Company generates only local currency earnings
  (sales in local market and neighbouring countries
  in the CEMAC zone)
• - Long term financing in local currency is hence
  the adequate instrument in order to reduce
  exchange rate risks
• - Problem local banks in West Africa are often
  highly liquid (e.g. due to increased savings),
  but are not in a position to lend funds on a long
  term basis due to central bank restrictions a.o.
  regarding required transformation ratios

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DEG Example of guarantee for a long term loan in
local currency

• Transaction
• DEG guarantees a certain percentage of the long
  term local currency loan (70 risk sharing with
  local bank)
• Guarantee enables the local bank to lend on a
  long term basis at a competitive interest rate
• Securities are taken pari passu with local banks
  Company pays a guarantee fee
• Advantages
• Mobilisation of available local liquidity
  ressources for long term uses
• Company receives a long term financing in local
  currency
• DEG reduces its risk by adapting the loan
  currency to cash flow generation

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DEG Example of guarantee in a PPP project

• Sale of a 2.600 ha palm oil plantation to
  smallholders in
• Cameroon by a private palmoil company
• Financing of the takeover by long term local
  currency loans to the farmers granted by a local
  commercial bank EG guarantees part of the Loans
  (80 )
• Problem Small farmer risk (transaction costs) is
  difficult to be financed on a pure commercial
  basis Solution PPP helps to overcome these
  restrictions
• PPP Funds are used to set up a microfinance
  village bank for the monitoring of the loans to
  the farmers and deposits handling / repayment
  flows

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DEG Example of guarantee in a PPP project
(continued)

• Sale of a 2.600 ha palm oil plantation to
  smallholders in
• Cameroon by a private palmoil company
• Company provides extension services to
  smallholders (partly financed by PPP) and commits
  itself to buy the entire FFB production for the
  duration of the DEG Guarantee
• Combination of PPP-Funds and commercial financing
  gives a high leverage and makes the transaction
  possible
• Very high developmental impact

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DEG Example of Guarantee in a PPP Project
palm oil plantation
palm oil Mill (Company)
2.600 ha land
purchase price x mio EUR
technical assistance fertilizers, seeds
delivery FFB
260 farmers
260 loans à 6.500 EUR 1.7 million EUR
20 first loss Guarantee fund
commercial bank
Management agreement for loan monitoring
micro bank
payment FFB
80 garantee of loans
DEG
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Two interests, one programme.Public Private
Partnership

• Programme for West European companies or their
  subsidiaries
• Financing of pre-investment or investment-tied
  projects
• Environmentally or socially oriented projects
• Measures for education and qualification
• Pilot projects and pilot facilities
• PPP contribution up to 50 of the costs, EUR
  200,000 max per project
• Prerequisite The project renders a lasting
  contribution to the local development

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The EDFI network(European Development Finance
Institutes)
UK
Spain
Austria
Belgium
Switzerland
Germany
Finland
Holland
Denmark
Norway
Hungary
France
Belgium
Sweden
Italy
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Your advantage in working with DEG

• Subsidiarity function Long-term financing,
  greenfield projects as well as expansions,
  complimentary and risk-taking role of DEG
• Mobilisation function of external capital
  (European Finance Partners -EFP, syndication,
  parallel financing, PPP)
• Umbrella function
• Signalling function
• Support function (through sector specialists)
• Networking function (promotion of cooperation
  between clients in the same sector)

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Representative and liaison officesof DEG and KfW
Group
DEG Offices Brazil / São Paulo China /
Beijing India / New Delhi Indonesia /
Jakarta Mexico / Mexico City South Africa /
Johannesburg Thailand / Bangkok
KfW / others in Africa Cameroon / Yaoundé Egypt
/ Cairo Ethiopia / Addis Abeba Ghana /
Accra Kenya / Nairobi (with DEG representative) Ma
li / Bamako Mozambique / Maputo Morocco /
Rabat Senegal / Dakar Tanzania / Dar Es
Salaam Uganda / Kampala
KfW / others in Asia
Afghanistan / Kabul Bangladesh / Dhaka Cambodia /
Phnom Penh Cazachstan / Almaty Sri Lanka /
Colombo Vietnam / Hanoi
KfW / others in Europe and Middle East Bosnia
Herzegovina / Sarajevo Croatia / Dubrovnik Jordan
/ Amman Kosovo / Pristina Macedonia /
Skopje Montenegro / Podgorica Palestinian Areas /
Al Bireh Serbia / Belgrade

• KfW / others in Latin America

Bolivia / La Paz Brazil / Brasilia Guatemala /
Guatemala City Nicaragua / Managua Peru / Lima
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Get in touch!

• Mr. Winfried Nau
• First Vice President Africa
  
• Phone 49 (0) 2 21 / 49 86 1299
• Fax 49 (0) 2 21 / 49 86 1106
• e-mail na_at_deginvest.de
• DEG - Deutsche Investitions-
• und Entwicklungsgesellschaft mbH
• Belvederestrasse 40, 50933 Köln, Germany
  
• www.deginvest.de