Changing the Game for Africa IISA Conference July 2016

Confidential2 AFRICAN DEVELOPMENT BANK: THE PREMIER DEVELOPMENT FINANCE IN AFRICA WITH A STRONG CONVENING POWER South africa: ADB has financed eskom in 2016 for USD 1bn loan with a a loan and b loan structure Morocco: Noor concentrated solar power in morocco 50 years experience in development finance The only rated AAA in Africa by S&P, Moodys and Fitch African Development Bank overview (1/2)

Confidential3 ADB HAS LAUNCHED A NEW DEAL FOR ENERGY IN AFRICA. THE MAIN OBJECTIVE IS AN UNIVERSAL ACCESS FOR ENERGY BY POWER SECTOR NEEDS USD50B PER YEAR Capitalization Operations Authorized capital: USD 100bn Shareholders funds: USD 10bn Total assets: USD 35bn Financial products: o Equity o mezzanine finance o senior loans o risk management products Funding in 2015: USD 9bn Infrastructure finance: o 56% of funding o Mainly in energy and transports African Development Bank overview (2/2)

Confidential4 African infrastructure market hurdles FOUR MAIN BARRIERS TO BRIDGING THE AFRICAN INFRASTRUCTURE FINANCING GAP HAVE BEEN IDENTIFIED Lack of Well- Prepared Project Lack of “Smart Capital” 24 Lack of Early Risk- Takers 3 Not enough well- prepared projects due to political bottlenecks and lack of institutional capacity Early investors (risk capital) are largely absent in Africa due to the high levels of perceived risk A flexible approach to committing equity is needed to ensure that projects can reach financial close Source: AfDB Lack of public resources 1 Budgetary constraints limit the number of projects that can be undertaken by the public sector Public sectorPrivate sector

Confidential5 Africa50 structure A commercial entity incorporated in Casablanca (Morocco) with a 99 year duration Legally & financially independent 2 ring-fenced companies : Project development and Project finance Three classes of investors: o African states o International financial institutions o Pension funds, sovereign wealth funds and private sector entities Target paid-in capital : $3 billion coming from a variety of investors Single ‘A’ target rating which should enable to leverage the capital 2 – 3 times to reach up to $10 billion of funds Africa50 - Project Development Africa50 – Project Finance African states IFIs, Public Financial Institutions Private investors Early stage equity funding Broad range of financing instruments pre and post financial close SPVs AB

Confidential6 African infrastrucure financing needs AFRICAN INFRASTRUCTURE SUFFERS FROM A SERIOUS FINANCING GAP, PARTICULARLY AT THE PROJECT DEVELOPMENT STAGE Project development funding gap $95 bn $33 bn $6 bn $50 bnFinancing gap Private sector DFIs Public sector Source: AfDB, PIDA $2.5 bn Project preparation facilities Financing gap $2.4 bn $0.1 bn Project financing gap

Confidential7 Scope of project development financing Project development financing THE PROJECT DEVELOPMENT COMPANY WILL FUND PROJECTS FROM EARLY STAGE FEASIBILITY STUDIES UNTIL THEY REACH FINANCIAL CLOSE A

Confidential8 Project finance company scope Project financing THE PROJECT FINANCING COMPANY WILL FUND PROJECTS AT FINANCIAL CLOSE AND THEREAFTER B

Confidential9 Trends in infrastructure financing in Africa Volume of private infrastructure financings US$ bn Sectoral split of investments (2014 – 2015) ICT Energy Other 95% 3% 2% USD 8.5 bn in 2015, up 55% on 2014, for a total of 29 projets Energy, particularly renewables, account for the bulk of the market

Confidential10 Type of insurance products used in project financing In project finance we use various insurance products to mitigate the risks For credit risk: partial credit guarantees (not usual) For political risk : partial risk guarantees that cover the commitment from the governments and the borrower During the construction and operation, we need policies to cover the following risks: o Insurance during transportation o Insurance of project assets (equipment and machinery) o Construction all ‑ risk o Delay in startup o Operational damage (all risk during operations), business interruption o Third party liability insurance o Directors' and officers' liability insurance o Terrorism cover

Confidential11 Process for placing insurance The lenders select a broker (i) for insurance due diligence and (ii) the placement of the insurance program when the project legal documentation is advanced Generally the usual suspects (marsh, willis / gras savoye, aon, JLT, Charles Taylor, Indecs, etc.) The insurance advisor will review all types of risk during construction and operations, determine which ones can be insured, and make proposals for placement Given the limited cost of insurance (with respect to overall project costs) and the competitveness of the insurance underwriting market, the lenders and sponsor generally easily agree on the exact insurance programme The conditions are: financially solid insurance company with a good rating, good scope (risks covered, exclusions, amount of cover and deductibles) From time to time the lenders do a supervision to make sure the insurance guarantees are in place and no deterioration of the rating