MENA SME Guarantee Facility By Laetitia Habchi EU WORKSHOP: NEW MODELS OF PRIVATE SECTOR PARTICIPATION IN DEVELOPMENT FINANCE MENA SME Guarantee Facility By Laetitia Habchi 2 February 2017

Our case today : MENA SME Guarantee Facility INTRODUCTION: Our case today : MENA SME Guarantee Facility About AFD: AFD is a financial institution and the main implementing agency for France’s official development assistance to developing countries and overseas territories. Our challenges: How to meet the needs of SMEs market? How to efficiently support access to finance ? How to share the risk? How to maximize the impact? 02.02.17 EU WORKSHOP

EU/NIF Grants (EUR million) BACKGROUND: G8 Deauville 2011 : EU partners commitment to support Arab Spring transition with EU initiative For financial Inclusion Financial Inclusion facilities with NIF support : Lead IFI EU/NIF Grants (EUR million) - Support to microfinance institutions (SANAD) KfW 30 - Support to Risk Capital Operations (equity, venture capital), microfinance) EIB 50 - Small Business Advisory services (SBS) EBRD 20 - Support to MSME Financial Inclusion 26 - MENA SME Guarantee Fund (MENA Facility) AFD 24 02.02.17 EU WORKSHOP

EU partnering strategyfor blending … BACKGROUND: EU partnering strategyfor blending … 02.02.17 EU WORKSHOP

CONTEXT: 02.02.17 EU WORKSHOP

MARKET CONTEXT The trend is a value proposition that responds to multiple needs with integrated solutions/products Illustration Nokia Sony Kodak IPhone Apple 02.02.17 EU WORKSHOP

CHALLENGE: How to mix International Financing institutions (IFI) products with private sector financing to meet SMEs needs? Solution: Blending instruments 02.02.17 EU WORKSHOP

Towards a new value proposition…. Traditional IFIs – EU offering … coverage Hedging Credit Line AFD Recruitment Enrolment …à un système intégré Enrolment Enrolment ….New IFIs–EU offering with Blending finance Marketing Equity Welfare Welfare Welfare Credit Line AFD Credit Line IFC Technical assistance Credit Line Proparco HR Hedging coverage Technical assistance Credit Line IFC Progression Progression Progression Risk sharing First loss coverage Learning Learning Learning Finance Finance Finance Delivery Delivery Delivery First loss coverage Risk sharing Credit Line Proparco Equity 02.02.17 EU WORKSHOP

MENA SMEs : Structure of the New Facility EC contribution: 24 M€ Existing Framework Agreement IFC/AFD Case by case basis IFC/Proparco Unfunded instruments Funded instruments Risk Sharing Facilities / Performance incentives / Technical Assistance Counter-guarantees / First loss / Technical Assistance Credit lines to public and private financial institutions / Performance Incentives / Hedging cost mitigation LGFs Guarantees PFIs / NBFI PFIs / NBFI PFIs / NBFI Loans Loans Loans SMEs, VSEs, WoBs 02.02.17 EU WORKSHOP

MENA SMEs : Impact 628 X 26 24 Total Financing NIF 02.02.17   BLENDED NON BLENDED Total (Euro M) Type / Sources EU facilities International Financial Institutions (IFI) : AFD, Proparco, IFC Financial Institutions (PFIs, NBFIs LGFs) Beneficiaires & Owners (SME) 1 - RSFs First Loss 6 40 16 102,5 Performance Incentive 0,5 2 - LGFs 5,1 34 102 27 168,1 3 - Credit Line 5,5 260 54 323,5 Partial hedging cost cover 3 1 4 - Technical Assistance PFIs & NBFIs 31 33,4 LGFs 1,4 5 - Other cost Communication 0,3 Evaluation, audit 0,2 Total Uses (€M) 24 365 196 43 628 Leverage 15,21 8,17 1,79 26,17 389 239 628 X 26 NIF 24 02.02.17 EU WORKSHOP

Key Success Factors to achieve goals… Coordination between stakeholders Adaptation Flexibility Control of Development & Execution cost Market knowledge EU support 02.02.17 EU WORKSHOP

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