Issue 11 .

July 2009

Newsletter of the

www.edfi.eu

European Development Finance Institutions

CONTENT 1 EFP REPLENISHMENT 2 SWEDFUND & JACOBI CARBONS INVEST IN INDIA 3 COFIDES NEW INDIA FACILITY 4 FINNFUND RECENT INVESTMENT IN INDIA , MANDATORY HIV/AIDS EDUCATION FOR SWEDFUNDS STAFF 5 OEEB LOOKING BACK ON A SUCCESSFUL 1ST YEAR 6 FMO SUPPORTS THE FIRST AFRICAN BIOGAS PROGRAM, SWEDFUND INVESTS IN ENVIRONMENTAL FRIENDLY YARN MANUFACTURING IN INDIA 7 DEG LAUNCHES 100-MILLION-EURO INITIATIVE AGROAFRICA, EDFI MEMBERS SIGN DECLARATION ON PRINCIPLES FOR RESPONSIBLE FINANCING AT THE EDFI AGM IN COLOGNE ON MAY 7 8 NEWS & EVENTS

EUROPEAN FINANCING PARTNERS REPLENISHED WITH 230 MILLION

(Switzerland) and SWEDFUND (Sweden). The EFP initiative was created in 2003 with the double aim of promoting sustainable development of the private sector in ACP States and strengthening cooperation between eligible European Development Finance Institutions and the EIB. EFP is a Luxembourg-based investment company and has since 2003 approved financing to 25 private sector enterprises in Africa, the Caribbean and the Pacific at a total amount of 280 million.
The EIBs Vice President responsible for lending operations in the ACPs, Plutarchos Sakellaris and the Chairman of EDFI, Luc Rigouzzo, signing the new Master Investment Agreement for the replenishment of EFP. (copyright: DEG/Thomas Brill).

On May 8, the European Investment Bank (EIB) and the EDFI members replenished the cofinancing facility EUROPEAN FINANCING PARTNERS with 230 million to finance private sector investments in Africa, the Caribbean and the Pacific (ACP). EDFI members and the EIB signed a new Master Investment Agreement for EUROPEAN FINANCING PARTNERS S.A. (EFP) at the Interact AGM in Cologne, com-

mitting an additional 230 million to the investment matching facility. The funding will be provided by the Cotonou Investment Facility through the EIB (100 million) and by following EDFI members (130 million): BIO (Belgium), CDC (United Kingdom), COFIDES (Spain), DEG (Germany), FINNFUND (Finland), FMO (the Netherlands), IFU (Denmark), NORFUND (Norway), OeEB (Austria), PROPARCO (France), Sifem

An evaluation of EFP undertaken by the Operations Evaluation Department of the EIB in 2008/2009 concludes that the EFP initiative is clearly in line with European development cooperation polices and with a number of joint statements on aid harmonisation put forward by the international community. It has also been a concrete step forward in implementing the Framework Agreement on financial co-operation and exchange of services signed by the European Partners in 2003. Continued on page 2 1 EDFI Newsletter

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EUROPEAN FINANCING PARTNERS REPLENISHED WITH 230 MILLION

Continued from page 1

This evaluation has highlighted that, while sharing the common objectives of EFP, its members participate with their own institutional agendas: larger partners focus on financial leverage and risk sharing while smaller partners focus on the exchange of experience and best practices. These diverse strategic objectives are not only coherent with the objectives of the EFP, but greatly contribute to achieve them. Through its operation, the EFP has proved to be an effective and efficient instrument in strengthening co-operation among partners. Furthermore, overall the partners feel satisfied with the experience and provide concrete examples of reinforced co-operation.

EFP has financed projects in 11 ACP countries in the following sectors: Agribusiness, Banking, Communication, Health, Hotel, Housing, Industry, Infrastructure, Power and Air Transport. The EIBs Vice President responsible for lending operations in the ACPs, Plutarchos Sakellaris and the Chairman of EDFI, Luc Rigouzzo, expressed their commitment to the EFP initiative at the signing ceremony in Cologne. VP Sakellaris said, We at the EIB have been encouraged by the manner in which the EFP initiative has been utilised to date to fund private sector projects in the ACP regions which foster economic growth and lead to an overall reduction in poverty. These are precisely the lending

objectives of the EIB in the ACPs and we are delighted to show our support for this European collaborative initiative with a further injection of capital of EUR 100 m." Luc Rigouzzo said that EFP has contributed to increasing the visibility of European development cooperation. Extensive harmonisation of guidelines, procedures and processes among the partners, enabling them to delegate tasks to the institutions in charge of the individual projects, has made EFP a very efficient vehicle for co-financing, which is being closely watched by other institutions considering establishing a similar platform.

SWEDFUND AND JACOBI CARBONS INVEST IN INDIA

Swedfund and Jacobi Carbons AB have invested in a production facility for activated carbon in the South of India. This investment allows the development of the worlds largest factory for coconut shell based activated carbon. The total investment is MUSD 6,8 and Swedfund has granted a loan of MUSD 3,0. Jacobi Carbons is one of the worlds leading manufacturers and suppliers of activated carbon. The investment in India will set up a production facility for coconut shell based activated carbon. This type of carbon is a green product, based on a renewable raw material as opposed to coal; the globally dominating raw material for production of activated carbon. Through this investment Swedfund partakes in the expansion of a world leading Swedish company. What is particularly interesting is that Jacobis products are based on raw material which today is of minor commercial value since it is a waste product, says Arne Georgzn, Senior Investment Manager at Swedfund.

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NEW INDIA FACILITY TO SUPPORT VIABLE INVESTMENT PROJECTS

COFIDES, as fund manager for FIEX and FONFYME, has implemented the India Facility in order to foster the financial support provided to the investment projects in this country. The new India Facility has a capital endowment which amounts to 80 million euros. The new Country Facility provides cost-effective financial support for viable private direct investment projects implemented in India and involving some type of Spanish interest. The ultimate aim is to conduct a profitable business that contributes to both host country development and the internationalization of Spanish enterprise and the Spanish economy. Therefore, the facility reinforces the presence of Spanish companies in India and supports the investment in this country. The Country Facilities entail specific advantages in the financial support provided regardless of the type of business and offer the following financial products: capital holdings, joint venture loans, other medium- and longterm syndicated instruments. The ceiling is 25 million euros per project and the minimum is 250,000 euros. Capital holdings are limited to 49% of the project companys share capital. Joint venture loans and other medium- and long-term syndicated instruments are limited to 70% of the total project investment. Country Facilities The new India Facility is one of the Country Facilities implemented by COFIDES as fund manager for FIEX and FONFYME. Recently, COFIDES has extended the previous Country Facilities expiry dates to January 2011. Indeed, COFIDES has renewed tions) are two State-owned Funds managed by COFIDES. In October 2002, The Spanish Government established the first Country Facility to provide specific financial support to viable projects undertaken in China. Subsequently, the Mexico Facility was established in 2005, follo-

the present capital endowment for every Country Facility until the ceilings approved when they were established. Mexico Facility: EUR 100 million China Facility: EUR 90 million Brazil Facility: EUR 70 million Morocco Facility: EUR 50 million Sub-Saharan Africa Facility: EUR 50 million. FIEX (Fund for Foreign Investment) and FONPYME (Fund for SME Foreign Investment Opera-

wed by the Brazil Facility and the Morocco Facility. In 2007 and within the framework of the Africa Plan by the Spanish Ministry of Industry, Tourism and Trade, the Sub-Saharan Africa Facility was established in order to foster the economic and social development of these countries.

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FINNISH CONTRACT MANUFACTURER INCAP INVESTS IN INDIA

building for Incap near the existing plant. The new production premises have now been built and brought into use. Incap's operations in India span electronics manufacturing and assembly as well as materials purchasing, distribution, logistics and maintenance. The product line focuses on complete products for energy technology and industrial electronics. The Tumkur plant has a fine reputation in India as a first-class contract manufacturer with an established clientele. Incaps To finance the new investments good references in Europe, in and provide necessary working turn, help to attract new cuscapital, Finnfund is making a tomers. two-million-euro equity invest- For a contract manufacturer like ment in Incap's Indian subsidi- Incap, India offers good growth ary. prospects. The competitors are The Tumkur plant employs major global corporations or some 230 workers and covers smaller local family firms. There 6000 square metres. As part of are still no other medium-sized the deal, it was agreed that TVS contract manufacturers in the would construct a new factory market.

Incap, a contract manufacturer of electromechanics, began production in India in 2007, when it took over the contract manufacturing business of Indian TVS Electronics. In the acquisition, TVSs production facilities in Tumkur and related planning operations in nearby Bangalore were transferred to Incaps Indian subsidiary.

MANDATORY HIV/AIDS EDUCATION FOR SWEDFUNDS STAFF

As a part of Swedfunds work with HIV/Aids in its portfolio companies, all of Swedfunds staff have undergone an education in HIV/Aids related questions. wledge to a new dimension and to create awareness of HIV/Aids not only to the thousands of employees in our companies in The complexity of problems re- developing countries, but also for Swedfunds staff in Sweden, lated to HIV/Aids, is very widesThe education has been carried pread in many of our investment says Bjrn Blomberg, Managing Direcor at Swedfund. out and initiated by Ophelia countries. Haanyama and the Foundation We are therefore anxious to take of Noaks Ark in which Swedfund our responsibility and to contrialso has a close collaboration bute to bring the level of knowith when it comes to developing HIV/Aids programmes in its investments in developing countries. 4 EDFI Newsletter

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OESTERREICHISCHE ENTWICKLUNGSBANK OEEB, THE DEVELOPMENT BANK OF AUSTRIA: LOOKING BACK ON A SUCCESSFUL FIRST
YEAR
OeEB: Funding prosperity tomorrows projects financed by OeEB together with other investors enabled the creation and safeguarOeEB, the official Development Bank of Austria, started its acti- ding of 21,000 direct and 14,600 vities in March 2008. Its man- indirect jobs. date is to provide long-term financing opportunities in developing countries. Any project financed by OeEB has to be profitable (i.e. commercially self supporting), and it focuses on the private sector. OeEBs financial instruments, which include equity, senior debt and mezzanine financing, are untied to Austrian supplies and services. In addition, OeEB can offer technical assistance under the so-called Advisory Programmes. These grants, which can be used in preparation for or accompaniment to financed projects, aim at increasing the development impact of projects, e.g. through technical experts or staff trainings. The overriding goal of all activities is to foster sustainable development. A successful first year In the first year, OeEB approved five financing projects, committing EUR 71.5 million, and thereby mobilised a total investment of EUR 141 million. All projects in 2008 aimed at strengthening the financial sector, as its well functioning has a substantially positive impact on economic development and poverty reduction. It thus represents a priority for OeEB. In 2008, the In 2008, OeEB activities were strongly linked to micro, small and medium enterprises (MSMEs) as they form the backbone of prosperity in an economy, due to the large contribution to job creation and innovation. Economic growth is slowed down if MSMEs do not have sufficient access to finance and OeEBs on-lending to financial institutions can thus be seen as positive contributions in this respect. OeEB acts on a worldwide basis in all developing countries (as defined by the OECD Development Assistance Committee); it puts, however, a particular regional focus on Central Asia, the Caucasus region, Southeast Europe and on selected countries in Sub-Sahara Africa. In 2008, 14.3% of its invested funds targeted low-income countries. tion, the development impact of EFSE was enhanced through a contribution to the Development Facility. Outlook for 2009 By the end of 2008, OeEBs financial assets totalled EUR 58 million and it employed 10 staff members (including the two Executive Board members). Its current plan is to grow to 15 people by August 2009, while several services continue to be outsourced and provided by its parent company, the Austrian Export Credit Agency - OeKB. As most projects so far have been undertaken together with partner organisations, OeEB has also established good relationship with its partner EDFIs and other DFIs/IFIs over the last year.

Projects in the first quarter of 2009 naturally focused on responding to the economic and financial crisis. They included among others the investment in the Microfinance Enhancement Facility or the contribution to OeEB in practice an example the IFC Program of Advisory One of OeEBs project examples Services relating to the Global is the investment in the Euro- Financial Crisis. pean Fund for Southeast Europe Due to the large number of pro(EFSE), the largest microfinance ject acquisitions - in 2008 as well fund worldwide, where EUR 30 as on an ongoing basis - OeEBs million have been invested into business in 2009 is expected to A and B shares. As a comple- grow at a similarly strong pace menting measure, EUR 3 million as last year with a target of at were granted to EFSEs first loss least doubling the amount of tranche in order to leverage fur- business. ther private investment. In addi5 EDFI Newsletter

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ACCESS TO RELIABLE SOURCE OF ENERGY FOR RWANDAN HOUSEHOLDS

many Rwandan households use wood for cooking, which not only leads to deforestation, but is also hazardous for the women that cook on these wooden fires in their homes. Another positive effect of these loans on women is that it saves them time spent on collecting wood and the transport of the heavy wood to their houses. This is the first (national) biogas program in Africa, but FMO expects follow-up programs in Rwanda and other African countries to be rolled out. The project is eligible for certified First African biogas program emission rights under The biogas program is a project the Kyoto Protocol. whereby small-scale farmers acquire biogas digesters. All they Access to Energy need is at least two cows, a stable Fund shed and easy access to water. This facility will secure access to a The Access to Enreliable source of energy for ergy Fund (AEF) is a 15.000 households. Currently, vehicle initiated by FMO supports the first African biogas program by providing a 4 mln senior loan in local currency with a 6.5 year tenor to Banque Populaire du Rwanda S.A. (BPR). The loan is granted by the Access to Energy Fund, and is to be used for on-lending to clients who wish to buy small biogas digesters. Partners in the project are Rabobank (35% owner of BPR) and SNV and GTZ. The Royal Netherlands Embassy in Kigali also provides financial support for this project. the Dutch government and FMO to make it possible to fund private sector projects that create sustainable access to energy services. By providing financing for projects involved in the generation, transmission or distribution of energy, the Fund hopes to ultimately connect 2.1 million people in developing countries by 2015.
Several ministers from the Rwandan government attended the signing ceremony

SWEDFUND INVESTS IN ENVIRONMENTAL FRIENDLY YARN

Recycled PET-bottles becomes yarn, which becomes clothing to transportation vehicles and also clothes. Swedfund gives a loan of MEUR 7,5 and finances a new factory in India which has a patented cleaning technique that can manufacture yarn of PETbottles. The factory will create some 180 job openings and indirectly occupy a large quantity of Indian people in collecting PET-bottles. As the factory will need a continuously large quantity of collected PET-bottles, the business will contribute to creating a systematic collection campaign of PET-bottles which does not exist today. This is an excellent clean tech investment that will bring large development effects. The investment will also contribute to transfer of know-how of a new environmental technique since modern polyester yarn mostly is made with petrochemical raw material in India and China, says Fredrik Wijkander, Senior Investment Manager at Swedfund. Swedfund invests together with Finnfund and the total investment amount to 35 MEUR. 6 EDFI Newsletter

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DEG LAUNCHES 100-MILLION-EURO INITIATIVE AGROAFRICA

Loan programme to support the African agriculture Up to 75 per cent of the population in developing countries lives on agriculture. Especially in Africa, efficient, resource-saving cultivation methods could offer an opportunity of increasing agricultural yields. It is against this background that DEG has launched the AgroAfrica programme. Under this programme, 100 million euros are to be provided over the next three years for financial support of the agriculture in sub-Saharan Africa. To realise this programme, DEG has for the first time formed a strategic partnership with a commercial bank. Its partner is Standard Chartered Bank (SCB), one of the leading banks for structured agricultural financing in Africa. With DEG acting as a guarantor, SCB will be able to extend its offer of input financing products. As the first project within the scope of AgroAfrica, DEG has provided SCB with a deficiency suretyship to the amount of up to 200 million South African rands (approx. 17 million euros) in May 2009. This will enable SCB to increase the number of South African farmers currently benefiting from 200 to 300, providing a long-term basis for the existing programme to finance input products. The cultivation areas of currently 140,000 hectares are to be expanded to over 300,000 hectares by the year 2012. With a total output expected to be around 1.1 million tonnes of wheat, soy beans and maize, this project will make a contribution towards meeting the consumption demands and increasing South Africas export potential. In this project, SCB cooperates with Farmsecure Capital (Pty.) Limited. Farmsecure selects the farmers, offers them comprehensive soil examinations and subsequently develops an optimisation programme, e.g. with respect to the choice of field crop and fertilizers and irrigation. A complementary insurance package contributes to risk mitigation because the financing of the cost incurred prior to harvesting, e.g. purchase of seeds and cultivation of the field, is the main problem of farmers in developing countries. With this project, DEG not only promotes the agricultural sector but also contributes to the development of the African capital market. The farmers will benefit from both the provision of finance and the securing of the pre-harvest risks. They will be able to lower the production cost, boost productivity and eventually make better profit. AgroAfrica is planned to be rolled out to other products, e.g. the long-term capital need to finance agricultural machines or irrigation plants, and to other regions of sub-Saharan Africa.

EDFI

MEMBERS SIGN DECLARATION ON PRINCIPLES FOR RESPONSIAlready in 2007, the EDFI members agreed on harmonized Environmental and Social Standards for any mutual financing activities, especially regarding any project financed through the EUROPEAN FINANCING PARTNERS S.A. (EFP) facility. These standards encompass (a) Environmental and Social Category Definitions, (b) Requirements for Environmental and Social Due Diligence, Environmental and Social Contractual Requirements and Monitoring and (c) an Exclusion List, all of which will be reviewed regularly. Benchmarks for the EDFI members are the UN Declaration of Human Rights, the ILO Core Conventions and the IFC Performance Standards on Economic and Social Sustainability and associated Environmental and Health & Safety Guidelines. 7 EDFI Newsletter

BLE FINANCING AT THE EDFI AGM IN COLOGNE ON MAY 7.

This forms another cornerstone ronmental and social risks of proin the harmonization of policies jects. and procedures among the 16 It is the conviction of the EDFI EDFI members. members that responsibly maWith the Prinicples on Responsi- naged companies play a vital part ble Financing, the EDFI members in a long-term positive environhave emphasized that a corners- mental, social and economic detone of their investment activi- velopment. They employ and ties is to have a positive impact train people, pay taxes, and build on the local communities where and operate infrastructure and they invest. It is a powerful suc- services. Such businesses set an cess for the process of further example for other companies. harmonising polices of the inter- They also generate sustainable national development finance economic growth, which benefits community. The Principles espe- the poor. The EDFI members cially underline that the respect therefore require their investee for human rights and environ- companies to work over time tomental sustainability is a prere- wards relevant international best quisite for any financing by EDFI practice norms and standards, institutions. The Principles give also encouraging them to proan important and clear signal to mote the same standards the market that all EDFI mem- throughout their supply chains, bers follow harmonized stan- e.g., with their contractors. dards in their evaluation of envi-

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APPOINTMENTS & EVENTS

DOUBLE STRIKE FOR GERMANY AT 2009 EDFI-CUP
Association
EDFI is the Association of European Development Finance Institutions, a group of 16 bilateral institutions which provide long-term finance for private sector enterprises in developing and reforming economies. Since its foundation in Brussels in 1992, EDFI's mission has been to foster co-operation among its members and to strengthen links with institutions of the European Union.

2008 figures
The consolidated portfolio of EDFI stood at 16 billion at the end of 2008, invested in 3,900 projects. In geographical terms, 24% of the global portfolio was in the ACP region and South Africa, 27% in South-East Asia, SouthAsia and China, and 16% in South and Central America.

Members
AWSAustria BIOBelgium CDCUnited Kingdom COFIDESSpain DEGGermany FMOThe Netherlands FINNFUNDFinland IFUDenmark NorfundNorway OeEBAustria PROPARCOFrance SBI-BMIBelgium SifemSwitzerland SIMESTItaly SOFIDPortugal SWEDFUNDSweden
Full contact details are available on www.edfi.eu

In taking both the mens and womens EDFI-Cup, Germany turned out as the biggest winner during this years Play for Development th tournament. The 9 EDFI-Cup tournament took place this year on June 13 in The Hague, The Netherlands, hosted by FMO, and was a recordbreaking event. Over 250 employees from thirteen EDFImembers and other DFIs participated in this years tournament. Among them were employees of first time participants BIO/SBI, CDC and OeEB. The competition took place under blue skies and was an added bonus for both players and on-lookers. Fair Play Cup Over fifty matches were played in total and all participants strived seriously for the best result. The referees were impressed that all teams kept Fair Play in mind. FINNFUND ladies and the United Colours mens teams took home the Fair Play Cup, no big surprise given the fact that

the United Colours mens team consisted of players from several DFIs. The results Six teams participated in the ladies competition. FMO finished third in the group; just falling short of the final. The final match was a show down between KfW and the United Colours team. In the end KfW

team was the distinct winner, thus dethroning last year winners from DEG. In the mens tournament, thirteen teams battled for victory. The FMO A team entered the semi-finals unbeaten to play AfD. The Picture: Participants from FMO & Dutch won and proceeded EIB competing through to the final. The second semi-final ended in a draw between KfW and

Proparco, but was decided by KfW during a penalties series. The final game was a show down between two strong teams. It entertained the audience with great play and chances on both side. However, both keepers turned out with peak performance and no goals were scored. The KfW team had once more the upper hand during the penalties series and took the EDFI-cup home. Aftermatch The tournament came to a close during a spectacular party at Schevingen beach. Sundrenched and tired participants showed their festive side. And drummed up by the Funhouse band the dance floor quickly filled. Next year FINNFUND will be host for the 10th EDFICup.

FMO APPOINTS NEW MEMBER OF SUPERVISORY BOARD

of the Supervisory Board of Dutch development bank FMO. He replaces Cees Maas, who has reached the maximum term of 12 years. FMO is very pleased with the appointment of Bert Bruggink. Willy Angenent, Chairman of the Supervisory Board: With his background as CFO of Rabobank Netherlands and as professor in Financial institutions and Markets, Mr. Bruggink fits perfectly in the profile of a Supervisory Board member with highlevel expertise in financials. With his knowledge and experience as CFO he will be able to further strengthen FMO as a professional development bank.
Picture: Bert Bruggink appointed to FMOs Supervisory Board

Contact
Jan Rixen General Manager Nathalie De Craecker Editor EDFI a.s.b.l. rue de la loi 81A B-1040 Brussels BELGIUM tel +32 2 230 23 69 fax +32 2 230 04 05 email edfi@edfi.eu web www.edfi.eu

Bert Bruggink, Chief Financial Officer and member of the Board of Rabobank Netherlands has been appointed as new member

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