AFD's subsidiary dedicated to the private sector will finally devote €3.5 billion to African companies. Decryption with its general manager, Grégory Clemente.

Three years after the Ouagadougou speech during which the President of the French Republic, Emmanuel Macron, announced a strong commitment of the France alongside African entrepreneurs, the group Agence française de développement  (AFD) is committed to mobilising an additional €1 billion under the Choose Africa initiative.

This new component, called "Choose Africa Resilience", will be implemented by Proparco, and should make it possible to meet the needs of MSMEs in Africa impacted by the health and economic crises related to the Covid-19 pandemic.

This initiative, initially set at €2.5 billion for the period 2018-2022, is thus increased to €3.5 billion.

For Jeune Afrique, Grégory Clemente, CEO of Proparco since 2016, looks back on four years of mandate at the head of the French public lessor: its balance sheet, its strategy and its prospects...

Jeune Afrique: We are exactly halfway through Choose Africa's goals. Last year, Proparco mobilized €750 million of the €2.5 billion initiative. How has the process accelerated?

Gregory Clemente © Alain Goulard

Grégory Clemente: We are at more than 2 billion euros deployed; so ahead of the initial plan.

These €2 billion are distributed according to the different instruments that make up Choose Africa: medium- and long-term financing for €1.15 billion; guarantee products for €465 million; and €380 million of direct investments or through investment funds in VSEs and SMEs.

With this initiative, we have, for example, made an intermediated loan of 3 million dollars for the benefit of Advans DRC, a Congolese microfinance institution, or a loan of 20 million dollars, associated with a technical assistance grant of 300,000 euros, on behalf of Bank of Kigali, to support the development of Rwandan SMEs...

At this stage, 16,000 companies will already benefit from the Choose Africa initiative.

Added to this is the doubling of the envelope for start-ups as part of the Digital Africa initiative, which was announced at the same time as Choose Africa. The commitment to start-ups is increased from €65 million to €130 million, with new initiatives such as the establishment of the "Bridge by Digital Africa" fund, which will make it possible to make bridge loans to these start-ups until they can resume their process of strengthening their own funds.

Finally, we have also exceeded the target of 10,000 beneficiary companies, since at this stage, 16,000 companies will already benefit from the Choose Africa initiative. This means thousands of direct or indirect jobs that have been maintained or created.

Can you tell us more about the next step, Choose Africa Resilience, which increases Proparco's outstanding amount for SMEs in Africa due to the Covid-19 crisis?

We started from the observation that the most fragile companies, those in the informal sector in particular, were the ones that would suffer the most from the crisis. Because, in general, these are already actors who are experiencing problems with access to banking, financing and refinancing.

The context of the crisis has exacerbated their difficulties. Proparco's role, particularly through the Choose Africa programme, is all the more relevant for the private sector. Therefore, in addition to the emergency measures granted as early as March, such as moratoriums or debt carry-overs, we will put in place other instruments and resources to fully fulfill our mission: to provide financing and impact.

At the end of July, parliamentarians voted on a €160 million guarantee to the AFD group, which Proparco will implement in favour of the private sector, exclusively on the African continent.

It is these 160 million euros that allow us to finance the new component of the initiative, Choose Africa Resilience: 100 million will be used to offer an 80% guarantee to 125 million euros of loans granted by local banks to VSEs or SMEs with less than 200 employees, affected by the crisis.

Choose Africa initiative to be increased from €2.5 billion to €3.5 billion

The AFD group signed an agreement with the State on 18 November, which will allow us to launch this guarantee product in the coming weeks, in partnership with Proparco's historical banking customers.

The remaining €60 million in guarantees will be used to guarantee short-term financing granted by local banks to VSEs/SMEs, micro-loans granted by microfinance institutions or direct loans from Proparco to companies.

In all, between what Proparco is able to bring through its own economic model and the instruments mentioned above and built around public resources, we will be able to contribute an additional volume to the Choose Africa initiative for an amount of about 1 billion euros, with in particular 160 million euros allocated by the French State, and 100 million euros of guarantees raised from the European Union.

This will increase the initiative from €2.5 billion to €3.5 billion.

Profile, size, range of tools... In four years, Proparco has changed enormously

Concretely, how do we go from 1 billion euros deployed in 2016 to 3.5 billion euros now, in Africa alone?

As the additional component is mainly intended to respond to the impacts of the crisis, we aim to deploy this funding by the end of 2021.

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The announcement of some twenty development finance institutions to grant a $4 billion in support for the African private sector, at the Joint Finance Summit organized from 10 to 12 November at the initiative of the AFD and its Director General, Rémy Rioux, is a perfect example of this new dynamic.

Of this $4 billion, €1 billion comes from the AFD group, via the additional Choose Africa Resilience funding. This is the France's contribution to this initiative.

But behind all the figures we quote, what matters to us is to have an impact on the ground: in relation to the Sustainable Development Goals, the objectives of economic development, access to banking, job creation and maintenance...

Thus, as part of the Choose Africa initiative, more than 2,000 companies will benefit from extra-financial support, mainly on the Sustainable Development Goals (SDGs) and environmental and social issues.

The next frontier is the ability, for players like Proparco, to mobilise pure private investors.

Is this approach cost-effective?

Yes. Because when we take the portfolio of our operations individually, and this over a long period, Proparco has demonstrated that we can invest in developing countries, in emerging countries, while being profitable. And by having significant impacts on the economies, on the populations and on the development of these countries.

The next frontier is undoubtedly the ability, for players like Proparco, to mobilize pure private investors (insurance companies, capital investors, etc.) to show them that we can invest in these regions while being profitable.