NIIF NEPAD Infrastructure Investment Facility Per Ljung PM Global Infrastructure Inc.
Outline of Presentation Why NIIF? => PPI in Africa NIIF s Mission NIIF s Niche NIIF s Organization & Governance NIIF s 5-Year Business Plan
Investments in New Private Infrastructure Projects (2000-2004) PPI/GDP PPI per capita % US$ Low Income Sub-Saharan Africa 1.04% 3.14 All Other 0.43% 2.09 Lower Middle Income Sub-Saharan Africa 0.55% 12.29 All Other 0.36% 4.98
Local Participation in Infrastructure South Africa Northern Africa Sub-Saharan Africa excl. South Africa 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Domestic firms Foreign lead with domestic participation No local firms participating
Local Participation by Sector in Sub-Saharan Africa (excl. South Africa) Telecoms Electricity Ports Railways Water & Sewerage Airports Multi-Utilities Toll Roads 0 5 10 15 20 25 Number of Projects Sole Sponsor Participated
Cross-Border Participation (In Sub-Saharan Africa excluding South Africa) Other African Firms Telecom only North African Firms Telecom only South African Firms 0 5 10 15 20 25 30 35 Number of Projects (Out of 210) Sole Sponsor Participated
NIIF s Mission African enterprises building, operating and investing in the region s infrastructure
NIIF s Functions Budget Share Advisory/transaction support 50-55% Capacity Building 10% Clearinghouse for Information 8% Advocacy 13-15% Collaboration 8% Outreach 6%
NIIF s Niche (Capacity Building) ACBF Africa Capacity Building Foundation ACGF Africa Catalytic Growth Fund AECF Africa Enterprise Challenge Fund AMSCO African Management Services Company FIRST Financial Sector Reform and Strengthening Initiative GSB Growing Sustainable Business Initiative ICF Investment Climate Facility PEP-Africa Private Enterprise Partnership for Africa (IFC)
NIIF s Niche (Infrastructure) DevCo PIDG/IFC Project Development Facility ESMAP Energy Sector Management Assistance Programme (WB) InfraCo Infrastructure Development Company (PIDG) IPPF NEPAD Infrastructure Project Preparation Facility (AfDB) PIDG-TAF Technical Assistance Facility (PIDG) PPIAF Public Private Infrastructure Advisory Facility (WB) PPPUE Public-Private Partnerships for the Urban Environ. (UNDP) PPSF NEPAD Project Preparation and Study Facility (DBSA) SUF Slum Upgrading Facility (UN-HABITAT) TASF FEMIP Technical Assistance Support Fund (EIB) TATF FEMIP Technical Assistance Trust Fund (EIB) WSP World Bank/UNDP Water and Sanitation Program (WB)
NIIF s Niche Infrastructure Project Preparation Facility Managed by AfDB Provides funding for preparation Focus on NEPAD STAP projects Public sector bias (so far) Project Preparation and Study Facility Managed by DBSA Provides funding for preparation Both public and private sector projects DevCo (PIDG initiative) Operated by IFC Provides direct advice Focus on privatization transactions Main clients are governments
NIIF s Strategic Partners Policy Change Investment Climate Facility Public-Private Infrastructure Adv. Facility (PPIAF) Project Preparation Infrastructure Project Preparation Facility Project Preparation and Study Facility Creative Financing Solutions Africa Infrastructure Consortium EU Trust Fund for Infrastructure Development
Institutional Options With AfDB With DBSA With other DFI With ABR Contracted out to investment banker Merged with DevCo
Assessment of Options Credibility with clients Credibility with potential donors Efficiency ability to attract the right skills, flexibility of operations, costeffectiveness, etc. Impact leverage, spin-off benefits, time to market, responsiveness to client needs, scale of operations, etc. Openess & transparency Public, objective criteria, careful selection of clients, reputational risk
NIIF Governance Structure DONORS (B) DONORS (A) AFRICAN INSTITUTIONS Appoints Grants TRUSTEES Grants/ Fees NIIF TRUST NIIF TRUST Appoints Appoints Equity Equity Fees NIIF BOARD MANAGEMENT MGMNT TEAM Flow of Funds Fees NIIF ADVISORY Ltd NIIF ADVISORY LTD Fees Governance CLIENTS
Salient Features of NIIF Private sector Board of Directors Outsourced professional management Donor funding either Through NIIF Trust Direct support of NIIF programs NIIF Advisory Ltd Owned by donors and African institutions Charges for services Commercially viable Targeted support from donors for SMEs Other services donor funded, some nominal charges
Budget: US$50 M over 5 Years African institutions & enterprises Donors Equity in NIIF Advisory Targeted subsidies for advisory services Non-advisory services Contingencies/reserve US$5 M US$45 M US$5 M US$13 M US$24 M US$3 M
Principles for NIIF Fees Power, telecom (BOT, concessions) Larger companies expanding internationally Cost reflecting fees/market Companies interested in medium sized and large projects in the domestic market Success fees (and carried interest/equity) Smaller companies Subsidized (largely based on size of project) Success fees (and carried interest/equity) Water Supply (management contracts) A certain percentage (1%-3%) of the management fee.
NIIF Advisory Budget Scenarios $7,000,000 $6,000,000 Large Projects $5,000,000 NIIF Advisory Cost $4,000,000 $3,000,000 Base Case $2,000,000 $1,000,000 Small Projects $0 Year 1 Year 2 Year 3 Year 4 Year 5
NIIF Start-Up Activities Phase 1: Preparatory Work Background Work Mobilize PPIAF Funding Complete Business Plan Pre 2006 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Phase 2: Mobilization of Funding Appoint Advisory Panel Develop Road Show Material Launch of NIIF Obtain Seed Money Develop Legal Structure Road Show Conditional Funding Commitments Firm Funding Commitments Phase 3: Establishment NIIF Transition Team Incorporate NIIF Trust Incorporate NIIF Advisory Appoint Chair and Board of Directors Select Management Team/Company Phase 4: Start-Up of Operations Establish Main Office Publication Campaign Develop Policies and Procedures Establish Regional Offices Start Outreach Establish Contacts with Strategic Partners Build Database Obtain First Advisory Mandate