The French Development agency
The French Development agency (AFD) is authorized to operate in Ethiopia since September, 1993. Until 2007, its interventions were focused on the water sector. In 2007, following the Ethiopian government’s commitment to development and to public investment, AFD opened a regional office in Addis Ababa, which also follows Eritrea, Somalia, Sudan and South Sudan.
1. A favorable context for AFD’s activities
An annual GDP growth consistently above 7% since 2004 makes Ethiopia the fastest growing non-oil African economy of the period. It needs important further investments to maintain its current economic and social development. The country has some key assets: the second largest population in the continent, a low and controllable rate of urban population, an important and under-utilized agricultural and mining potential, and a strong developmental leadership.
AFD’s interventions are in line with the ethiopian Growth and Transformation Plan 2010-2015, which focuses on reaching the millennium development goals, filling the infrastructure gap, and increasing agricultural productivity.
2. A strategy based on a continuous dialogue with the authorities :
From 2010, it has focused on two pillars :
- Develop national and regional facilities in water and sanitation, urban and energy sectors;
- Support the investment and reinforce the capacities of the productive sectors (private sector and merchant public sector).
Since mid-2012, the government has expressed a demand for AFD to focus on energy and food safety infrastructure. Those new focuses are taken into accounts for future projects.
3. A wide pannel of financial tools
AFD offers a wide pannel of financial tools to better address the needs of its partners. Until 2009, AFD intervened in favor of the ethiopian State only with grants. The recent assessment by the IMF of a low public external debt distress risk allows AFD to use the full scope of its toolkit:
- Sovereign loans (direct loans to the State) : several projects are under preparation, in the urban sector (solid waste management, transport), the energy sector (transmission lines, network management, geothermal energy); water and sanitation (urban and rural) et food-related (slaughterhouse, grain storage).
- Non-sovereign loans (to solvent public sector market-oriented enterprises) : already financing EEPCo (the national electricity company) for a windfarm and Ethiopian Airlines (the flag-carrier airlines) for a training center, AFD is looking to deepen its support to public sector enterprises.
- ARIZ guarantees, a guarantee tool aimed at easing access to credit for micro-finance institutions and small and medium enterprises : five guarantees were issued, showing the banks’ and borrowers’ interest for this product in a context of credit shortage.
AFD’s subsidiary PROPARCO is interested in participating in financing the private sector. The offered financial products feature the following, among others: foreign currency loans for exporting firms, equity participation in local currency, credit guarantee in local currency.
From 2001 to 2011, total financings reached 174 million euros. They include among others support to Addis Ababa municipality for drinkable water and solid waste management, and the two non-sovereign loans mentioned above : a concessional 45 million € loan to EEPCo and slightly concessional 30 million € loan to Ethiopian Airlines.
Read more about AFD in Ethiopia :