AfDB-EMRC SME Forum Session 8 Diogo Araujo

byDiogo Gomes de Araújo

6 June 2011Lisbon

Investments through SME partnerships

SOFIDan innovative sollution

AfDB-EMRC SME ForumBridging the Missing Middle Gap in Africa

Summary

1.SOFID as an innovative solution

2.SOFID vs. traditional banking

3.Eligibility criteria

4.What is on offer?

5.Examples of projects

1. SOFID as an innovative solution

1. SOFID as an innovative solution

• Portuguese DFI with SME focus

• Regulated by Portugal’s Central Bank

• HQ in Lisbon

• Twofold mandate:– Support Portuguese companies and business

partners investing in emerging and developing countries

– Promote sustainable private sector development in those countries

2. SOFID vs. traditional bankingADDITIONALITY: SOFID only participates in operations

where it adds value

• Sustainable investment: social and environmental responsibility, job creation, knowledge transfer, wealth distribution

• Political comfort: public-private shareholders• Flexibility: adjust to client needs• Focus and specialisation: partnerships,

products and markets

3. Eligibility criteria

• Minimum 20% Portuguese stake

• Productive sectors (no real estate)

• Brown and green-field projects

• Economic and financial viability with social and environmental concerns

• Preferably in PARTNERSHIP with local banks

4. What is on offer?

• Tailor made financial products Loans

Guarantees

Equity

Funds

• Financial services Financial advice

Resource mobilisation

4. Loans and Guarantees

• Commercial terms (no soft money)

• Grace period up to 3 years

• Maturity up to 10 years

• Hard currency

• Local bank provides local currency

4. Funds

• ITF – EU-Africa Infrastructure Trust Fund

• NIF – Neighbourhood Investment Facility

• InvestimoZ – Portuguese Fund for Investment in Mozambique

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HIGEST

Leading FI: Millennium bimTotal investment: € 2 MSOFID guarantee: € 0,5 MSponsor: Higest

5. Case study 1

• Poultry industry in Mozambique• Sells chicks and feed to local farmers• Buys back chickens• Frozen chicken is supplied• Network of “container shops”

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PREMAP• Production, supply and sale of precast concrete parts • Maputo and Dondo (MZ)• Upgrade operationsand expand production capacity • Locally produced goods for the domestic market

5. Case study 2

Leading FI: SOFIDTotal investment: € 0,7 MSOFID Loan: € 0,4 MSponsor: Concrepax

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PRIO FOODS

5. Case study 3

Leading FI: SOFIDOther IF: BCI Total investment: € 2,3 MSOFID guarantee: € 1,7 MSponsor: Prio

• Agricultural produce for the food processing industry• 80 direct staff + 1,000 local farmers• Sofala region (MZ)• Guarantee secured financefrom a local bank• Crop diversification and supply to domestic market

African saying

If you want to go fast, run like the gazelle

If you want to go far, run together likethe buffalo

Thank you

Diogo Gomes de Araújo

www.sofid.pt • [email protected]