Financing Private Ventures in Africa

1

• Financing Private Ventures in Africa
• Enhancing SME-Entrepreneur's Access to Capital
• www.technoserve.org

William (Bill) Cosby January 22, 2003
Yaounde-Douala Cameroon
2
Presentation Agenda

• TechnoServe overview
• Drivers of development
• Engagement example
• Investment activity in Africa hypothesis
• Snapshot of some investment funds
• QA

3
TechnoServe Background- Who We Are

• 25 in US, 275 staff overseas
• Presence in Africa Latam
• Strong Private Sector Orientation to Economic
  Dev.
• Strong Board
• Leverage Strategic Partners

4
TechnoServe Background- What We Do
International Corporate Institutional Partners

• Build Management Capacity
• Create Market Linkages
• Raise Development/Expansion Capital

5
Investment Activity in Africa-Drivers
Public Private Partnership
Education
Income
Low COP Product Pricing
IRR
6
Practical Example-Ghana Pineapple Business

• Before company existed, the farmers grew
  pineapples and sold mainly to local markets
• Less than 25 of production met export standards
• With TechnoServe assistance, 5 smallholder grower
  cooperatives and 2 exporters launched pineapple
  processing/exporting company in 1999

7
Practical Example-Ghana Pineapple Business

• Best practices ag extension services, total
  quality control to meet European export standards
• Leverage technology plastic mulching to improve
  yields, introducing new varieties with higher
  market value
• Improve business management skills through
  training

• Good field practices
• Higher quality product
• Higher yields
• Better management practices

Operational Improvements

• Expand buyer base partner with exporters,
  utilize TechnoServe global network
• Ensure supply increase production capacity
• Inform client of market information collect and
  disseminate

• Better prices
• Higher volumes sold

Market Linkages

• Institutional capital TechnoServe helped
  company obtain World Bank loan to launch company
  in 1999
• Local participation assistance from 2 major
  banks

• Working capital obtained
• Ability to purchase needed equipment

Capital Raising
8
Practical Example-Ghana Pineapple Business

• 2002 Results
• Sales 1.6 million
• Doubled production of export-grade pineapples
• Exported 6,148 tons, approximately 18 of Ghanas
  total pineapple exports to Europe
• Exporting about 60 of harvests

9
Investment Activity in Africa-Hypothesis
Africas Emergence
Growth Markets
Emerging Markets
Mature Markets
Source Investing in Africa
10
Investment Activity in Africa-Hypothesis
Impact of Infrastructure on Foreign Direct
Investment
Percentage Respondents All Firms
Source African Development Report 1999
11
Review of Existing Funds Investments by Stage
Source PriceWaterhouseCoopers
12
Review of Existing Funds Sources of Fund Capital
Source PriceWaterhouseCoopers
13
Review of Existing Funds
14
Review of Existing Funds
15
Getting a transaction financed- Conclusion

• Good management team
• Good business opportunity (IRR/NPV)
• Proven concept on small scale

• Hard currency earner
• Rapid returns
• Strong prospects (logical story)

• Begin w/ end in mind-Exits
• Project must have relatively fewer risks
• Creativity, Flexibility, Patience

16

• QA