The Private Sector Facility (PSF) represents an additional, complementary means through which OFID can fulfill its core mission of assisting its partner countries in their socio-economic development. By extending loans and equity investments, the PSF seeks to encourage the growth of productive private enterprise and local capital markets.
The PSF manages risk by partnering with other DFIs and commercial banks to support commercially viable, privately-owned enterprises. State-owned institutions may also be eligible, if they are commercially managed as autonomous enterprises or act as a channel of support for local private enterprises. In addition, public-private partnership projects are supported when operated on private enterprise principles. Projects selected are required to have a high developmental value.
Through providing credit lines to financial intermediaries, the Facility prioritizes support for micro-,small,- and medium-sized enterprises, whose activities drive economic growth and play a key role in employment generation and poverty alleviation. The Facility also gives priority to the energy sector as part of the wide range of solutions delivered by OFID in fighting energy poverty, one of OFID’s key strategic objectives.
Activities in 2013
For the year 2013, private sector approvals comprised 17 transactions with a combined value of US$281m. This was an increase of 70% over 2012, as OFID’s efforts were again needed to bridge the gap in the market caused by the repositioning of commercial banks post-2008. The funds supported operations in the agriculture, energy, industry, telecommunications and MSME sectors.
- Energy projects attracted the largest share (US$130m) and included US$20m for a pioneering wind project in Jordan.
- Telecom project: US$39m loan to Bharti Airtel, the Pan-African telecom group which has been expanding its networks in a large number of OFID partner countries.
- In the financial sector, MSME development benefited from credit lines totaling US$105m.
In 2013, OFID also initiated private sector operations in two new partner countries:
- Rwanda’s Bank of Kigali secured a US$10m line of credit to help expand its SME portfolio
- in Mozambique OFID supported the establishment of a greenfield aluminium manufacturing plant