French development finance institution Proparco has doubled its annual private sector development financing to €2 billion as it prepares a new strategy for 2017 to 2020.
The institution aims to use the renewed commitment to triple its impact for its private sector clients, many of which are based in Africa. Proparco’s aim is to create 1.7 million new jobs, reducing carbon emissions by 15 million tonnes and providing essential goods or services to 12 million people through 45 innovative projects.
Gregory Clemente, director general of Proparco, commented: “We live in a rapidly changing world so we need to adapt to the needs of our customers.”
Clemente said the strategy has been shaped by three events in 2015 that he believes have spearheaded a new universal goal for development. These landmarks include the Addis Ababa Conference on Financing for Development, the 17 Sustainable Development Goals (SDGs) established by the UN General Assembly, and the signing of the Paris climate change agreement (COP21).
Cooperation is a key plank of the new strategy as the institution aims to boost French SMEs operating internationally. Proparco’s syndication activity with other DFIs, commercial banks or institutional investors will be developed to support climate loans or green securitisations. The institution will also use the “Green Fund” to support upstream risk taking, particularly for renewable energy projects in Africa.
Proparco intends to mobilise private sector funds for the fight against climate change by supporting new initiatives, such as the creation of equity investment vehicles for renewable energies or the development of a syndication capacity in the climate sector.
Banks and microfinance institutions will also been encouraged to develop products to finance their clients’ adaptation to climate change, particularly in the agricultural sector.
Proparco will also more systematically include tariff incentive mechanisms in loan agreements to encourage clients to improve their practices.
Clemente said that Proparco will take on a higher level of risk to support innovative projects with a high impact, such as off-grid electrification and projects that break digital isolation. He said special attention will be paid to innovative new companies in the digital sector.
The DFI has signalled it has begun widening its share of equity investments or quasi-equity instruments to around 25 percent. It adds it will adopt a proactive approach to venture capital to meet investment needs.