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18 December 2008 Board of Directors meeting

 

Water and sanitation in Cape Verde, Gabon, the Palestinian Territories and Cambodia, urban and road development in Ghana and Haiti, support for the health sector in Surinam and West Africa… AFD pledges over a billion euros for development at its 18 December 2008 Board of Directors meeting.

 

 

Agence Française de Développement (AFD), a public institution, has been working to combat poverty and promote the development of South countries within the framework of France’s official development assistance for over 60 years.  AFD is active in the field in over 70 countries and Overseas France and finances and supports projects to improve living conditions for populations, boost economic growth and protect the planet: education for children, support for farmers, support for small businesses, water supply, tropical forest preservation, fight against climate change… In 2007 AFD pledged 3.5 billion euros to finance operations in South countries and Overseas France. Thanks to this financing 5.8 million children received schooling and 4 million people gained access to drinking water. Energy efficiency projects for the same year saved 2.7 million tons of CO2 annually. www.afd.fr

 


Cape Verde: water and sanitation in Santa Catarina

AFD approved the allocation of a 10 million euro loan to the Republic of Cape Verde for drinking water supply and sanitation in Santa Catarina.

The Cape Verde State has mobilized considerable financing with support from donors and has consequently managed to raise the archipelago’s water access rate to 85%. Despite this success, there are wide disparities between the islands and between urban and rural areas within a general context of water stress. Unit consumption also remains under 50 litres per person per day and the cost of the service is the highest in Africa. Collective sanitation is in its infancy (10% of connections) and individual sanitation is not controlled.

The project will improve water and sanitation services in the municipality of Santa Catarina (50 000 inhabitants), the second biggest city on Santiago Island which itself counts over half of Cap Verde’s 500 000 inhabitants. The project mobilizes new underground resources and will reduce losses in water distribution. The implementation of the city’s first collective sanitation system will make it possible to connect 6 000 inhabitants. The project, by making a marked improvement to living conditions for populations, will contribute to the development of the city and neighbouring municipalities’ regional hub which aims to restore a balance to population movements towards the capital, Pria, and to reduce rural exodus.

 

Ghana: urban and road development

AFD approved the allocation of a 30 million euro loan to the Republic of Ghana to restructure districts and rehabilitate and develop roads between Awoshie and Pokuase to the northwest of Accra.

Demand for mobility of goods and people, as well as the provision of market and social services, are not currently met in the long-term due to a context of growing urbanization rates which are already among the highest in Africa (almost half of Ghana’s population are city dwellers). The program firstly aims to rehabilitate and increase the capacity of a 16 km road section which will be Accra’s future ring road. The second objective is to equip periurban districts with basic services (secondary roads, drinking water supply and drainage systems). This will improve living conditions for some 100 000 inhabitants.

The total cost stands at some 70 million euros, 10 million euros will be earmarked for the urban restructuring component and almost 10 million euros for environmental and social resources and for project implementation.

 

Ghana: support for decentralization

AFD approved the allocation of a 15 million euro loan to the Republic of Ghana to finance an allocation fund for the country’s districts.

Ghana’s government has engaged in a series of reforms to strengthen decentralization and local governance. It has decided to increase the share of State fiscal revenues transferred to districts via the implementation of a District Development Fund (DDF). AFD will contribute to endowing this fund alongside other donors.

The DDF will provide the districts with additional resources to finance their investment and maintenance projects in the economic, social and environment sectors. It will also be used for staff training actions. The amount of the allocation will vary according to whether performance target indicators have been met by the districts in terms of quality in administrative, organizational and financial management. A steering committee, which will include donors, will supervise the annual evaluation of this management, as well as the disbursement of allocations and the implementation of training.



Guinea Bissau: budget support

AFD approved the allocation of a 2 million euro grant to the Republic of Guinea Bissau to support its budget and help it meet health and education expenditure.

Guinea Bissau has experienced a long period of instability which has considerably weakened its economic and social situation. This country, with a population of 1.6 million inhabitants, is one of the poorest on the African continent. It is unlikely to achieve the Millennium Development Goals (MDGs) and is largely dependent on all forms of external support. A reform process is underway, but the bulk of the work remains to be done. In the current context of structural budget crisis, which leads to extremely heavy financial pressure, the aid will be earmarked for priority expenditure (health and education) in order to achieve social impacts. It will also contribute to the implementation of a recovery program set up with the International Monetary Fund (IMF).

 

Burkina Faso: budget support

AFD approved the allocation of a 1.5 million euro grant to the Republic of Burkina Faso to support its budget and help it face increasing food prices.

Burkina Faso, a Sahelian country, suffers enormously from being landlocked. It also has to bear difficult agroclimatic conditions and lacks any significant natural resources. The economy is very sensitive to climatic hazards and exogenous shocks, particularly in export cotton prices, oil prices and food product import prices. The government has been pursuing its poverty reduction and growth policy in a satisfactory manner, but the latest exogenous shocks have led to a rise in inflation which has increased the poverty index.

France wanted to provide additional support to the country following 14.5 million euros that had already been allocated for the 2006-2008 period. This support is in line with France’s wider commitment to support food security, particularly in West Africa.


Tunisia: wastewater treatment plants and pumping stations

AFD approved the allocation of an 18.5 million euro loan to the Republic of Tunisia for the extension and rehabilitation of the wastewater treatment plants and pumping stations of ONAS, the national sanitation authority.

Since 1992 the Tunisian government has earmarked around 0.5% of its annual GDP for depollution investments due to the need to protect the environment and natural resources. Moreover, Tunisia supports policies to develop sub-products from treatment and proposes specific solutions to industries for their wastewater treatment.

The program will renovate and increase the capacity of 19 wastewater plants and 130 pumping stations spread over 11 governorates. It will allow 100% of waste to be eliminated in compliance with Tunisian norms, which are similar to the main international norms in this sector. The treated water from some plants may be reused for irrigation.


Surinam: support for the health sector

AFD approved the allocation of 16.1 million euros of financing (15 million euro loan and 1.1 million euro grant) to the Republic of Surinam to support its investments in the health sector.

Despite a good level of health coverage, most of Surinam’s health centers are dilapidated, their equipment does not work and the services provided are not adapted to populations. The Ministry of Health has pledged to modernize all these services, particularly in the region of Albina in eastern Surinam where the Saint Laurent du Maroni hospital is located on the French Guiana side. This is where most of the inhabitants often go for healthcare.

The project will finance the reconstruction and equipment of the Albina rural hospital as well as the renewal of heavy medical equipment in health centers inland and in the coastal region. It will help reduce disparities in access to care between the regions’ populations that are made up of traditional minorities and have long been excluded from these services.


Mauritius: energy management and environmental improvement

AFD approved the allocation of a global 40 million euro line of credit to Mauritius’ banking sector to finance investments in energy management and environmental improvement.

Dynamic growth in Mauritius’ economy puts increasing pressure on the environment. Moreover, the island’s dependence on fossil fuel imports and the sharp rise in energy demand put a strain on budget equilibrium and impact the competitiveness of companies. In order to tackle these threats, the Mauritius government has launched several initiatives and reforms, particularly in the framework of its “Mauritius –Sustainable Island” project. The project aims to develop renewable energies and requires scaling up private investment in energy and environmental management. Overall needs in this sector are estimated at 140 million euros for the next five years and concern four main topics: (i) sustainable tourism, (ii) energy efficiency in buildings, (iii) independent electricity production from renewable sources and (iv) energy management and clean production in industry.

This scaling up of investment requires a mobilization of Mauritius’ banking sector. AFD’s line will allow partner banks to strengthen their capacities in terms of environmental issues and energy management and they will be able to provide long-term financing to companies for these sectors.


Vietnam: developing village rubber growing

AFD approved the allocation of 15.4 million euros of financing (14.8 million euro loan and 0.63 million euro grant) to the Republic of Vietnam for the development of village rubber growing in ten of Vietnam’s Center provinces.

70% of Vietnam’s population earn a livelihood in the rural sector, including 85% of the poorest. Rubber growing, which covered 549 000 ha of the territory in 2007, is profitable, brings the country foreign currency, has positive effects on the environment (carbon capture and soil protection) and helps combat poverty. The authorities promote the expansion of private plantations for which they have set a target of covering 100 000 ha by 2010.

This project was planned to follow on from an agricultural diversification project in the Center region, cofinanced between 1996 and 2006 by AFD and the World Bank. The project developed 30 886 ha of village rubber plantations. Most of these plantations (28 743 ha) still need maintenance for 2008-2012 prior to the production period. Total annual production generated will reach 200 000 tons of rubber which, when developed, will be worth an estimated 260 million euros. The project will help create employment in rural areas and will increase revenues for populations. The plantations will require a minimum of maintenance after the investment phase and, at the end of the exploitation period, the sale of the trees for construction wood will finance replanting.


Cambodia: drinking water production and network extension

AFD approved the allocation of a 16 million euro loan to the Phnom Penh Water Supply Authority (PPWSA) for the construction of drinking water production infrastructure in Niroth and the extension of distribution networks in Phnom Penh.

Only 37% of Cambodia’s urban population has access to drinking water. The situation is better in the central districts of Phnom Penh (85%), but the outskirts of the city are still not equipped with networks. The service is partly provided by private transporters and is very expensive. PPWSA, an autonomous public establishment in charge of water production and distribution in Phnom Penh and the outlying quarters (1.3 million inhabitants) serves 173 000 clients with a production capacity of 235 000 m3/day. This will be raised to 300 000 m3/day in 2009.

The project will increase the number of connections on the existing network (32 000 connections) and will extend the water service to outlying areas which are currently not served by the network (28 000 connections). Almost 350 000 more people will gain access to the water network between 2010 and 2015.


Afghanistan: support for agricultural development

AFD approved the allocation of a 5.2 million euro grant to the Republic of Afghanistan for agricultural development in the country’s North and Northeast regions.

Afghanistan has been battered by twenty years of conflict. Over 80% of the population work in the agricultural sector, but it has to be entirely reconstructed. The State and the various ministries were, like Afghanistan itself, in a state of total collapse until 2002 but have engaged in a reconstruction phase.

The project aims to develop agriculture and contribute to food security in the region by reducing areas used for poppy growing. It comprises four components: (i) support for research and development activities (selection of varieties and techniques to optimize resources and yields), (ii) the creation of an industry to produce and distribute certified cereal and cotton seeds, (iii) support for the emergence of agricultural cooperatives and professional organizations and (iv) the creation of an observatory and regional rural economy unit.

 

Health sector in West Africa: support for the Mérieux Foundation to strengthen
laboratories

AFD approved a 3 million euro grant to the Mérieux Foundation to strengthen the laboratory sector in Mali, Burkina Faso and Senegal.

The quality of biological diagnosis is crucial to identifying diseases, selecting therapeutic strategies and deciding how they must evolve. This diagnosis constitutes a key phase in the implementation of programs to combat communicable diseases. In order to effectively mobilize the leverage effects from financing earmarked for these programs (Global Fund, UNITAID…), operational laboratories with correctly trained staff and adequate quality assurance systems must be targeted. The Mérieux Foundation is operating in Mali in the framework of a project to strengthen the national laboratory network and has long-standing recognized expertise in this field.

The project will improve the health status of populations in the region. It will focus on three key activities for a laboratory network: continuous staff training, quality management and epidemiological surveillance.


Microfinance in Africa: endowing an investment fund

AFD approved the allocation of a 3 million euro loan to the European Fund for Inclusive Financing for Africa (EFIFA), currently being formed, for the development of microfinance in Sub-Saharan Africa.

Microfinance aims to provide financial services to people who are excluded from the classic financial system. The sector has seen considerable development and is today characterized by extremely diverse institutions and beneficiaries in a great number of countries. Additional, long-term and more stable financial resources are required to meet their needs. They also need support via expertise and more sophisticated tools. The institutions in this sector often find it very difficult to access financial markets. Investment funds are consequently instruments that can effectively support their development. This financing will allow EFIFA to provide solutions for this sector in Sub-Saharan Africa and will contribute to economic development and the fight against poverty in these regions.

AFD’s first operations in microfinance date back to 1988. It has since supported over 55 structures via 140 financing operations for a total amount of 300 million euros in the region.


Cameroon: support for the health sector

AFD approved the subvention of a 35 million euro loan to the Republic of Cameroon to strengthen governance and decentralization in its health system, and improve affordability and service quality in the provinces.

The health status of Cameroon’s population has been constantly deteriorating since 1990. In 2006 France decided to support the health sector within the framework of debt cancellation for the country, by implementing 90 million euros of aid, of which 55 million have already been allocated. The sector strategy was updated in 2008 and a program targeting all the provinces was defined. This program will be financed by France, Germany and the World Bank with joint coordination procedures. France’s support will contribute to improving the health status of the most vulnerable populations (pregnant women and children) and will focus on (i) improving health system governance, (ii) improving access and quality in health services and (iii) strengthening the ministry’s coordination and management capacities.


Cameroon: support for basic education

AFD approved the subvention of a 50 million euro loan to the Republic of Cameroon to support its basic education program.

Since the beginning of 2000, the number of pupils achieving the primary cycle has only reached 64% and the quality of teaching would appear to be falling. Moreover, national statistics mask considerable geographic disparities, to the detriment of urban areas and the north and east provinces.

In addition to strengthening the capacities of the ministry, this new financing aims to remedy disparities in the public school network. A large-scale upgrading program for intake capacities (around 200 schools and over 1 000 classrooms, annex buildings and furniture) is to be implemented in the provinces in Adamaoua, the East, the Far North and the North, as well as in the cities of Yaoundé and Douala.

 

Gabon: sanitation in Port-Gentil

AFD approved the allocation of a 55 million euro loan to the Republic of Gabon for sanitation in Port-Gentil.

Very few investments in Gabon’s urban sector have been made in sanitation. In the three main cities rainwater collection is mainly implemented via open-air networks. The population of Port-Gentil consequently suffers from recurrent flooding and a total lack of wastewater treatment. Waste from septic tanks is discharged into nature without treatment. 

The project comprises three components: (i) the rehabilitation of the rainwater collection and drainage network, (ii) the construction of 1 000 latrines in disadvantaged neighbourhoods and (iii) the creation of a waste treatment plant for septic tank waste. It will greatly reduce flooding and will improve the quality of water in the ducts. The resulting improvement to the environment and hygiene will reduce risks of epidemics and infant mortality. The Seine Saint Denis Departmental Council and Total are participating in this project financing.

 

South Africa: financing small municipalities

AFD approved the allocation of a 100 million euro loan to the Development Bank of Southern Africa (DBSA) to finance infrastructure and essential services in South Africa’s small municipalities.

The South African government aims to eradicate shortcomings in infrastructure and essential services in all its municipalities by 2014. Priority is given to access to electricity, drinking water, sanitation and health equipment. The project involves allocating a 100 million euro line of credit to DBSA, a development institution 100% held by the South African State. DBSA is a key instrument for sustainable development financing in South Africa and in the region. By providing resources and technical assistance to low-capacity municipalities, the institution implements poverty reduction operations in the framework of the post-apartheid reparations policy.


South Africa: upgrading airports

AFD approved the allocation of an 85 million euro loan to Airport Company of South Africa Ltd (ACSA) to upgrade South Africa’s main airports.

ACSA, a public operator for South Africa’s airports, benefits from a monopoly at South Africa’s three main international airports (Johannesburg, Cape Town and Durban) and 93% of its revenues come from this activity. The financing will be earmarked for upgrading and extending these airports. It also provides for the creation of the infrastructure required to receive the Airbus A380 in Johannesburg and Cape Town.

The project will have impacts on South Africa’s growth by improving its transport network and creating employment. It will also contribute to developing cooperation and regional integration. The project is part of the preparation for the FIFA World Cup in 2010.


Morocco: support for the education system

AFD approved the allocation of a 50 million euro loan to the Kingdom of Morocco to support its education system.

The Moroccan authorities consider the education sector as a priority and devote a considerable budget effort to education. This has already considerably improved school coverage. However, regional and gender disparities persist and human resource management is very centralized which reduces effectiveness. A 2009-20012 emergency plan should give impetus to the reforms needed and should help manage the increase in staff numbers. The program has a total cost of 3 billion euros and will receive some 520 million euros from the external financing community.

The program specifically aims to enforce compulsory schooling until the age of 15, mainly in rural areas and for the most vulnerable populations. Improvements in literacy rates and the rise in the level of human capital will eventually promote the economic and social development of the country.

 

Tunisia: water sector investment

AFD approved the allocation of 46.5 million euros of financing (45 million euro loan and 1.5 million euro grant) to the Republic of Tunisia for its water sector investment program.

Water resource management is a priority for the Tunisian government. The program will specifically improve operating efficiency in irrigated areas and will increase access to drinking water for rural populations. It will contribute to improving living conditions for populations via enhanced resource management.

 

Palestinian Territories: drinking water and sanitation

AFD approved the allocation of two grants totalling 15 million euros to the Palestinian Authority for a drinking water supply and sanitation program in the West Bank.

The Palestinian Water Authority was set up in 1995 and is in charge of political directives in terms of water and sanitation. It does, however, have limited autonomy since the creation of infrastructure to increase water availability, or to collect and treat wastewater, must be negotiated in the framework of the Joint Water Committee, an Israeli-Palestinian body set up by the Oslo Agreements. In 2001 an agreement was made to leave water outside the Israeli-Palestinian conflict, but negotiations on this topic do remain difficult.

The project will equip newly authorized boreholes in the region of Tuba in the north of the West Bank and will implement supply and distribution networks. It will also set up a sustainable management system and, by 2015, 47 200 people will gain access to drinking water and 83 400 people will benefit from improved services.


Brazil:  Brasilia’s metro

AFD approved the allocation of a 134 million euro loan to the Federal District of the Republic of Brazil (Brasilia) to finance infrastructure for the capital’s first light metro line.

Brasilia was designed in 1960 for 500 000 inhabitants, but today counts 2.3 million. Urban transit has become a source of congestion, energy loss and carbon emissions. The development program launched in 2007 plans to create “Brasilia Integrada”, a mass public transport network integrating regional metro lines, a light metro (equivalent to a tram) and classic and rapid bus lines. The light metro line will serve the city’s central area by 2011 at the major intersection of the W3 avenue. The first phase is 8 km long. The line will be extended to reach 21 km by 2104 and will then transport 140 000 travellers a day, including 16 000 during the rush hour.

Brasilia’s entire public transport program, including the light metro, should benefit a population close to the 4 million mark by 2020 and will lead to 100 000 CO2 equivalent tons being saved every year.


Haiti: road works

AFD approved the allocation of an 18.5 million euro grant to the Republic of Haiti for the rehabilitation of a road linking Hinche and Saint Raphaël.

Haiti is the poorest country in the northern hemisphere and on the American continent and depends almost exclusively on road transport. Its network is made up of six national roads covering just 650 km, of which only 20% are surfaced. The network is in an extremely dilapidated state. This situation cuts off rural populations, increases transport costs and road insecurity and harms the environment.

AFD’s financing concerns a 45 km section and is part of the rehabilitation program for the RN3, the 190 km road linking Port au Prince to Cap Haïtien. This program is cofinanced by the European Commission and the World Bank. The project will restore the main link between the capital and the country’s second economic center by opening up the central plateau which is one of Haiti’s three agricultural regions. The management of AFD’s financing will be delegated to the European Commission.

 

China: reconstruction in Sichuan after the May 2008 earthquake

AFD approved the allocation of a 200 million euro loan to the People’s Republic of China for the reconstruction of basic infrastructure in Sichuan Province.

On the 12 May 2008 an earthquake measuring 8 on the Richter scale shook central China killing 69 000 people, with 18 000 missing and almost 380 000 injured. This catastrophe left several million people homeless, destroyed or damaged 5 million homes and caused an economic loss estimated at 115 billion euros. AFD is participating in the Financing Plan established by the Chinese government that sets out sectoral and geographical priorities for reconstruction.

The project entrusted to AFD involves basic infrastructure in areas hit by the earthquake in Sichuan Province (water, sanitation, waste treatment, roads…). It also aims to reduce the Province’s impact on climate change (by strengthening domestic biogas). AFD is the only bilateral actor from the international donor community to be present. Through this financing, France is demonstrating the aid it provides to populations and to the Chinese government and is strengthening its relations with China.

 

Vietnam: Huoi Quang hydropower plant

AFD approved the allocation of a 100 million dollar loan to EVN, the Vietnamese Electricity Group, for the construction of the Huoi Quang hydropower plant.

With 13 500 MW of installed capacity, Vietnam’s electricity generation capacity cannot meet sharply rising demand. The country suffers from an increasing number of power cuts despite imports. The 520 MW hydropower plant, located on the River Nam Mu in the northwest, will improve the reliability and availability of the electricity supply. It will reduce expenditure relating to replacement energies and will support the economic development of the north which is less developed than the south. Construction works will benefit local populations.

Social due diligence will be conducted in favour of the populations living on site and they will be given compensation. The electricity supply will benefit industry and trade which will lead to job creation and poverty reduction among the most disadvantaged local populations. The carbon balance represents a saving of 1.12 million of CO2 equivalent tons. The impacts on water and biodiversity, as well as the impacts of the construction sites, will be closely controlled. Finally, this dam will reduce the need for thermal generation which emits greenhouse gases and pollutants, particularly in the north.