Finnish solutions for pioneering private projects in Africa

Jaakko KangasniemiMay 13, 2016

Finnfund in brief• Finnish Fund for Industrial Cooperation Ltd. (Finnfund)

– development finance institution, government owned• Member of European Development Finance Institutions (EDFI)• Risk capital for private projects in developing and emerging countries

– ¾ in low and lower-middle income countries, ½ in Africa

• Investment criteria include:– development impacts– profitability– social and environmental responsibility

• In millions of euros, approximately– Capital 250, Portfolio 350 + 220 undisbursed board approvals, pipeline +-300– Annually +-20 investments, +-100 million euros on average 5 million euros

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What does Finnfund finance?

• Profitable private projects- Greenfields or expansions- from small and medium-sized companies to large

companies- Renewable energy, sustainable forestry and many other

sectors• Positive development and environmental impacts • Finnish interest, not just co-investments with Finns• In developing and emerging countries

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What is Finnfund’s role?

• Financial investor with minority stake, EUR 1 - 10 million– Exceptionally up to 10 % of capital in one project

• Long-term investor• Sharing country risks • Sharing political risks • Expert of development financing• Partner of the project sponsor with industry knowledge

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Finnish knowhow for African needs

• Finland trains more engineers per capita than any other country

• Most internationally oriented Finnish companies are based on engineering skills– Producer goods and B2B; few global consumer brands

• Moreover, dozens of Finnish companies have become global players in their fields, employing many more engineers in other countries

• Part of this engineering talent is now targeted at developing and emerging markets – or serving those markets anyway

• Land of Engineers!

Examples of Finnish knowhow in Africa

• Linux – the operating system for much of internet• Telecommunications – Nokia and its competitors• Energy sector

– Hundreds of power plants in Africa– Technologies for solar, wind and biopower, and waste to energy– Energy-saving technologies

• Technologies to grow and harvest trees and to process wood into paper, pulp or wood products

• Mining, construction, agribusiness• Logistics

Finnish companies with relevant technologies

• Telecommunications: Nokia and dozens of others• Energy: Wärtsilä, Andritz, Valmet, ABB, Vacon (Danfoss),

VEO, Peikko, Oilon, Switch, Savo Solar, BMH, Neste Oil, St1, Luvata, Pöyry, ..

• Forestry: Valmet, Raute, Veisto, Ponsse,..• Logistics: Kone, Konecranes, Cargotec, Mantsinen,..• Mining: Outotec, Metso, Sandvik (Tamrock), Normet,..• Agribusiness: Elecster, Sampo Rosenlew,..• Water: Kemira, Econet Engineering, Clewer,..

New and innovative, some recent examples

• Medical diagnostics• Mobile health applications• Monitoring in the field• Games for learning• Smart power, distributed power• Smart grids, demand management• Smart irrigation• Led lights for better rooting or smarter breeding

Appropriate for Africa?

• Best payoffs for investments to save energy can be found in places where energy is expensive

• Where sun shines and solar gets cheap, it pays to manage energy demand or to install smart power

• Where wood products are imported and expensive, it may pay to produce domestically

• Where distances are long and roads bad, mobile telecommunications and apps cut more costs

• Where cities grow, investments in logistics and waste water treatment are needed

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Investments in Africa

• Renewable energy – wind in Cape Verde and Kenya• Sustainable forestry – East Africa and West Africa• Hotels – Kenya, Ethiopia, South Africa, Sierra Leone• Steel mill – Nigeria• Mobile payment service – Ethiopia• Private equity funds and financial institutions• In the pipeline:

– More energy and forestry– Wood-based industries– Agriculture– Manufacturing

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Green Resources AS (GRAS) – East AfricaSustainable plantation forests • Leading plantation forest company in

East Africa – largest operation in Tanzania

• Transmission poles, sawn timber and charcoal for domestic consumption

• Thousands of jobs Livelihood for tens of thousands of rural inhabitants

• FSC certified – operates responsibly and protects remaining natural forests

• A modern sawmill by Veisto of Finland• Finnfund one of the main financiers• Others: Kilombero Valley Teak

Company, The New Forests Company, Miro

Example

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UpEnergy - UgandaEnergy-efficient stoves for Africans• Developed ways of recording the

carbon savings of its stoves• Stoves burn wood more efficiently and

produce less carbon monoxide and particulate emissions. Smoky fires in buildings and doorways cause respiratory diseases, which are bigger problem in Africa than malaria

• Rwanda, Liberia and Sierra Leone• UpEnergy ranked 7th of 10 Most

Innovative Companies in Africa by Fast Company.

5 June 2014

Example

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Lake Turkana – Kenya Clean energy with wind power• Wind farm of 365 turbines, capacity 310

megawatts, largest in Sub-Sahara Africa• Financed mostly by development financiers• Large social responsibility programme• Jobs for 2,500 people in the construction phase,

later 200 permanent jobs• 16 per cent of the total power generating

capacity in Kenya• Cuts carbon dioxide emissions by 790,000

tonnes a year (= annual emissions of over 250 000 cars)

• Preceded by successful operational wind farm Cabeòlica in Cape Verde

• Paves to the way to more investments in this “natural wind tunnel”

• Under construction, starts producing in 2017

5 June 2014

Example

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Universal Corporation Ltd. - Kenya

Drug producer saves lives in Kenya• The largest drug producer in East Africa• European PIC/S standard• WHO prequalification for AIDS medicine• New and secondhand equipment from Finland

and Germany • High-quality affordable medicine for Africans • Finnfund main financier, also a grant from

Finnpartnership• More than 400 jobs, exports to neighboring

countries• Produces more than a billion (1,000,000,000)

pills per year– 19 million people dewormed with UCL drugs– Truckloads of ORS to treat diarrhea produced for UNICEF– 100+ registered products: malaria, inflammations,..

• Finnfund exited recently, development impact continues and expands

Example

Contacts

• www.finnfund.fi

• firstname.lastname@finnfund.fi• tel. +358 9 348 434

address Uudenmaankatu 16B, Helsinki

@Finnfund

http://services.team.finland.fi/home

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