EAIF was initiated by the PIDG a multi-donor organization constituted in 2002. PIDG’s objective is to encourage private infrastructure investment in developing countries that contributes to economic growth and poverty reduction. Since its establishment, the PIDG has developed project development facilities focused on improving project development and execution (InfraCo and DevCo) and project financing vehicles (GuarantCo and EAIF), aimed at addressing financial market failures that have created constraints to private investment in infrastructure service provision. GuarantCo which provides local currency guarantees to infrastructure projects in low-income countries to mitigate credit risks for local lenders is also managed by EAIF’s fund manager. PIDG’s current members include: the UK Department for International Development (“DFID”), the Swiss State Secretariat for Economic Affairs (“SECO”), the Netherlands Ministry of Foreign Affairs (“DGIS”), the Swedish International Development Cooperation Agency (“SIDA”), the Austrian Development Agency (“ADA”), Irish Aid and the World Bank. The PIDG members provide equity to EAIF through the PIDG Trust, a vehicle for the development of PIDG programs and the ownership of its investment vehicles. EAIF is managed by Standard Infrastructure Fund Managers Africa Ltd ("SIFMA"), a Mauritius incorporated fund management company jointly owned by Standard Bank Group (70%), FMO (The Dutch Development Bank – 18.4%) and Emerging Markets Partners ("EMP" – 11.6%). SIFMA does not hold any employees and subcontracts the management services to Frontier Markets Fund Managers (“FMFM”), a division of Standard Bank Plc.

The total project cost of $ 235 million is equivalent to the increase in the Fund size. The additional financing is needed in order to enable the Fund to meet its projected pipeline of projects through 2010. The proposed IFC investment is a $50 million A loan and a $10 million C loan for IFC’s own account.

58.75 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	58.75
Equity

* These investment figures are indicative

EAIF is a special purpose company incorporated in Mauritius, able to invest 100% of its commitments across 45 eligible countries in Sub-Sahara Africa. The fund’s advisor, FMFM, is based in London.

Globally, infrastructure is central to economic growth, improved living standards, and broader development. Investments in infrastructure projects, such as power, water and transport, have direct impacts on improving quality of life and enabling local economic development. In the last 15 years, on average about $10 billion a year has been spent on infrastructure in sub Saharan Africa, of which only about 30% was private sector investment and half of that was in the telecommunications sector. It is widely recognized that in order to achieve a reasonable growth rate Africa should be spending at least $20 billion a year. This additional investment cannot all be funded by the public sector and for this reason emphasis is being placed by the WBG and other donors on developing Public Private Partnerships (“PPPs”). If the development of a larger number of PPPs is successful, very large amounts of additional long term private sector debt will be required. The project is another of the building blocks necessary to achieve increased involvement of the private sector in the development of infrastructure projects. Higher private sector financing catalyzed will free public sector capital for investment in other priority sectors. The project also supports the expansion of a highly successful Fund which has already demonstrated its ability to originate and book commitments for projects in Africa, not only alongside existing DFIs in larger projects, but more recently and increasingly on a sole mandate basis with smaller clients. The development impact of the project is thus captured in terms of the amount of private investment mobilized into productive infrastructure, the expansion of access to infrastructure made available by project investments, and the quality of those investments and the role of the Fund in extending appropriate environmental and social standards.

IFC’s additionality is both financial and non financial. From a financial point of view, IFC’s longer tenor and repayment profile tailored to meet the Fund’s cash flow needs will in the long term strengthen the Fund’s financial position by allowing it to better match the duration of its assets and its liabilities. From a non financial point of view, IFC would also play a significant role by providing input on areas such as fund governance, structure, compensation, risk management and portfolio management best practices. In addition, IFC would be able to improve project quality by introducing IFC’s environmental and social sustainability standards in the Fund’s investment processes.

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.

The applicable requirements as determined by IFC are, implementation of:

- The IFC FI Exclusion List,
- The applicable Social and Environmental Laws and regulations, and
- The IFC Performance Standards (PS).

IFC will also review the capacity of EAIF and SIFMA to manage social and environmental risks and to establish and maintain a Social & Environmental Management System (SEMS). Based on the review, EAIF will be required to:

- If necessary, develop or upgrade to the satisfaction of IFC, the SEMS prior to disbursement.
- Identify responsible, qualified persons to manage and implement the SEMS;
- Commit to implement the SEMS, to ensure that investments supported by IFC financing are in compliance with the applicable requirements;
- Commit to take action to remedy gaps, if any, in SEMS implementation on an ongoing basis; and
- Submit a periodic report to IFC describing the environmental and social performance of EAIF’s investments.