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 Frontier Markets Fund Manager Limited (“FMFML”), also a special purpose company incorporated in Mauritius jointly owned by Standard Bank Group (70%), FMO (The Dutch Development Bank – 18.4%) and Emerging Markets Partners (11.6%). FMFML in turn delegates most of the operational management to Frontier Markets Fund Managers (“FMFM”), a division of Standard Bank plc based in London and regulated by the U.K.’s Financial Services Authority (“FSA”).

The total project cost of $150 million is equivalent to the net increase in the Fund size. The additional financing is needed in order to enable the Fund to meet its projected pipeline of projects through 2013. The proposed IFC investment is to provide an A loan of up to $45 million. IFC will also play a coordination role with other DFIs who will fund an additional $105 million.

47.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management	2.0
Guarantee
Loan	45.0
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.

To close the infrastructure gap with other parts of the world, meet the Millennium Development Goals, and achieve national development targets in Africa within 10 years, an annual spending in infrastructure of US$93 billion (about 15 percent of the region’s GDP) would be required. A funding gap equal to one third of this amount exists and the magnitude of the required investments places a premium on maximizing private sector investment flows that the proposed IFC investment will support. The development impact of the project will be captured in terms of the Fund’s performance, the Fund’s additional investments in SSA infrastructure projects, the expansion of infrastructure capacity made available by project investments, the role of the Fund in extending appropriate environmental and social standards and the quality of those investments as follows: (i) Net Internal Rate of Return; (ii) Private sector involvement in infrastructure; (iii) Percentage of underlying investments with steady cash flows; (iv) Total infrastructure capacity (e.g. electricity generated, volume of export/import handled by a port etc.).

The company is keen to have IFC help coordinate the fund raising efforts given IFC’s: (i) existing relationship with the Company; (ii) long-term perspective; (iii) infrastructure sector and SSA’s market knowledge; and (iv) coordination and mobilization role.

This second category FI investment in the Fund will not involve any material change in the way environmental and social risks are to be managed under the existing investment. Under the terms of the first investment and to the satisfaction of IFC, the Fund developed a social and environmental management system to ensure that IFC’s Performance Standards (PS) and applicable host country laws and regulations will be observed by each investee company.