The Private Sector Facility (PSF) represents an additional, complementary means through which OFID can fulfill its core mission of assisting its partner countries in their socioeconomic development. By extending loans and equity investments, quasi-equity instruments and guarantees, the PSF seeks to encourage the growth of productive private enterprise and local capital markets.
The PSF manages risk by partnering with other DFIs and commercial banks to support commercially viable, privately-owned enterprises. State-owned institutions may also be eligible, if they are commercially managed as autonomous enterprises or act as a channel of support for local private enterprises. In addition, public-private partnership projects are supported when operated on private enterprise principles. Projects selected are required to have a high developmental value, by promoting productivity, enhancing GDP growth, and supporting job creation and poverty alleviation.
By providing loans to financial intermediaries, the Facility prioritizes support for MSMEs, whose activities drive economic growth and play a key role in employment generation and poverty alleviation. Around half of the Facility’s portfolio supports real economy sectors, such as agribusiness, telecoms and transport. Energy, including renewables, is a key strategic focus. The Facility has been responding to evolving market conditions by expanding its outreach to new countries and considering new venues to achieve a more balanced portfolio and be more responsive to partner countries’ needs.
Activities in 2015
In 2015, private sector approvals comprised 12 transactions with a combined value of US$207m in support of operations primarily in the financial (US$115m) and energy (US$40m) sectors.
Funding for MSMEs continued strong, with US$110m earmarked for delivery through financial institutions in Armenia, Bangladesh, Cambodia, Kenya and Sri Lanka, as well as through a regional facility covering Latin America and the Caribbean.
An important highlight of 2015 was the PSF’s first equity participation in funds targeting the health and education sectors. These investments, in the Abraaj Growth Markets Health Fund (US$20m) and the Regional Education Finance Fund for Africa (US$5m), reach out directly to needy populations and offer strong developmental impact.
Three previously approved OFID-sponsored projects—in Côte d’Ivoire, Honduras and Jordan—were inaugurated by the concerned countries’ heads of state in 2015, underlining the importance attached to the concerned investments.
Read OFID co-financed wind power plant inaugurated by King of Jordan