The Private Sector Facility (PSF) was created in 1998 in response to the changing economic policies in OFID’s partner countries. Support for the private sector, through the provision of loans and equity investments, is seen as a natural adaptation, enabling OFID to continue to serve as wide a range of countries as possible while remaining responsive to their development needs.
The goals of the PSF are to encourage the growth of productive private enterprise and to boost the development of local capital markets. Successful interventions stimulate economic growth – creating jobs and generating income – and thereby leading to poverty alleviation.
Partnering with other DFIs and commercial banks, the Facility supports commercially viable, privately owned enterprises. State owned institutions may also be eligible, if they are commercially managed as autonomous enterprises and provided they 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, thus complementing OFID’s mandate.
A priority of the Facility is support for MSMEs, whose activities drive economic growth and play a key role in employment generation and poverty alleviation. The PSF provides support to MSME’s mainly through intermediation to financial institutions, including national and regional development banks, commercial banks, leasing companies, specialist micro-finance institutions and investment funds.
Activities in 2012
For the year 2012 private sector approvals amounted to US$165m representing 13% of total commitments. Sectors supported included agriculture, energy, industry and telecommunications, as well as MSMEs through financial intermediaries such as commercial banks and leasing companies. Operations included telecom projects in Bangladesh and Kenya, energy initiatives in Côte d’Ivoire, Ghana and Kenya, a steel manufacturing plant in Bangladesh and a sugar production and refinery facility in Egypt. As part of support to MSMEs, credit lines were extended to financial intermediaries in Azerbaijan, Paraguay and Sri Lanka.