Official Development Assistance is a valuable source of relatively soft financing for African states and private entrepreneurs. Emmanuelle Moors de Giorgio focuses on the financing arm of the French ODA, the Caisse Francaise de Developpement, to highlight the changing nature of official aid.
Over the past months, this magazine has presented various financing instruments available from banks and private investors, but what about Official Development Assistance (ODA)? For proactive African business people, donors' support almost sounds misplaced these days. After all, the mistakes and scandals linked to certain bilateral or multilateral operations are making everyone wary, especially given the financing alternatives now offered by the development of local capital markets.
But this attitude is like throwing out the baby with the bath water. Aid is changing. On the negative side, its volume is generally declining. But the good news is that ODA is now better tailored to the needs of developing countries' business communities.
To assist in the determination or implementation of ODA, most donors set up Development Finance Institutions (DFIs). Of course, not all DFIs operate in the same way. Some are increasingly independent or focused on specific regions (eg the Commonwealth Development Cooperation of the UK). But the example of the French DFI, Caisse Francaise de Developpement (CFD), should shed light on the relevance of this type of institution to the financing needs of our readers.
With a capital of Fr2.5bn ($500m), CFD is both a public institution and a specialised financial institution acting as an instrument of France's cooperation policy. Its private sector subsidiary, PROPARCO (founded in 1977) promotes and supports the creation, development and restructuring of private-sector companies, and the privatisation of public-sector ones.
CFD is controlled by the Commission Bancaire and a government commissioner Its general manager is appointed by decree on a proposal from the Minister for Economic Affairs and Finance after consultation with the Ministries of Foreign Affairs and of Cooperation.
In 1995, payments on CFD's own operations were Fr8,306m, about three times the payment of Fr3,008m made on behalf of the French Government. The latter (managed operations) cover the distribution of structural adjustment funds (subsidies for least-developed and low-income countries (LDCs and LICs), loans for middle-income countries (MICs)), subsidies for...