French Development Agency

History

AFD is the descendant of the Caisse Centrale de la France Libre (Central Fund for Free France) created by an ordinance of Charles de Gaulle on 2 December 1941 in London. The Fund’s role was limited to a note-issuing bank and Public Treasury institution. The ordinance of 2 December 1941 gave the Fund the responsibility for “issuing and having issued or taking charge of banknotes in the territories of Free France”, as well as for foreign exchange controls (ordinance of 24 July 1942).

Just before the end of the Second World War, Pierre Mendès France, Minister of Finance, decided to change the function of the Fund by giving it responsibility for financing the economic and social development of the French overseas territories. It became the Caisse Centrale de la France d'Outre-mer (CCFOM – Central Fund for the French Overseas Territories) on 2 February 1944. It did, however, maintain its role as a note-issuing bank.

Following the independence of a number of French colonies, CCFOM changed its name to Caisse Centrale de Coopération Economique (CCCE – Central Fund for Economic Cooperation) in 1958. Its monetary mandates were gradually taken over by two public institutions, the Institut d'Emission des Départements d'Outre-mer (IEDOM – Note-Issuing Bank for the French Overseas Departments), which was set up in 1959, and Institut d'Emission d'Outre-mer (IEOM - Note-Issuing Bank for the French Overseas Territories), which was set up in 1967.

CCCE became Caisse Française de Développement (CFD – French Development Fund) in 1992. Finally, with the reform of French cooperation in 1998, CFD become Agence Française de Développement (AFD – the French Development Agency) and the main operator for French development assistance.

Recent history

General legal framework

As a specialized credit institution, AFD is subject to banking law, particularly in the field of risk sharing. AFD is a public financial institution. The Government has entrusted it with the role of the main operator for France’s cooperation policy. It thereby combines the functions of development bank and implementing agency for France’s Official Development Assistance policy.

AFD and the French Government’s policy

AFD has a Contract of Objectives and Means with the State and implements the orientations defined by the Interministerial Committee for International Cooperation and Development (CICID), chaired by the Prime Minister.

- “Contribute to the implementation of the State’s Official Development Assistance policy abroad”

- “Contribute to the development of France’s overseas departments and territories, as well as New Caledonia.”

In overseas France, AFD conducts a policy, on behalf of the State, to support public authorities and finance the economy. This mandate was reaffirmed during the first Interministerial Committee for Overseas France, chaired by the French President, which was held in November 2009.

Governance

Its Board of Directors comprises a Chairperson and 16 members appointed by decree, including 6 representatives of the State: Ministry of the Economy, Industry and Digital Affairs, Ministry of Foreign Affairs and International Development, Ministry of the Interior, Ministry of Overseas France.

AFD’s activities

Agence Française de Développement (AFD) implements the policy defined by the French Government. It works to combat poverty and promote sustainable development.

It achieves this by financing and supporting projects that improve living conditions for populations, promote economic growth and protect the planet.

In 2014, AFD allocated EUR 8.1bn to finance projects, including EUR 6.35bn in developing countries and EUR 1.55bn for overseas France.

Sectors

In 2014, AFD allocated some EUR 767m to education and health and invested over EUR 633m in water and sanitation programs. Projects related to territorial development benefited from over EUR 4bn, i.e. almost half AFD’s commitments, with projects in the energy, transport and telecommunications sectors in rural and urban areas. For 2014, the breakdown for commitments by sector is as follows:

- 22% in the productive sector,

- 27% in infrastructure and urban development,

- 21% in energy,

- 2% in biodiversity and natural resources,

- 8% in water and sanitation,

- 9% in education and health,

- 2% in agriculture and food security.

7% is divided among various sectors.

Development and climate change

AFD also operates in emerging countries for issues related to the protection of the environment and energy management.

In a crosscutting manner to these sectors, in 2014, AFD earmarked 53% of its international activity for the fight against climate change, i.e. EUR 2.8bn, which financed development projects that also have a positive impact on the climate.

AFD, via the projects it finances and several initiatives, is gearing up for the 21st Conference of the Parties (COP21) to the United Nations Framework Convention on Climate Change (UNFCCC). For example, with the GoodPlanet Foundation, it is putting on a photo exhibition “60 SOLUTIONS Against Climate Change”, which presents concrete, innovative and effective initiatives in four sectors that combine climate change and economic development.^,

Geographical areas of operation

AFD has been working for over sixty years to promote development in Southern countries and the French overseas territories. It is active in the field in over 90 countries, where it finances and supports projects that improve living conditions for populations, promote economic growth and protect the planet: getting children into school, assisting farmers, financing small businesses, water supply, tropical forest conservation, combating climate change… AFD’s strategy is guided by sustainable development. Its operations are in line with the Millennium Development Goals, at the intersection of the objectives of economic growth, poverty reduction and environmental conservation.

A wide range of financial and technical instruments meet the different needs of countries: grants, guarantees, equity investments, subsidized loans, loans on market terms and technical assistance.

It develops financial and intellectual partnerships with other donors and contributes, in conjunction with its supervisory authorities, to public policymaking and to France’s influence in the development sphere.

Latin America and Caribbean

In Latin America and the Caribbean, AFD promotes sustainable and equitable development through green and inclusive growth. There are a number of projects to fight climate change, for urban development, as well as projects to promote social convergence.

Sub-Saharan Africa

Sub-Saharan Africa is the priority region for France’s public development policy. In 2014, AFD invested EUR 2.95bn in the region, i.e. 36.5% of its total financing. Among the many projects, a number focus on promoting access to essential services, the growth of sustainable cities, the development of infrastructure, family farming and job-creating enterprises, as well as on the preservation of natural resources.

Asia

In Asia, AFD works to promote environmental and regional balances, with a focus on projects that limit the environmental footprint of cities or contribute to regional convergence.

Mediterranean and Middle East

AFD supports the region’s political and economic transition, with a focus on promoting Euro-Mediterranean integration, territorial development and job creation.

Overseas France

Since 1946, AFD has had a public service mandate to provide a reference public service provision for credit and social housing. In 2014, overseas France accounted for 19% of AFD’s activity, i.e. EUR 1.55bn. AFD conducts several types of action in overseas France. Its activities are based on the following areas: financing and assisting public policies, advisory services for local authorities, promoting business competitiveness and job creation, supporting regional integration and action for sustainable development. This involves financing and supporting projects that improve living conditions for populations and promote economic growth, while preserving the environment. Thanks to its financing, its expertise and its knowledge production, it assists the local public sector, finances companies, housing and urban development, and supports regional cooperation.

It fulfills this mandate through nine agencies throughout the overseas territories: French Guiana, French Polynesia, Guadeloupe, Martinique, Mayotte, New Caledonia, Réunion, Saint-Pierre-et-Miquelon, Wallis-et-Futuna.

In the overseas departments (DOM), in Saint-Martin, Saint-Barthélemy and Saint-Pierre-et-Miquelon, AFD also represents the public investment bank Bpifrance, which finances the creation, innovation, investments and international development of French SMEs.

AFD is the reference shareholder in seven social housing companies (Simar in Martinique, Sic in New Caledonia, Sig in Guadeloupe, SIDR in Réunion, Siguy and Simko in French Guiana and Sim in Mayotte). These property companies promote, manage and build social housing.

Finally, it provides part of the staff of the note-issuing banks, Institut d'Emission d'Outre-mer and Institut d'Emission des Départements d'Outre-mer.

Knowledge production

Knowledge production is a major activity for AFD and aims to contribute to the definition of the public policies of France and its partners. It has become an essential complement to the financial and technical tools. AFD’s knowledge production started to play an important role in the 2000s. This drive for knowledge production is based on the organization of seminars and conferences, training given by CEFEB, a studies and research program, and the establishment of partnerships with academic and research institutes.

AFD also offers a number of publications on developing countries and the French overseas territories:

All this contributes to improving knowledge of the Official Development Assistance policy: “its rationale, its effectiveness, its interactions with the other public policies, its role in the management of globalization” AFD’s aim is to become an internationally recognized research center, both in terms of sustainable development and global public goods, and the design of innovative financing instruments.

PROPARCO

PROPARCO is an AFD subsidiary set up in 1977. It is a development finance institution with a mandate to promote private investments for growth, sustainable development and the achievement of the Millennium Development Goals (MDGs) in emerging and developing countries. It provides financing tailored to the specific needs of investors in the productive sector, financial systems, infrastructure and private equity.

PROPARCO is jointly held by AFD (59.04%) and private shareholders from the North and South.

CEFEB

The Center for Economic and Banking Studies (CEFEB) is AFD’s training institute. It is based in Marseille and offers training for partners from the South in order to contribute to building their capacities. It also acts as a platform for the dissemination of AFD’s expertise towards its partners.

FFEM

AFD handles the secretariat and financial management of the French Facility for Global Environment (FFEM), a bilateral public fund set up by the French Government in 1994. It is a financial instrument for France’s cooperation and development policy dedicated to environmental protection and sustainable development.

It is coordinated by five ministries (Economy and Finance, Foreign Affairs, Sustainable Development, Research, Agriculture) and AFD.

Controversial issues

In 2007, AFD was called into question for its support for French companies suspected of contributing to deforestation in Central Africa. However, no legal proceedings were brought against AFD.

AFD has strict procedures during project appraisal for impact control and measurement in terms of social and environmental responsibility. It has provided EUR 900,000 of financing to the Central Africa Forest Commission (COMIFAC), which is responsible for guiding, coordinating, harmonizing and taking decisions in terms of the conservation and sustainable management of forest ecosystems. Mr. Joyandet, French Secretary of State for Cooperation and Francophonie from March 2008 to July 2010, criticized the Chief Executive Officer at the time, Mr. Severino, for AFD’s emergency-oriented approach, without a long term-vision and a certain lack of scope.36 However, the Minister’s remarks did not gain wide consensus among the development community.

According to the Cameroon National Anti-corruption Commission (CONAC), two front companies, including one controlled by AFD, have been suspected of fraud. In December 2013, CONAC presented its 2012 activity report in Yaoundé, indicating that over CFA 113bn had been misappropriated from the cotton development company (SODECOTON) between 2002 and 2011.