AFD - 2018 Registration document

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FINANCIAL INFORMATION

Recent changes and future prospects

5.1 Recent changes and future prospects

5.1.1 Recent changes ACTIVITIES

target activity of €4.9bn, including 2.45bn in sovereign loan financing. Several priorities have been identified to continue to implement the Ouagadougou speech, by developing the actions committed to the agricultural sectors, and by increasing the number of actions in human services, on particular education, health and young people. Africa benefits from a substantial increase in the 2019 subsidy budget (from €293M in 2018 to €924M in 2019, i.e. a tripling of the budget), which will be targeted as a priority to Sahel countries and priority countries for French development aid (amongst the 19 countries indicated as part of the February 2018 CICID). This growth in subsidies will enable a sustained activity to be maintained in countries faced with debt constraints. It will also enable AFD to deepen its actions in the Sahel, and more specifically in the crisis zones, by further adapting its procedures to have a faster impact and by developing the continuum of the Sahel-Maghreb (North Africa) activity. Lastly, AFD will continue to mobilise fund delegations, notably from the European Union, with a target of €390M in delegated loans; P the reorganisation of AFD’s geographical focus led to the creation of the Orient department in September 2018, which covers the former Asia scope, to which is added the Balkan countries, the Near and Middle East and Turkey. AFD’s commitment objective in this new geographical area is €3bn in 2019, with a third in South East Asia, 15% in South Asia, 10% in China, 24% in Eurasia (Balkans, Turkey, Caucasus, and Central Asia), 18% in the Middle East. The intervention strategy in Asia, always in response to our partner countries’ expectations, remains focused on the fight against climate change (production target of 70% of climate co-benefits) and support for energy transition on the one hand and territorial and ecological transition on the other. The modest size of AFD in the region and the financial conditions generally considered not very competitive compared to those that most countries benefit from on local markets or from multilateral development banks, lead us to systematically look for added value (innovative financial theme or structure, mobilisation of additional resources, technical assistance). AFD operates in sectors where France and/or AFD have recognised know- how (water and natural resources management, urban development/land use planning…) and the operations also aim to foster public policy dialogue with counterparties to promote low carbon development strategies that are more resilient to climate change. Around 80% of the Asian activity remains concentrated on the three major issues of energy transition, water management (resources, all uses) and the sustainable city. The remaining activity (20%) will explore other cooperation opportunities (biodiversity and heritage, governance, urban development/land use planning and

AFD Group’s global activity reached €11.44bn of commitment approvals in 2018, an increase of €1.10bn on the 2017 figure and in line with the objective set by the French President of €12.70bn by 2020. Governance AFD’s governance system has not changed. 5.1.2 Future prospects 2019 will be marked by a renewed ambition for France’s development policy and for AFD Group, with a new orientation and planning law, and the operational implementation of the French President’s commitment to dedicate 0.55% of GNI to AFD in 2022. Thus, AFD Group has set itself the target of achieving €14bn in commitment authorisations in 2019, which will represent a 22% increase over the 2018 amount (€11.4bn). In 2019, AFD Group will implement and operationalise the major commitments of its Strategic Orientation Plan: it will pursue its target of being 100% compliant with the Paris Agreement and will seek to guide its partners in this direction, particularly through the actions of the IDFC Club by participating and fuelling the momentum of the One Planet Summit. It will prepare a 100% Social Ties strategy that will detail the Group’s ambition on this issue, including in with regard the challenges of reducing gender inequality. In 2019, the new allocation of resources will enable growth of financing in human services (education and health) and in promoting gender inequality reductions. The Group will also invest in new fields such as cultural and creative industries and sport. AFD will continue its actions in crisis and fragility contexts by reinforcing its 3D (diplomacy, defence, development) approach, notably in the Sahel and the Middle East, and by focusing on the issues of democratic governance. The Group’s non-sovereign activities in Foreign States will reach €4.2bn. Lastly, the partnership ambition will be further emphasised with French partners (CSO, local authorities, companies) and European and international partners. Forecast operations by region: P 2018 saw the implementation of the All Africa approach including North and Sub-Saharan Africa, for the strategic and operational steering of the activity. AFD’s activity in Africa is now structured around six regions, with regional departments on the ground and geographical units covering the same scopes at head office. The 2019 outlook plans for

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REGISTRATION DOCUMENT 2018