Innovative Territorial Financing Project - PROFIT

CONTEXT

As economic actors, local governments have substantial financing needs, similar to businesses. Their own resources and transfers from central government are not enough to meet these growing needs, especially given their driving role under the Emerging Senegal Plan (PSE) and Act 3 of Decentralisation.

To address this, ADM launched on its own funds (XOF 2 billion) the “Innovative Financing Project” to help local governments mobilise private partners through capital markets, banking and public-private partnerships (PPP).

OBJECTIVES

• Strengthen municipal capacities to identify, design and implement PPP projects;
• Set up financing mechanisms for municipalities through local banks and the sub-regional capital market.

COMPONENTS

Component A: PPP financing

Capacity-building for actors involved in PPP delivery at central and local levels:

• design and delivery of a training programme;
• experience sharing with countries that have successfully implemented similar local projects;
• development and dissemination of tools to support PPP development;
• selection and delivery of pilot projects in selected communes using shared criteria.

Component B: Bank financing for communes (XOF 280 million)

Support for communes in preparing bank financing applications through a consultation framework:

• improve municipal financial management with financial analysis and credit-risk tools;
• develop loan-guarantee mechanisms with specialised institutions;
• implement pilot bank-loan operations.

Component C: Capital markets & structured finance (XOF 360 million)

• capacity-building on financial markets and products;
• pilot securitisation of receivables ADM holds on communes;
• issue of municipal bills to test investor appetite for these new products;
• pilot bond-issuance operations.