On Thursday, Senegal’s Electricity Sector Regulatory Commission (CRSE) announced the winner of the program’s competitive auction to develop two utility-scale solar plants with a total capacity of 60MWac. ENGIE/MERIDIAM was awarded both projects with bids to produce solar power at just 3.80 Euro cents per kilowatt hour for the solar plant located in Kahone and 3.98 Euro cents per kilowatt hour for the solar plant located in Touba.

Once the plants are built, this will constitute Senegal’s cheapest utility energy source, helping the government meet the objectives of the ‘Plan Senegal Emergent’ by drawing on an abundant renewable resource.

“In Senegal, Scaling Solar once again demonstrates that this innovative approach brings together the IFC and the World Bank, investors, and governments in a transparent, streamlined, and competitive process. The result is great deals for consumers,” said Philippe Le Houérou, IFC’s CEO. “Scaling Solar is the poster child for creating markets for clean and affordable energy for Africa.”

The World Bank Group designed and helped CRSE run the tender, which led to 14 bids for the two projects from eight bidders. This success follows the first Scaling Solar auction in Zambia, which had delivered a ground-breaking 6.015 US cent tariff, the lowest tariff in Sub-Saharan Africa at the time.

In addition, the program is expanding to new regions with countries in Asia, Latin America, and the Middle East in discussions to join Scaling Solar.

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Globally, 27 percent of banks surveyed noted declines in their correspondent banking relationships (CBRs) – financial institutions that provide services on behalf of other institutions – forcing them to reduce vital services. The challenge is most critical in Sub-Saharan Africa where 35 percent of banks reported a decline in these essential relationships—a major risk for countries’ economies heavily reliant on imports. 

“We are concerned,” said IFC CEO, Philippe Le Houérou. “In emerging markets, the business environment has often been challenging for banks and their customers, but a decline in correspondent banking disrupts the financial connections that countries and businesses need.” 

Restricting the availability of trade finance, wire transfers, deposits and other services could have a severe impact in developing countries, where they are a lifeline to the wider world.  The WTO estimates the existing global trade gap to be $1.4 trillion, and it exceeds $100 billion in Africa alone, a gap the decline in CBRs will exacerbate further.  An IMF study in April 2017 said the decline in these relationships could undermine affected countries’ long term growth and financial inclusion prospects. 

The survey,  the first extensive survey of banks in emerging markets on the issue, polled 300 banks active in 92 countries. The institutions surveyed have a total of $5 trillion in assets—roughly 10 percent of all emerging-market banking assets. 

Emerging markets banks are having to address multiple sets of new, sometimes conflicting, compliance requirements and are spending large amounts to upgrade their processes, hire staff, and upgrade software. Some 78 percent expected the costs of regulatory compliance to continue to rise, further pressuring their ability to serve their customers with essential services. 

Over the past decade, policymakers have taken much-needed steps to bolster the global financial system with new rules against unnecessary risk-taking, money laundering, and terror funding. These reforms will help safeguard the system from future crises. But increased capital standards, rising compliance costs, and the threat of large fines are also leading financial institutions to rethink their cross-border networks, the survey confirmed. 

Survey participants identified three solutions that could help address the issue, including greater harmonization of regulatory requirements, a centralized registry for due diligence data, and assistance with understanding and adaption to the new standards as measures. A solution will require multiple stakeholders across the international community to formulate a comprehensive response. 

“Trade, economic growth, and the remittances that families depend on are at risk when banking relationships deteriorate,” said Marcos Brujis, Director of IFC’s Financial Institutions Group. “By working together, multilateral institutions, regulators, and banks can help ensure that necessary reforms don’t create unintended costs for the most vulnerable people.”

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October 6, 2016: Allianz Group and International Finance Corporation (IFC), a member of the World Bank Group, have signed a partnership under the Managed Co-Lending Portfolio Program (MCPP). Under the agreement, Allianz intends to make an investment of $500 million which will be co-invested alongside IFC debt financing for infrastructure projects in emerging markets worldwide.

The infrastructure debt team of Allianz Global Investors has structured the transaction and will manage the fund on behalf of investors. IFC will originate, structure and administer the loans on behalf of the fund in addition to providing a first loss protection.

Allianz Global Investors has established an infrastructure debt fund that will co-invest with IFC in a portfolio of loans which IFC has granted to infrastructure projects in emerging economies and fulfill a defined set of eligibility criteria. The IFC will provide a first loss protection in order to reflect the risk/reward profile of an institutional investor. This will offer Allianz insurance entities access to Emerging Markets infrastructure loans, which have historically been funded by international development institutions, local banks and some international banks.

Allianz Global Investors has 25 offices in 18 countries. It provides global investment and research capabilities with consultative local delivery. It has more than £469 billion in AUM for individuals, families and institutions worldwide and employs more than 500 investment professionals. Its infrastructure debt team, led by Claus Fintzen, focuses on senior and stable debt investments in the essential infrastructure sector. The team currently has £8bn under management.

IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. In FY16, long-term investments in developing countries rose to nearly $19 billion.

Oliver Bäte, CEO of Allianz SE, says, “We work to ensure that our activities are profitable and sustainable. We create long-term value by embedding sustainability in our core business. The partnership with IFC and our co-investment in infrastructure is a perfect example how Allianz can provide thought leading investment expertise to support the economic development of emerging countries as well as serving the interest of our customers.”

“Modern infrastructure is essential for economic growth and lasting prosperity,” said IFC CEO Philippe Le Houérou. “Yet, a huge investment gap exists in this sector—totaling trillions of dollars a year in emerging markets alone. MCPP infrastructure marks a breakthrough in the search for large-scale financing solutions to the challenges of development. It is a key building block in the global effort to move from billions to trillions in development finance.”

Andreas Gruber, Allianz Group Chief Investment Officer, says, “This partnership underlines how we at Allianz can create value for our customers by combining entrepreneurial investment ideas with industry-leading implementation know-how. Together with IFC we were able to conceive a reliable investment vehicle appropriate to the very long-term perspectives of all parties involved.”

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