AFD allocates different types of loans. Their terms are determined by the nature of the project and its environment (political, economic, social, environmental impact and context) and the quality of the borrower (sector of activity, rating, guarantees).
This tool may be in several forms:
- Grants to NGOs
- Debt Reduction-Development Contract (C2D)
- Delegation of funds from other donors
AFD allocates grants to a limited number of countries: poor countries considered as priorities.
In 2016, 94% of grants approved concerned these countries. AFD thereby complies with the decision of the Interministerial Committee for International Cooperation and Development (CICID) meeting of July 2013 to earmark a minimum of two-thirds of grants for priority poor countries.
List of priority poor countries:
- Burkina Faso
- Central African Republic
- Democratic Republic of Congo
Projects financed via grants are appraised with the same rigor as those financed with loans. They have the same quality standards and effectiveness requirements (impact measurement).
The Debt Reduction-Development Contract (C2D) is a tool to restructure the debt of certain countries. In practical terms, once a Heavily Indebted Poor Country has signed a C2D with AFD, the country continues to service its debt until repayment. At each payment on the due date, AFD transfers the equivalent amount to the country in the form of a grant. This amount is used to finance poverty reduction programs.
The direct financial cooperation between AFD and CSOs today covers a wide range of instruments tailored to the specific characteristics of CSOs and their added value: support for innovation (Sectoral Innovation Facility for NGOs, financing from the French Facility for Global Environment, FFEM), financing for operations in fragile, crisis and post-crisis contexts (APCC), and support for their initiatives, via the CSO Initiatives mechanism.
FEXTE meets the development needs of middle-income countries, feeds into dialogue on public policies, and promotes French expertise.
The guarantees allocated by AFD facilitate financing for small businesses and microfinance institutions in developing countries. They also help French SMEs set up abroad. This means that they are an effective tool for promoting investment and job creation.
Following the Paris Climate Agreement, AFD has launched Adapt’Action to support countries seeking technical assistance for the institutional, methodological and operational implementation of their commitments to the fight against climate change.