27060 - Mixta Africa

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Environmental & Social Review Summary

Project Number

27060

Company Name

Mixta Maroc

Date ESRS Disclosed

May 9, 2008

Country

Morocco

Region

Africa

Last Updated Date

Sep 30, 2022

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jun 16, 2008
Signed : Jun 19, 2008
Invested : Jun 30, 2008

Sector

Construction and Real Estate

Industry

Tourism, Retail and Property

Department

Gbl Ind, Manufact, Agribus & Services

Project Description

Mixta Africa (MA) is a Spanish real-estate/land development company focussing on the development of affordable housing in Africa for low and middle-income households. The company’s business strategy and philosophy is to:

- build decent and safe housing for its customers;
- utilise best practices during construction, and provide quality housing to customers as per global standards;
- set competitive and transparent prices; and,
- generate wealth and jobs by promoting the use of local companies and professionals to develop the projects.

Mixta Africa’s two business areas are:

- the development of housing projects; and,
- land transformation projects, with an exclusive African focus. (In addition, the current land transactions in Senegal have required Mixta to commit to hotel development although this is not their core business).

The land transformation projects involve acquiring land plots, undertaking legal transformations and physical improvements and selling them to others for housing, business construction or other activities. All development of land and housing occurs through local construction companies.

The business model requires the establishment of a subsidiary in each selected country whereupon land identification, evaluation and acquisition, and subsequently, project design, development and implementation, occur. Initially MA starts with pilot projects to accurately assess cost and demand prior to making longer-term commitments. Mixta Africa has focussed on Morocco and Senegal. Mixta Morocco has completed its pilot phase and is now managed as consolidated business while Senegal remains in emerging market categorisation subject to completion of the pilot project. Nonetheless these countries have the largest in-country teams and the largest portfolio of land identification, evaluation and acquisition as well as a range of completed and on-going projects. Mixta Africa plans to enter the Egyptian, Tunisian, Algerian, Mauritanian markets and to this end has established subsidiaries in these countries and is in the process of prospecting, evaluating and acquiring land.

It is proposed that IFC take an equity stake in the parent company and provide a revolving loan to finance a number of specific projects, namely:

- Anass, Tanger, Morocco;
- Essafia (Phase I and II), Martil, Morocco;
- Marjane, Tetuan, Morocco;
- Costa Cabo, Morocco, and
- Residance La Paix (Phase II), Senegal.

Table 1 (attached) presents a summary project description. A desk-based review of these projects has been conducted. Subsequently the revolving fund may be used to support other projects.

Overview of IFC's Scope of Review

IFC’s review involved meetings with Mixta Africa’s (MA) management team in Barcelona, Spain. The following documents were reviewed:

- MA documents describing projects and environmental, human resources, occupational health and safety (OHS) and land acquisition principles and procedures;
- sample contracts with construction companies;
- country-level laws and regulations pertaining to labor, environment; and,
- the corporate social responsibility program.

E & S Project Categorization and Applicable Standard

While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards:

- PS1: Social and Environmental Assessment and Management Systems
- PS2: Labour and Working Conditions
- PS3 Pollution Prevention and Abatement
- PS4 Community Health, Safety and Security
- PS5 Land Acquisition and Involuntary Resettlement

Depending upon project circumstances, issues covered by PS6 Biodiversity Conservation and Sustainable Natural Resource Management and PS8 Cultural Heritage may also be encountered from time to time.
PS7 Indigenous Peoples does not apply as the project works in urban/peri-urban settings where functional land markets exist and land acquisition occurs on a willing buyer-willing seller basis.

The key environmental and social issues have been identified as the existence of a social and environmental assessment and management system (PS1) and specifically a site screening/assessment procedure and contractor management, including performance on PS2, PS3 and PS4. Furthermore appropriate procedures and protocols need to be developed to address PS5, PS6 and PS8 as and when these are brought into effect on specific projects.

As a result of its due diligence, IFC has concluded that the potential adverse environmental and social impacts presented by the project are few in number, site-specific and have been or can be readily addressed through mitigation measures. It is therefore concluded that this is a Social and Environmental Category B project.

Environmental and Social Mitigation Measures

PS1: Environmental and Social Assessment and Management Systems

- Environment and Social Assessment:

MA does not have a comprehensive Environmental and Social Assessment procedure. Country laws do not necessarily require either initial E&S screening or the development of ESIA for housing projects (although in Senegal, ESIA have been required for hotel development and these have been developed by MA).

MA will formalize and document a process to screen potential E&S impacts arising from each project, considering impacts which might be anticipated at desk review. This screening:

- will determine whether detailed ESIAs are necessary,
- will identify any issues which should be subject to E&S assessment and/or
- will identify site-specific general and specific E&S management requirements to be implemented by Contractors.

The results of these possible outcomes will be included in construction contracts as required and contractor compliance will be monitored. The screening process will include relevant aspects of PS3, PS4, PS6 and PS8 as described below. Regarding PS8, MA will insert a ‘chance find’ protocol into its future construction contracts such that any cultural property uncovered during construction will be protected.

- Management Systems and Organisation:

MA does not have a formal Environmental and Social Management System (ESMS) although components of such a system exist. The Company has generic documents outlining key principles addressing environment, work force, and health and safety. These documents also specify compliance with national law. Contractors are required to adhere to company policy and national law.

There is no specific dedicated function within the organisation to address environment, and occupational health and safety (OHS). Contractor compliance is monitored by the Construction Manager and overall Director of Construction, who are required to visit construction sites at least every two weeks.

MA will create an ESHS function in Morocco (and subsequently in other countries of operation as they transition from emerging market to consolidated market status) The ESHS function be responsible for:

- developing and documenting a complete integrated ESHS system that can be applied consistently in every country of operation; and
- key environmental issues (including waste management), occupational health and safety (OHS), and contractor ESHS management.

- Community Engagement:

Community engagement for the low impact housing projects is managed by the local planning framework. The community engagement process involves:

- Preparation and submission of development plans to the planning authorities;
- The review (and revision) by the planning authorities'' technical experts;
- Following approval and before construction starts, a large billboard is erected at the project site. This carries a project description, an artist''s impression of the building and an address and contact details of the Company Representative, the company Construction Manager, the Architect, the Construction Contractor (s) and QA/QC groups.

- PS2: Labor and Working Conditions:

Mixta Africa has a total of approximately 170 staff, the majority of whom are located in Morocco (97), Spain (40) and Senegal (19). Other country operations (Mauritania, Algeria, Tunisia, Egypt) only have very small staff complements reflecting the early stage of country operations. MA currently employs a single human resource manager based in Spain who also travels to countries of operation.

- Human Resource Policy and Management:

Although MA does not have an integrated human resource policy applicable to MA, its subsidiaries and contractors, the requisite elements of a HR policy are defined in various documents. A general document outlines key principles including:

- equal opportunity;
- non-discrimination (for reasons of gender, religion or political affiliation);
- prohibition on child and forced labor;
- commitment to OHS;
- commitment to ensure awareness of rights under national labor laws;
- commitment to fair and adequate salaries, comparable with those paid in the sector, and
- commitment to ensure that principles are applied by all contractors and sub-contractors and across construction sites. In addition MA staffs are provided with an induction manual and procedures for hiring and dismissal are defined.

As indicated MA requires contractor compliance with MA policy and principles and national laws. However there is no organisational function dedicated to promoting awareness of and monitoring compliance within each country of operation.

MA will:

- recruit a human resource manager for Morocco (and subsequently in the other countries of operation as they transition from emerging market to consolidated market status) to
- develop country-specific human resource policy documents (as per second paragraph below);
- address MA human resource requirements and,
- build the capacity of, and monitor, MA Contractors human resource management (including recruitment, contracting, dismissal, grievance procedure, etc).
- ensure development of country-specific human resource policy documents, reflecting both company policy and national law.

Such documents are to be developed in appropriate language reflecting the capacity of the majority of MA staff as well as key Contractors.

Contractor employees receive written contracts specifying terms and conditions of employment. Labour laws vary by country – in Morocco workers are allowed to join labour unions and the appropriate number of representatives are elected based on the size of the workforce. In addition businesses with more than ten employees must provide for employees’ delegates elections, the nominees of which are elected to represent the workers to the employer.

- Grievance Mechanism:

MA maintains an ‘open-door’ policy regarding employee suggestions and grievances and facilitates both formal and informal approaches to having grievances raised and resolved. With regard to Contractors, MA will ensure that Contractors have established functional grievance systems. In addition MA will provide workers with an avenue to confidentially raise grievances directly with MA and ensure that these are then addressed by the Contractor.

- OHS:

MA has a generic document outlining a commitment to worker health, safety and security and a more specific document supporting construction projects in Morocco. MA requires Contractors to abide by these generic and specific policies as well as with national laws regarding worker health, safety and security. MA has described difficulties in securing Contractor (and their employees’) compliance with OHS requirements as a result of cultural and cost factors as well as limited incentives due to limited evaluation (and penalty) by relevant national authorities. Nonetheless it is recognised that substantial progress in building Contractor awareness and compliance has been made, especially in Morocco, where the same contractors have been contracted for subsequent projects.

MA will ensure that:

- tender documents include the requirement for an OHS assurance/management plan and that this will be an integral part of tender evaluation, and
- the newly recruited ESHS Manager for Morocco (refer PS1 above) will assume responsibility for ensuring that Contractors are aware of OHS requirements, for incentivising OHS performance and monitoring compliance.

- PS3 Pollution Prevention and Abatement:

MA has developed a generic policy and principle document pertaining to its environment. As described above country legislation does not require ESIA for development of housing projects. MA develops housing projects through construction contracts with selected companies. Contracts require compliance with company policy and national law. To ensure that site-specific issues are identified and addressed, MA will develop a policy and protocol to support pollution prevention and abatement. The policy and protocol will require:

- PPA screening to be included in the site screening process described in the discussion of PS1;
- inclusion of specific actions relevant to pollution prevention and abatement in the terms and conditions of relevant contracts; and,
- specific initiatives to identify and where necessary develop the capacity of contractors responsible for management of hazardous waste. As described in PS1, MA will recruit an ESHS Manager for their operation in Morocco (and subsequently in other countries as they transition from emerging market to consolidated market status) to support the implementation of the policy and protocols and monitor contractor compliance.

Mixta Africa has explored opportunities for including energy and water efficiency in design. However MA’s first efforts (i.e., the use of insulation panels) were troubled by:

- lack of cultural acceptance;
- limiting flexibility in house renovation/adaptation;
- Contractor capacity; and,
- cost (as materials were imported and MA was required to pay import duty).

It is recommended that MA further explore opportunities to include energy and water efficiency in design. At the minimum this should include energy efficient light bulbs, water conserving shower heads and dual-flush toilets. In addition the potential for solar heating, rain water collection systems, use of grey water, etc might be considered.

- PS4 Community Health, Safety and Security:

The design and development of housing projects is defined by contracted architects. These architects incorporate relevant national and international standards into their design, including appropriate earthquake and fire safety requirements.
MA does not have specific policies regarding community health, safety and security during the construction phase although Contractors are required to comply with national law as appropriate. Mixta Africa will develop a policy and protocol in support of community health, safety and security. The policy and protocol will require:

- CHSS screening to be included in the site screening process described in the discussion of PS1 and - inclusion of specific actions as required to protect community health, safety and security in the terms and conditions of relevant contracts.

The newly recruited ESHS manager for Morocco (refer PS1 above) will assume responsibility for ensuring site screening, ensuring Contractor awareness and implementation of requirements, and compliance monitoring.

MA will ensure that projects currently under consideration for IFC financing will be properly fenced and appropriate traffic management plans are developed.

- PS5 Land Acquisition and Involuntary Resettlement:

Mixta Africa operates in urban and peri-urban settings in northern Africa (e.g., Tanger and Tetuan in Morocco, Dakar in Senegal) where active, reliable land markets (with title deeds) combine with favourable land use planning and zoning to create opportunities for rapid project development and turnover. Identification of potential land plots occurs through various means (advertising, brokers, architectural firms, government administration, notaries) and leads to an evaluation and due diligence of potentially suitable plots. To date land acquisition has occurred through ‘willing buyer-willing seller’ transactions with private landholders or through concessions of government owned land whereby government disposes of land in support of governmental objectives regarding urban development. In Morocco national laws forbid foreign ownership of, and transactions involving, agricultural land. Accordingly Mixta Africa ensures appropriate zoning is in place prior to finalising land acquisition. In Senegal, to date all land transactions (both purchase and lease) have occurred through a governmental body (i.e., ANOCI) and have involved specific requirements regarding development (e.g., development of a hotel, development of housing).

The vast majority of transactions have involved either vacant lands or lands on which the owner is resident. With regard to acquisition of the lands for the five projects, as per the information available to the Company, such lands were vacant prior to the land transactions. However, it is unclear whether these lands were occupied or otherwise utilized prior to the lands coming onto the market.

As a condition of disbursement, the Company shall develop a specific policy and protocol addressing potential economic displacement and physical displacement associated with all land acquisition. Such a policy and protocol will require MA to incorporate explicit consideration of the potential for or occurrence of economic and physical displacement in support of land acquisition into their land acquisition due diligence process, and where such risk exists, ensure that people adversely affected are adequately compensated. Compensation of economically and/or physically displaced people will occur in accordance with the requirements of PS5.

- PS6 Biodiversity Conservation and Sustainable Natural Resource Management:

Mixta Africa requires compliance with national and regional laws which, in the case of Morocco and Senegal, include specific reference to the protection and conservation of biodiversity. Nonetheless the Company will establish a policy and protocol to:

- ensure screening of new projects to assess biodiversity value and potential adverse impacts upon natural or critical habitats. Such screening can be incorporated in the environmental and social screening as required in the discussion of PS1 above and
- where such impacts occur require the development of appropriate management plans.

- PS7 Indigenous Peoples:

Mixta Africa operates in urban and peri-urban settings in northern Africa (e.g., Tanger and Tetuan in Morocco, Dakar in Senegal) where active, reliable land markets combine with favourable land use planning and zoning environments to create opportunities for rapid project development and turnover. Typically indigenous people issues do not occur in such contexts.

- PS8 Cultural Heritage:

Mixta Africa requires compliance with national and regional laws. Review of national legislation in Morocco and Senegal indicate that reference is made to cultural property and the need for protection and conservation. Nonetheless the Company shall develop a ‘chance find’ protocol that provides adequate protection in the event of an unexpected discovery of items of cultural heritage and ensure the contractual right to apply such a protocol if necessary.

Stakeholder Engagement

Mixta Africa recently established Fundacion Mixta Africa with the aim of investing in social development programs in the countries in which MA operates. In principle funds will be derived from dividends derived from the 33% stake that Fundacion Renta Corporacion (the Foundation associated with Renta Corporacion) holds in MA. However until such time that funds are generated by MA, Fundacion Mixta Africa will rely on the funds generated by the Fundacion Renta Corporacion’s endowment in Renta Corporacion (5% of the capital) and 5.91% share capital in Second House.

Fundacion Renta Corporacion objectives are to:

- support humanitarian projects;
- protect children, women and vulnerable groups;
- promote education;
- promote the social and economic development of marginalised groups; and,
- other related activities.

Currently the Fundacion has an annual budget of approximately E1,000,000 of which 80% is available for projects and 20% is utilised in administration. The Fundacion supports both fund raising activities (20%) and well as providing direct support to projects (80%).

IFC financing is provided for a framework agreement. Under the terms of this agreement, MA will be required to disclose documents prepared during this appraisal. MA will disclose project information to the public through appropriate channels, i.e., newspaper.

For subsequent projects, IFC will conduct appraisals for each project and will disclose project specific information in accordance with IFC requirements. Similarly MA will be required to disclose these projects locally in accordance with IFC requirements.

Client Documentation

File Name	Actions
27060_ESAP.pdf
27060_ESRSTable1.pdf

**Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Environmental and Social Review Summary (ESRS) is prepared by IFC to disclose its findings and recommendations related to environmental and social considerations regarding potential investments. Its purpose is to enhance the transparency of IFC's activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this ESRS is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein.
It is distributed in advance of IFC Board of Directors' consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following ESRS is disclosed in accordance with IFC's Access to Information Policy (AIP).

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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