32273 - Confianza II

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Summary of Investment Information

Project Number

32273

Company Name

FINANCIERA CONFIANZA S.A.A.

Date SPI Disclosed

Nov 20, 2013

Country

Peru

Region

Latin America and the Caribbean

Projected Board Date

Nov 29, 2013

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Regional Industry FIG LAC & EUR

Industry

Financial Markets

Previous Events

Approved : Jan 17, 2014
Signed : May 22, 2014
Invested : Mar 27, 2015

Sector

Microfinance and Small Business - Non Commercial Banking

Project Description

The proposed transaction aims to support Financiera Confianza (“Confianza”), a microfinance provider in Peru, through a senior loan that would facilitate resources for the Company’s microfinance portfolio expansion in Peru.

The Project aims to: (i) provide funding for Confianza’s microfinance lending activity; (ii) diversify the Company’s funding sources through long term funding in local currency; and (iii) enable the Company to comply with higher regulatory liquidity levels that will be effective from January, 2014.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	17.75
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Loans to Microfinance Borrowers

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

-The project will provide Financiera Confianza long term local currency financing to help diversify funding sources and support the expansion plan of this strategically important non-bank MFI.
-Long Term Partnership: The project will strengthen IFC''s relationship with Financiera Confianza and Fundacion BBVA para las Microfinanzas, a key player in providing access to microfinance in Latin America.
-Furthermore, Financiera Confianza will consolidate best-in-class E&S practices by applying IFC''s environmental and social ("E&S") Performance Standards to the merged Company.

Indicator	Metrics	Calendar Year 2022	Calendar Year 2023	Calendar Year 2024
Access to Finance: Outstanding SME Portfolio (#)	Outstanding Portfolio (#)	Not Available	Not Available	Not Available
Access to Finance: Outstanding SME Portfolio ($)	Outstanding Portfolio ($)	Not Available	Not Available	Not Available
Access to Finance: Outstanding Microfinance Portfolio (#)	Outstanding Portfolio (#)	Not Available	Not Available	Not Available
Access to Finance: Outstanding Microfinance Portfolio ($)	Outstanding Portfolio ($)	Not Available	Not Available	Not Available

E&S Category Rationale / Risks and Mitigation

The proposed project is a Senior Loan (US$18.1 million equivalent) to Confianza (a new microfinance institution, as a result of the merger of two existing IFC clients) to provide increasing access to finance to the micro and small enterprises in rural regions of Peru. Confianza''s current portfolio primarily entails exposures to micro and small enterprises in industry sectors such as Consumer Goods, Animal Production, and Transport Services. The overall portfolio risk is considered to be low to medium and to carry limited adverse environmental and social impacts. This project has been categorized as an FI-2 in accordance with IFC’s Sustainability Framework. For this project, Confianza will be required to screen financing activities against the IFC Exclusion List and the environmental and social laws and regulations of Peru. Confianza will be required to: i) revise and implement the ESMS to ensure that lending provided avoids supporting activities on the IFC Exclusion List and comply with local laws, ii) ensure an ESMS Officer has been designated at all times, iii) comply with the requirements of the Performance Standard 2 - Labor and Working Conditions, and (iv) continue to submit a periodic report as per a format to be provided by IFC.

The key E&S risks and impacts derive from the capacity of Confianza to identify and manage the potential environmental and social risks associated with its lending activities to medium-size enterprises, which typically have low environmental risks (waste management and effluent treatment) and social risks primarily related to occupational, health and safety (lack of occupational training and low use of personal protective equipment). Additional E&S risks and impacts of the project derive from the capacity and systems that are in place to manage these risks, and Confianza’s practices with regards to labor and working conditions. At present, Confianza has not yet revised the Social & Environmental Management System (ESMS) outlining the procedures, responsibilities and tools for undertaking E&S risk management of its lending activities for the newly merged institution. However, as previously 2 separate IFC clients, the E&S performance has been considered to be satisfactory.

Key Mitigation Measures:
Type of Action
Timeline
Formalize existing E&S procedures into a Social & Environmental Management System (SEMS), including guidelines for implementation
Condition of disbursement
Staff training
Within 3 months after disbursement
SEMS implementation report
Within 6 months after disbursement
Grievance mechanism
Within 3 months after disbursement

Contacts

For Inquiries About the Project, Contact

Ana Cecilia Akamine
CFO
Tel: (511) 3161106
Av. Javier Prado Este 4487
San Isidro, Lima - Peru

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E Mail: Webmaster

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/
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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 Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII 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 SII 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 SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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