33591 - ABN MF Bank Loan

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Summary of Investment Information

Project Number

33591

Company Name

AB MICROFINANCE BANK NIGERIA

Date SPI Disclosed

Sep 6, 2013

Country

Nigeria

Region

Africa

Projected Board Date

Oct 7, 2013

Environmental Category

FI-3 - No Impact

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Nov 18, 2013
Signed : Feb 10, 2014
Invested : Mar 26, 2014

Sector

Microfinance and Small Business - Non Commercial Banking

Project Description

AB MFB is an existing client of IFC. AB MFB received its banking license on November 3, 2008, and started operations on November 10, 2008. It offers a broad range of financial services to micro, small and medium-sized enterprises (MSMEs) and other clients in the lower income strata. A limited liability company duly incorporated in Nigeria and regulated by the Central Bank of Nigeria as a microfinance bank.

The proposed project involves a local currency loan for IFC’s own account of up to NGN800 million (~US$5.0 million) to support the growth of loan portfolio and expansion of AB Microfinance Bank (AB MFB) based in Nigeria.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	5.0
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

(i)The project will enable AB MFB to grow its loan book by an additional 3,000 loans and is expected to result in an IDG count of approximately 10,000, excluding the IDG count resulting from the rights issue in November 2012;
(ii)The project will also strengthen the ability of AB MFB to grow its balance sheet, transform into a national microfinance bank and position itself as one of the role models in the microfinance sector in Nigeria. (iii)IFC''s partnership with AB MFB will support its transformation from a local operator to a national operator, which will diversify its operations and strengthen its competitive advantage over other players that operate only in Lagos ;
(iv)The project will indirectly create jobs by enhancing the ability of small businesses to survive, expand and provide employment opportunities ;
(v)Strong demonstration effect by encouraging other FIs, especially local banks, to extend financing to the microfinance sector and thus assist in bridging the financing gap in the market ; and
(vi)Potentially create positive spill-over in the microfinance sector by supporting a strong partner with good risk management and corporate governance practices.

(i)Financial Risk Mitigation: The proposed loan provides AB MFB with access to long-term and stable funding which is not readily available to MFIs in Nigeria.
(ii)Catalyst for Additional Funding: The investment will demonstrate IFC''s confidence in AB MFB and the Nigerian microfinance sector. IFC''s reputation and "stamp-of-approval" would help facilitate the bank''s growth in an industry that is faced with the challenge of accessing deposits and long term funding; and
(iii)Continuous support: The proposed loan demonstrates IFC''s long term commitment to AB MFB.

E&S Category Rationale / Risks and Mitigation

This project has been classified as a Category FI-3 project according to IFC’s Environmental and Social Review Procedure. ABN is microfinance bank which provides loans mostly to traders in Nigeria. The key risk is the ability of the bank to identify and manage the E&S risks associated with microfinance activities in Nigeria. The Applicable Performance Requirements are the IFC Exclusion List and the applicable national social and environmental laws in Nigeria.

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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.

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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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