33608 - CRDB SME Loan, GWFP and GTFP

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Summary of Investment Information

Project Number

33608

Company Name

CRDB BANK PLC

Date SPI Disclosed

Feb 19, 2014

Country

Tanzania

Region

Africa

Projected Board Date

Mar 21, 2014

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Apr 9, 2014
Signed : Apr 15, 2014
Invested : Jun 19, 2014

Sector

Commercial Banking - SME Finance

Additional Project Attributes

Blended Finance

Project Description

The proposed project involves a debt and guarantee facility to develop a partnership with CRDB Bank (“CRDB” or the “Bank”) geared towards improving banking penetration in Tanzania, and more specifically, enhancing the Bank’s strategic focus on SMEs and commodity/agri-businesses as a way of reaching more of Tanzania’s under-served communities. The Bank aims to grow its business and improve its competitiveness as part of its 5-year strategic plan by expanding its lending capacity and delivery channels, broadening its product offerings and extending its branch and agency network.

CRDB’s strategy in the coming years is to focus on the underserved SME and retail market segments in Tanzania.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	34.0
Equity

Development Impact

IFC''s financing package for CRDB is expected to deliver the following development impact:

1) Supporting SME Sector Development: Through access to longer-tenor loans, SMEs will have greater flexibility in making investments to develop their businesses, improve productivity and income generation, and create new jobs. Additionally, the project will help the Bank extend banking services to under-served communities, including women-owned businesses, as the Bank increases its branch network and reach through alternative banking channels and platforms.

2) Enhancing Access to Finance for Farmers: This Project will contribute to the working capital needs of the agricultural supply chain in Tanzania by partnering with the country''s leading warehouse receipts financing bank, helping grow its activities in agri-lending. Improved availability of credit to the agri-sector will continue to support growth, promote employment and generation of higher income in this sector.

3) Demonstration Effect: By supporting the warehouse receipts finance activities of the market leader in Tanzania, the Project will have a strong demonstration impact on local banks to promote participation in funding the agricultural sector.

4) Financial Sector Deepening: Deepening the financial sector through improved credit policies and procedures, risk management techniques, product design, and customer service.

5) Job Creation: The Project will support income generating exports and population sustaining imports or basic staples which are the essential roles of agricultural commodity trade, and IFC aims to help maintain and expand the commodity financing flows in emerging markets.

1) Stamp of approval and enhanced sustainability standards: IFC''s facility to CRDB and its associated financial and policy requirements will help instill greater discipline in the bank''s risk management and will represent a stamp of approval in the eyes of international investors. IFC will also enhance the sustainability standards of CRDB by assisting in developing a Social and Environmental Management System.

2) Financial Additionality: IFC''s proposed investment package is a critical source of liquidity to support the bank''s asset-liability management. There are few other sources of capital in the Tanzanian market that will offer both the size and tenor of the proposed SME loan. The GWFP loan will be USD-denominated to meet the increasing demand for USD short term loans from exporters. The GTFP line will promote lower cost of import finance for CRDB''s clients by broadening the Bank''s network of competing confirming banks and enabling direct access to the beneficiaries'' banks.

3) Capacity building in SME Banking: IFC''s Advisory Services package to CRDB will enable it to achieve its goal of developing specific products and expertise/capacity in serving the SME segment. The proposed Advisory services will focus on three key areas: Strategy and Segmentation; Credit and Risk management support; and Institutional strengthening.

4) Mobilization of funding: IFC will mobilize funding from Department for International Development (DFID) and Global Agriculture and Food Security Program (GAFSP) to support the bank''s expansion into the high-impact sub-sectors of women-owned SMEs and agri-finance, respectively, through investment and advisory services.

Indicator	Metrics	Comments	Calendar Year 2022	Calendar Year 2023	Calendar Year 2024
CORE - E and S Management Systems (Y/N)	Compliance/Enhancement		Not Available	Not Available	Not Available

E&S Category Rationale / Risks and Mitigation

The project has been categorized as FI-2 according to IFC’s Environmental and Social Review Procedures. CRDB’s portfolio includes retail, microfinance, SME and corporate lending. The sectors covered include: trade, agriculture, building and construction, education, and hospitality (hotels and restaurants). The environmental & Social (E&S) risks and impacts associated with these sectors are considered limited and can be managed through readily available mitigation measures. The Applicable Requirements are the Exclusion List, the National E&S Laws in Tanzania and the Performance Standards.

The main E&S risks and impacts of this project relate to the ability of CRDB to identify and manage the E&S risks associated with the activities of its clients in line with IFC’s policy requirements. The client’s existing E&S risk assessment process covers EIA requirements, compliance with applicable E&S laws, and also covers a ‘potential issue list’ which identifies areas that may pose increased environmental risks. The existing process does not cover the Performance Standards and there are also no tools in place for implementation. The client will be required to revise the risk assessment procedures to meet IFC’s requirements and also appoint an E&S Officer.

Contacts

For Inquiries About the Project, Contact

Point of Contact: Saugata Bandyopadhyay, Deputy Managing Director
Address: CRDB Bank PLC
PO Box 268, Dar es Salaam, Tanzania
Tel: +255 22 2129051
Fax: +255 22 2114235
Email: mailto:Saugata.Bandyopadhyay@crdbbank.com
Web: http://www.crdbbank.com

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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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Task Title & Description	Anticipated Completion Date
Nominate officers
Establish SEMS
Formalize procedures
Develop guidelines
Staff Training

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