35343 - AFRICA RIVERS FUND

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Summary of Investment Information

Project Number

35343

Company Name

AFRICA RIVERS FUND

Date SPI Disclosed

Jan 29, 2015

Country

Eastern Africa Region

Region

Africa

Projected Board Date

May 1, 2015

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Dec 21, 2024

Department

Equity Portfolio Management

Industry

Funds

Previous Events

Approved : May 1, 2015
Signed : Jun 29, 2015
Invested : Feb 19, 2016

Sector

Small Business Fund

Project Description

The project entails an IFC equity investment of up to US$10.0 million, not to exceed 20% of total commitments, in the African Rivers Fund (“ARF” or “the Fund”), a 10 year closed-end fund seeking to raise US$50.0 million. The key objective of ARF is to construct a portfolio of small business investments diversified across low income countries in Central and Eastern Africa, which collectively capture the underserved SME and FCS investment segment in those two regions. The Fund will seek to provide (i) risk capital and (ii) management guidance to small businesses in the Democratic Republic of Congo, Republic of Congo, Central African Republic, Burundi and Uganda. ARF will continue the business model established by the Central African SME Fund, which has had a business model that has achieved proof of concept, demonstrated by (i) establishment of a functional effective team; (ii) sourcing of a healthy pipeline of investments; (iii) execution and value addition; and (iv) the Fund Manager making four cash distributions to investors to date. CASF has managed to achieve this even with the significant setback brought on by the political disorder in CAR, and the Fund Manager has proven the ability to ring-fence investments and safeguard capital in such environment, a critical ability for a FCS investor.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	10.0

Development Impact

- Access to finance for SMEs: The Fund is expected to provide much needed equity and quasi-equity financing to at least 25 SMEs in Central Africa to support their growth and expansion. - Job Creation: The Fund is expected to generate employment in low-income communities (as confirmed by pipeline investments in the health, education and agriculture sectors) and help support over 8,000 direct jobs from its investee companies and investments ranging from $250,000 to $5 million. Job creation impact is being demonstrated by CASF, which has generated 450 new jobs over a 4-year period from its 26 investments ranging from $100,000 to $500,000. - Private Sector Development: The Fund is expected to promote sustainable growth in companies that have very little or no access to other sources of capital. Further, there will be significant value add to the portfolio companies through capacity building, improved ESG, as well as operational and financial expertise through a technical assistance facility that ARF is raising for investee and prospective SME companies. - Poverty Alleviation: All target countries with the exception of Uganda, are fragile and low-income countries. IFC's investment will have impact in supporting business growth and generating job income. - Expansion of Financial Markets in Central Africa: the Fund's successful investments and exits are expected to help develop a new asset class and provide much needed long term capital financing for high-growth SMEs in these markets.

- Catalytic Role: By investing in CASF, the first PE fund in DRC and CAR with a first-time fund manager, IFC played a catalytic role both developing a PE model tailored for these markets, and paving the way for the development of a PE ecosystem in these countries. Supporting ARF will provide a continuation of the same catalytic support in nascent PE markets in Central Africa, mobilizing other investors and creating access to finance for at least another 20 high-growth SMEs in the region. - Demonstration Effect: IFC investing in ARF will act as a signal to the investor community that frontier and fragile markets, specifically those in Central Africa, are viable markets for risk and growth capital. This is also expected to unlock and expand the range of financing mechanisms and amounts of capital for local SMEs which have limited funding options and as a result have limited growth opportunities. IFC's investment in the Fund will also allow these first-time fund managers to "graduate" from the SME Ventures program and become potentially sustainable. The Program is designed to develop PE funds and first time fund managers in target frontier markets by providing a mix of investment plus non-traditional IFC advisory and grant funding at the macro, intermediary and micro level to support their development. - IFC Performance Standards: IFC's investment will assist in establishing ARF in accordance with IFC standards for governance, environmental and social standards. IFC will also continue to assist in transmitting these standards across ARF's investee companies, as it is currently being done through CASF. The fund manager already as an established Environmental and Social Management System in place with an ESG coordinator, has ESG integrated into its investment processes and provides ESG training to all its investment managers through an IFC ESG course.

E&S Category Rationale / Risks and Mitigation

36AF3C8858604567A6F9CF69AB3E3641 .par_AC1B03F7F232A0F342257D5C0032DC57_8 { font-family:sans-serif; color:black; font-size:10pt; font-weight:normal; text-decoration:none; } The project has been categorised as FI-2 according to IFC’s Environmental and Social Review Procedures. The fund is expected to focus on mostly medium risk sectors considered to have limited E&S risks and impacts which can be readily addressed through mitigation measures. On occasion, the fund may invest in projects with higher E&S risks and commensurate mitigation measures will be applied in such instances. The key risk in this project is ability of the Fund Manager to identify and manage the E&S risks associated with the activities of the portfolio companies in line with IFC’s policy requirements. The applicable requirements are the Exclusion List, the National E&S Laws in the countries where portfolio companies are located and the Performance Standards.

In accordance with IFC's Access to Information Policy, IFC will periodically disclose the names, locations and sectors of sub-projects that have been supported by IFC investments through private equity funds, subject to regulatory constraints and market sensitivities. The sub-project(s) listed below reflect(s) the status of the portfolio as of January 1, 2025.

Investee	Country Of Investment	Sector
Ecopharm	Uganda	Q-AB - Pharmaceuticals and Medicine Wholesalers
Medecines de Nuit	Congo, Democratic Republic of	S-AA - Hospitals and Clinics
NGO Aurora ABSL	Congo, Democratic Republic of	T-AA - Elementary and Secondary Schools
RJ Trading	Congo, Democratic Republic of	Q-AZ - Other Distributors and Wholesalers
Simba Telecom	Uganda	Q-BD - Consumer Durables & Electronics Retail (Appliances and Electronics etc.)
Popshop	Congo, Democratic Republic of	X-XY - Other
MONISHOP	Congo, Democratic Republic of	Q-BA - Grocery Retail (Supermarkets, Hypermarkets, Convenience Stores etc.)
NRJ Distribution Sarl	Congo, Democratic Republic of	E-AE - Other (Including General Freight Trucking)
Maison Galaxy	Congo, Democratic Republic of	Q-BZ - Other Retail
Quickprint	Congo, Democratic Republic of	X-XZ - Other
Fawaz Trading	Congo, Democratic Republic of	Q-BD - Consumer Durables & Electronics Retail (Appliances and Electronics etc.)
Gerant de Leternel	Congo, Democratic Republic of	X-XZ - Other
KARE	Uganda	Q-BA - Grocery Retail (Supermarkets, Hypermarkets, Convenience Stores etc.)
Qualicoff	Uganda	Q-AA - Trading of Agri Commodities
M&N Cleaning	Uganda	X-XZ - Other
Ecopharm	Uganda	Q-BB - Pharmaceuticals and Medicine Retailers
TMR	Uganda	S-AA - Hospitals and Clinics
PCA	Congo, Democratic Republic of	Q-BA - Grocery Retail (Supermarkets, Hypermarkets, Convenience Stores etc.)
Prime Concepts Packaging	Uganda	J-AG - Paper Packaging Products (Including Boxes, Cartons, etc.)
Citadel Unity	Uganda	S-AA - Hospitals and Clinics
Ice Industries Uganda	Uganda	X-XZ - Other
Sindco	Congo, Democratic Republic of	X-XZ - Other
Toussaint	Congo, Democratic Republic of	Q-BA - Grocery Retail (Supermarkets, Hypermarkets, Convenience Stores etc.)

5C28B4B2B4B5416CB5995588AD7C03DF .par_AC1B03F7F232A0F342257D5C0032DC57_9 { font-family:sans-serif; color:black; font-size:10pt; font-weight:normal; text-decoration:none; } The main E&S risks and impacts of this project relate to the ability of the Fund Manager to conduct adequate E&S due diligence and monitoring to identify and manage the E&S risks associated with the activities of the portfolio companies in line with IFC’s policy requirements. The fund is expected to focus on mostly medium risk sectors including consumer products, logistics, industrial services and infrastructure services. The Fund Manager is an existing IFC partner; IFC invested in XSML CAFR a similar fund to AFR. The Fund Manager has an Environmental and Social Management System (ESMS) and an E&S Officer, and adequate E&S due diligence and monitoring assessments are conducted for portfolio companies. The Fund Manager’s E&S performance is considered satisfactory. However, the Fund Manager needs to improve on its E&S risk management approach for financial intermediaries to ensure that each financial intermediary develops adequate risk management systems for managing the E&S risks and impacts associated with its lending portfolio in line with IFC’s policy requirements for financial intermediaries. The existing E&S team will be retained for ARF and the existing E&S risk management system will also be applied to ARF transactions. The Fund Manager will be required to confirm both aspects in writing. In addition, the Fund Manager will be required to provide E&S risk management training to any new members of the team.


Task Title & Description	Anticipated Completion Date as Disclosed in SII
Nominate officers	03/16/2015
Establish SEMS	03/16/2015
Staff Training	06/15/2015
ESDD for all 3 projects and Cat A	04/13/2015

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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.

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.

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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.

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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.

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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