36071 - Ecobank RSF

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Summary of Investment Information

Project Number

36071

Company Name

ECOBANK TRANSNATIONAL INCORPORATED

Date SPI Disclosed

Mar 13, 2015

Country

Africa Region

Region

Africa

Projected Board Date

Apr 13, 2015

Environmental Category

FI-2 - Limited

Status

Pending Signing

Last Updated Date

Nov 30, 2016

Department

Regional Industry - FIG ME & Africa

Industry

Financial Markets

Previous Events

Approved : May 5, 2015

Sector

Other Non-Banking Financial Institution (NBFI)

Project Description

Ecobank Transnational Inc. (“ETI” or “the Group”) is the leading pan-African full service banking group, active in 36 African countries with a licensed operation in Paris and representative offices in Beijing, Dubai, Johannesburg, London and Luanda. As at December 31, 2013, the Group’s 19,546 staff served more than 10.4 million customers across Ecobank’s 1,284 branches.

Under the proposed project, IFC will be supporting ETI’s commitment to SME banking by providing risk mitigation and guarantee tools to multiple affiliates in fragile and conflict afflicted situations (“FCS”). This would enhance the participating banks’ SME lending capacity and contribute to prudently growing the Group’s SME banking business. The project entails the provision of a Risk Sharing Facility (“RSF” or the “Facility”) in the amount of US$55 million to cover eight ETI affiliates in FCS – Burundi, Chad, Republic of Congo, Democratic Republic of Congo, Cote d’Ivoire, Guinea, Mali and Togo, together the Participating Affiliates (“PAs”) for a target portfolio of SME loans in the amount of US$110 million.
The project includes resources mobilization from the IFC’s Global SME Facility (“SME Facility”).

Associated Advisory Engagement

The project includes an Advisory Services (“AS”) engagement whereby IFC will provide targeted support to the 8 ETI Participating Affiliates to enhance their utilization of the proposed Facility. In addition, ETI Training Academy is working on a plan to develop and roll out a customized SME Banking training program in English and French for its SME Banking and Credit Officers across the Group (i.e. including but not limited to the 8 Participating Affiliates).

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	89.38
Loan
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
Guarantee	Loans to SME Borrowers

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

Development Impact

Increasing of Access to finance: The project will make the risk/return profile of SMEs in the designated FCS more attractive to the participating ETI subsidiaries, thereby reducing financing constraints for SMEs in the targeted countries. This in turn would increase financing volumes to existing and new SME clients, ultimately contributing to bridging the wider financial access gap in FCS countries.
Strengthening of Financial Sector in FCS: Given the relatively small size of the real sectors in several FCS markets, the financial sector is usually highly exposed to government. Through the eligibility criteria, the RSF would support better allocation of resources across vital segments of the economy
and help the banks diversify their loan portfolios. This would strengthen the financial sector in FCS.
Private Sector Development: SMEs are the engine of private sector growth in developing countries, and more so in FCS. By facilitating access to finance for
SMEs, the project would support entrepreneurship, encourage investment in existing or new businesses, and promote international best practices among eligible SMEs. The medium term result would be a more vibrant private sector.
Job Creation: This RSF project will help generate private sector growth which in turn would create and/or maintain employment opportunities in FCS.

Risk Mitigation for SME lending in FCS: The RSF will provide Ecobank PAs with appropriate tools to prudently build scale in SME lending in FCS, a much riskier segment than the rest of ETI''s portfolio. Few private sector partners with IFC''s global experience in SME lending are able to deliver the same support to ETI in FCS countries.
Mobilization of Blended Finance: through the project, IFC is creating a platform for ETI subsidiaries in FCS and their SME clients to get financing from other participants in the Global SME Finance Facility, which they may not otherwise have access to.
Global SME Expertise delivered through a focused and Integrated IS/AS Offering: IFC is arguably the only likeminded institution with IS and AS of the scale and scope ETI requires to implement its Group-wide SME strategy. By leveraging the breadth and depth of IFC''s industry knowledge, ETI affiliates would be equipped to deliver solutions that match the complexity of SME banking in their specific markets.
Environment and Social ("E&S") Expertise: IFC''s E&S requirements under this SME focused Facility have led ETI to a Group-wide Action Plan aiming at developing and implementing for the SME business segment, E&S standards that are similar to those in place for the corporate clients.

E&S Category Rationale / Risks and Mitigation

The project has been categorized as FI-2 in accordance with IFC's Environmental and Social Review Procedures. The project consists of a risk-sharing facility to support the SME portfolios of eight ETI subsidiaries. Most of the SME facilities are short term facilities to clients in low to medium risk sectors such as wholesale and retail trade, services and construction. The E&S risks and impacts associated with SME activities are considered limited and can be readily addressed through mitigation measures. The overall portfolio risk is thus considered medium. The applicable E&S requirements for this project are the IFC Exclusion List and the applicable environmental and social laws in the countries where the subsidiaries are located.

The main E&S risks and impacts associated with this project relate to the ability of the subsidiaries to identify and manage the E&S risks and impacts associated with their lending activities in line with IFC's policy requirements. Ecobank Transnational Inc (ETI) is an existing IFC client and in line with IFC's E&S requirements, the Group has an E&S Officer and an E&S Management System (ESMS) for identifying and managing the E&S risks associated with clients' activities. This ESMS meets IFC's E&S requirements and is applicable to all subsidiaries. All the subsidiaries under this project will be required to confirm the names of the designated E&S Officers and the adoption of the Group ESMS. Although, ETI has provided training on the implementation process to all subsidiaries, additional E&S risk management will need to be provided to these subsidiaries to enhance their E&S risk management capacity.

Contacts

For Inquiries About the Project, Contact

Fabien AMANY
Group Head Local Corporate & SME
Ecobank Transnational Inc. (ETI)
c/o Ecobank Côte d’Ivoire
Immeuble Alliance
Avenue Terrasson de Fougères
01 BP 4107 Abidjan 01 – Côte d’Ivoire
Tel. : +225.20.319.200 / +225.07.71.51.10

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Task Title & Description	Anticipated Completion Date
Nominate officers	04/30/2015
Establish SEMS	05/31/2015
Staff Training	06/30/2015
Verification of ESMS implementation	07/31/2015

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