36982 - WCSS Zenith

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Summary of Investment Information

Project Number

36982

Company Name

ZENITH BANK PLC

Date SPI Disclosed

Nov 12, 2015

Country

Nigeria

Region

Africa

Projected Board Date

Dec 18, 2015

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Nov 30, 2016

Department

Regional Industry - FIG Africa

Industry

Financial Markets

Sector

Commercial Banking - Trade and Supply Chain

Project Description

The project is part of a short-term liquidity facility for up to US$600 million to existing IFC clients in Nigeria. The objective of the facility is to help address an acute foreign exchange (“FX” or “USD”) liquidity shortage in the country by availing short-term loans in USD to the banks for settling their clients’ trade import bills and provide trade-related working capital loans to new and existing client companies. The facility will be geared towards providing import financing for largely consumer food staples, pharmaceuticals and medicines as well as agri inputs and industrial raw materials.

Under the facility, a US$150 million loan will be made available to Zenith Bank PLC, of which US$45 million will be for IFC’s own account and the remaining US$105 million will constitute mobilized funding through B loans, parallel loans and/or guarantees.

Sponsor / Cost / Location

Development Impact

Improved Access to Credit: Due to the FX liquidity situation, the project will increase access to finance for credit-constrained enterprises to meet trade-related working capital requirements. By directly financing the short term FX liquidity needs of local banks to support trade and foreign currency working capital finance needs, the facility will support local enterprises, including SMEs, and will have a positive impact on economic activity in Nigeria.

Job Preservation and Employment Continuation: The facility, by contributing to bridging the FX liquidity gap, is expected to have a positive impact on job preservation in import-oriented businesses. Financial support to corporates and SMEs is, thus, critical to employment preservation in adverse market conditions. Hence, the facility will have a direct impact on job preservation and employment generation through the banks'' financing of private enterprises.

(i) Catalytic Role: By providing critical USD liquidity to local banks, IFC will play a catalytic role in meeting the immediate trade finance and working capital needs of local enterprises amidst the liquidity shortage and limited capacity of other commercial lenders to provide the FX. This intervention is seen as necessary given Nigeria''s FX market conditions and the significant role these enterprises play in the country''s import-driven economy.

(ii) Market Stability: Local banks require FX funding as international banks are reluctant to maintain existing financing lines as these have reservations about the macroeconomic and political risk in Nigeria. Real sector clients have also approached IFC regarding their inability to obtain LCs on an efficient basis. Therefore, this liquidity intervention, along with the medium term engagement on the capital markets front, will be essential to bring stability to the market for foreign currency borrowing as well as import and re-exports.

(iii) Demonstration Effect: In addition to the strong signaling effect of this Facility, IFC could play a catalytic role in market development by bringing mobilization partners that have limited or no exposure to Nigerian counterparties. Through a participation with IFC, partners will have a better understanding of macroeconomic and counterparty risk. As partners feel more comfortable, they will be able to provide stand-alone financing in future years.

E&S Category Rationale / Risks and Mitigation

This project has been classified as category FI-2 according to the IFC''s Environmental and Social Review Procedure. The project consists of a short term loan under the working capital systemic solutions program to support non-investment related trade finance transactions. Although there’s the possibility of a small fraction of potentially high risk oil and gas transactions, the E&S risks related to these trade finance transactions are considered mostly limited; therefore, the overall portfolio risk for this project is considered medium. The identified applicable requirements are the IFC Exclusion List and the applicable national social and environmental laws in Nigeria.

The main E&S risks and impacts relate to the ability of the bank to identify and manage the E&S risks associated with its lending activities as well as the bank’s labor standards. Zenith Bank is a new client and the bank is currently in the process of revising its Environmental and Social Management System (ESMS) to meet IFC’s requirements. Zenith Bank will be required to effectively implement this ESMS to meet the requirements of the senior loan as well as this project. The bank’s labor standards meet the requirements of IFC Performance Standard 2.

Contacts

For Inquiries About the Project, Contact

Michael Anyimah
Multilateral Group
Zenith Bank Plc
Zenith Heights, 87 Ajose Adeogun Street, Victoria Island, Lagos, Nigeria
Tel: +234-1-2782328
Fax:
Email: mailto:Michael.anyimah@zenithbank.com
Website: http://www.zenithbank.com

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Washington DC 20433
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Local Access of Project Documentation

Zenith Bank Plc
Zenith Heights, 87 Ajose Adeogun Street, Victoria Island, Lagos, Nigeria

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.

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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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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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