38159 - RSF Benin Tourism

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Summary of Investment Information

Project Number

38159

Company Name

RSF Benin Tourism

Date SPI Disclosed

Dec 6, 2016

Country

Benin

Region

Africa

Projected Board Date

Jan 31, 2017

Environmental Category

FI-2 - Limited

Status

Pending Signing

Last Updated Date

Jun 2, 2017

Department

Regional Industry - FIG ME & Africa

Industry

Financial Markets

Previous Events

Approved : May 10, 2017
Signed : May 31, 2017

Sector

Other Non-Banking Financial Institution (NBFI)

Project Description

The proposed project is a risk sharing facility (RSF or “the Facility”) with potentially two participating banks, namely Bank of Africa Benin SA (“BoA Benin”) and Ecobank Benin SA (“the Banks”). Under the RSF, the Banks will build, over an agreed period of time, a portfolio of eligible SME loans for a total amount of up to US$40 million. Up to a third of the maximum size of the target SME loan portfolio will be expected to relate to the tourism sector with a focus on SMEs along the value chains of hotels. IFC will cover up to 50% of losses on each participating bank’s eligible SME portfolio. IFC’s maximum exposure will be up to US$20 million.

The project includes resources mobilization from IDA.

Associated Advisory Engagement

The proposed project will have a capacity building component, whereby eligible SMEs will be trained on various subjects including the development of business plans, basic accounting & cash management, operational efficiency, with the view to equip them to have a more successful relationship with banks.

The participating banks will also be supported through advisory activities that will seek to strengthen the banks' ability to sustainably service the SME segment. The advisory services component of the project will be implemented jointly by IFC and the World Bank.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	24.0
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

- Access to finance for SMEs: the proposed project would help provide financing to SMEs in Benin, including up to 500 tourism related SMEs in the food and furniture sub-value chains. - Economic growth and job creation: By promoting tourism which is the third largest employer in Benin, the World Bank and IFC will support additional sources of growth and job creation. This would lead to building a stronger and broader based economy in Benin - Broader product offering and portfolio diversification for banks: through the project, banks are expected to scale up financing for tourism, which they had limited interest doing in the past.

- Risk Mitigation Solution: the RSF will enable the banks to underwrite risks they would not take otherwise. It will also provide capital relief from a capital adequacy perspective. - WB/IFC convening power: the project is a demonstration of the WB/IFC convening power in bringing together multiple stakeholders from public and private sector along the value chains of tourism to address a fundamental development issue in the tourism. - Environmental and Social Expertise: IFC's E&S requirements under this SME Facility will lead to enhancement of the participating banks' E&S risk management procedures for SME clients, in particular those in the value chains of tourism. - Comprehensive package: the four components of the WB Project provide, together, a fully integrated package of complementary tools and solutions to holistically promote tourism in Benin. Very few investors are willing and able to offer such a comprehensive package (investment, advisory, global experience) to support SME financing in Benin.

E&S Category Rationale / Risks and Mitigation

The project has been categorized as FI-2 according to IFC’s Sustainability Policy. The portfolio to be managed by the participating banks consists of SMEs, including tourism-related SMEs, which entail environmental and social risks and impacts that are considered limited and can be readily addressed through mitigation measures. For this project, the Banks will be required to: 1) develop specific due diligence guidelines to screen eligible loans under the project and ensure that all eligible loans avoid supporting activities on the Exclusion List and comply with applicable environmental and social laws in Benin, and 2) comply with the requirements of Performance Standard 2 – Labor and Working Conditions.

The key E&S risks and impacts derive from the capacity of the participating banks to identify and manage the potential environmental and social risks associated with their lending activities to the SME sector, which typically have low to medium environmental risks (resource efficiency, waste management, emissions to water, loss of biodiversity and ecosystem services, etc.) and social risks primarily related to occupational health and safety (lack of occupational training, use of personal protective equipment, lack of emergency training, etc). The participating banks have developed and are implementing Environmental and Social Management Systems that designate the roles and responsibilities of staff implicated in the ESMS, delineate environmental and social due diligence procedures and include screening tools. As part of this project, the Banks will need to develop specific due diligence procedures to ensure that all eligible loans to support SMEs under the risk sharing facility are in compliance with applicable environmental and social requirements, and demonstrate effective implementation of the ESMS.

Contacts

For Inquiries About the Project, Contact

BOA Benin & Ecobank Benin
Faustin AMOUSSOU & Lazare NOULEKOU
Managing Director

Bank of Africa Benin, Avenue Jean Paul II, Cotonou & Ecobank Benin, Rue du Gouverneur Bayol, Cotonou
www.boabenin.com & www.ecobank.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	02/10/2017
Establish SEMS	02/10/2017
Develop guidelines	02/10/2017
Staff Training	08/10/2017
ESMS Implementation	08/10/2017

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