39075 - Al Majmoua II

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Summary of Investment Information

Project Number

39075

Company Name

THE LEBANESE ASSOCIATION FOR DEVELOPMENT

Date SPI Disclosed

Apr 24, 2017

Country

Lebanon

Region

Middle East

Projected Board Date

May 31, 2017

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Nov 1, 2024

Department

Regional Industry FIG MCT

Industry

Financial Markets

Previous Events

Approved : Jun 12, 2017
Signed : Jun 14, 2017
Invested : Jul 25, 2017

Sector

Microfinance and Small Business - Non Commercial Banking

Additional Project Attributes

Blended Finance

Project Description

The proposed project will be IFC’s second engagement with The Lebanese Association For Development (“Al-Majmoua”). Proposed project includes a senior loan and a Risk Sharing Facility to support Al- Majmoua grow its activities in Lebanon and reach out to more of the underserved target clientele especially the very small enterprises and micro entrepreneurs. Furthermore, through this project, Al-Majmoua will be able to provide needed support and help alleviate the hardship dictated on local communities as a result of the current economic situation and the influx of refugees over the past few years.

Associated Advisory Engagement

Advisory project includes developing two product namely Very Small Enterprises and Very Small Equity products.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	2.0
Loan	5.0
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
Straight Senior Loan	Loans to Microfinance Borrowers
Guarantee	Loans to Microfinance Borrowers

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

Development Impact

IFC's additionality through this project is expected to be of multiple folds. First, the Risk Sharing Facility is expected to allow and encourage Al-Majmoua to serve very small businesses in underserved communities affected by the influx of refugees; second, the loan will provide the needed funding for Al-Majmoua to grow its activities targeting the underserved segments in the country including, women, and youth; and third, through the advisory package, IFC will assist Al-Majmoua to develop new products that would allow it to address the needs of an important segment of the market.

E&S Category Rationale / Risks and Mitigation

The proposed Project consists of a senior loan and a RSF. The RSF will share the credit risk of the portfolio of Very Small Enterprises (VSEs). Al Majmoua current portfolio entails low environmental and social risk sectors including trading of clothing and textiles, grocery trade, beauty salons, education, agriculture, and transportation services. Al Majmoua portfolio including the RSF portfolio will largely be comprised of business activities that have limited adverse environmental and social risks and impacts that are few in number, site specific, largely reversible and can be readily addressed through mitigation measures. This project is classified as Category FI-2 project according to IFC's Environmental and Social Policy. For this project, Al Majmoua will be required to screen financing activities against the IFC Exclusion List and relevant environmental and social laws and regulations.

As Al Majmoua is an existing IFC client, it has an Environmental and Social Management System (ESMS) for screening its loan portfolio against the IFC Exclusion List and Lebanese E&S laws and regulations. Al Majmoua HR management and practices is in line IFC Performance Standard 2 Labor and Working Conditions. Al Majmoua HR policies and procedures are currently being revised and Al Majmoua will be required to provide IFC with the revised version. The main E&S issues of this investment relate to Al Majmoua' s capacity to manage environmental and social risks in line with the applicable requirements for its lending activities. Al Majmoua will be required to revise its ESMS to reflect E&S requirements for VSEs covered under the RSF. Al Majmoua will also be required to enhance its ESMS implementation and provide sample E&S due diligence records to IFC as evidence of adequate implementation of the ESMS.

Contacts

For Inquiries About the Project, Contact

International Finance Corporation
Fatma Mohamed Aziz Sidky
Investment Officer
+1 (202) 2461 4288
fsidky@ifc.org
Nile City Towers, North Tower, 24th Floor. 2005C Corniche El Nil, Ramlet Boulac. Cairo, Egypt
www.ifc.org

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Task Title & Description	Anticipated Completion Date
Provide a sample of five completed new application forms, and five E&S assessment forms for SMEs as evidence of adequate implementation of ESMS	05/31/2017
Revise the ESMS to integrate E&S requirements for VSEs	10/15/2017
Provide E&S training to loan officers on ESMS implementation	10/15/2017

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