Absa is a leading Pan-African financial services group offering banking, insurance and financial products and services to individuals, corporates and small and medium enterprises clients. Headquartered in Johannesburg, south Africa, it is the third largest commercial bank in South Africa with operations in Botswana, Ghana, Kenya, Mauritius, Mozambique, Uganda, Tanzania, Seychelles, and Zambia.

Total Project cost is up to US$140 million equivalent in ZAR of which IFC’s proposed unfunded risk participation is up to US$70 million equivalent in ZAR.

The Bank and the Company are headquartered in Johannesburg, South Africa. All eligible suppliers are domestic South African companies, of which the majority are micro, small, and medium enterprises (MSME).

The most significant expected Project-level outcomes are the stakeholder effects - increased access to financing for suppliers engaged in the Company's supply chain. IFC also anticipates that the Project will have a strong effect on the integration of the manufacturing sector in South Africa via enhancing connectivity of suppliers into the domestic value chain.

IFC's additionality includes increased availability of funding to MSMEs at affordable terms.

This Project has been classified as a category FI-2 in accordance with IFC’s Policy on Environmental and Social Sustainability. The Project will support primarily the Company’s SME suppliers through short-term invoice discounting facilities. The E&S risks and impacts associated with the activities of SMEs are considered limited, largely reversible and can be addressed through mitigation measures. While there could be a small number of larger companies with higher E&S risk, the transactions included in this Project are limited to short-term invoice discounts and the Project’s overall portfolio risk is considered medium. The applicable requirements are the IFC Exclusion List and applicable E&S laws in South Africa. 

Given the Project portfolio, the Project will not include high-risk activities that may include (a) involuntary resettlement; (b) potential adverse impacts on Indigenous Peoples; (c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage; or (d) significant occupational health and safety risks. In addition, suppliers with activities on the IFC Exclusion List and coal-related activities will be excluded from the Project. 

The main E&S risks and impacts are associated with the Project’s supported portfolio as well as the alignment of the Bank’s labor standards with Performance Standard 2. The main E&S risks of the suppliers supported by the Project include occupational health and safety, labor and working conditions, pollution prevention, and waste management.

Absa has an E&S team and an E&S risk management system (ESMS) for identifying and assessing the E&S risks and impacts associated with its lending activities. The E&S risk management procedures include screening against the IFC Exclusion List, applicable E&S laws in South Africa and the IFC Performance Standards. In addition, the Bank applies the Equator Principles to project-related transactions. For this Project, the suppliers participating in this Project are screened through the Company’s supplier procedures, which consist of an assessment of compliance with E&S regulations and the Company’s E&S standards and audits to assess quality, safety and environmental issues. In addition, the Bank screens the suppliers for financial / reputational issues and regulatory compliance. The screening process is considered adequate for this Project. In relations to Performance Standard 2, Absa’s labor and working conditions were found to be in line with the requirements of this Performance Standard.

Refer to the E &S Action Plan tab in the ESRS on the SPI (publishing) site.