39745 - BCN SME

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Summary of Investment Information

Project Number

39745

Company Name

BANCO CABOVERDIANO DE NEGOCIOS SA

Date SPI Disclosed

Jan 24, 2018

Country

Cabo Verde

Region

Africa

Projected Board Date

Feb 28, 2018

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jul 4, 2024

Department

CF3S6 - Regional Industry - FIG ME & Africa/FIG Inv Ops - Africa

Industry

Financial Markets

Previous Events

Approved : Mar 30, 2018
Signed : Mar 31, 2018
Invested : Nov 6, 2018

Sector

Commercial Banking - General

Additional Project Attributes

Blended Finance

Project Description

The purpose of the above investments is to help BCN increase access to finance to small and medium enterprises (“SMEs”), including women-owned SMEs requiring long term finance, and to help the Bank grow its trade finance business. The proposed investments consist of a 5-year senior loan of up to EUR5.0 million and a Trade Line of up to US$2.0 million.

Associated Advisory Engagement

The project is complemented by Advisory Services that will enable the Bank to better design a Strategy & Business model that will help it scale up its SME lending. Institutional Capacity Building will be achieved through improved corporate governance and enhanced social & environmental management system (“SEMS”).

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	6.11
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 SME Borrowers
Straight Senior Loan	Loans to Woman-Owned SMEs

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

Development Impact

i. Through the project, the Bank is expected to increase access to financial services for underserved SMEs, including women-owned SMEs, a strategic priority for IFC in Africa. ii. By expanding access to funding sources for BCN's clients, the project will facilitate employment opportunities and poverty alleviation. Long Term funding will help BCN manage balance sheet risk and broaden the mix of loan products available to its clients. iii. The project will also assist in deepening the provision of financial services in Cape Verde, by supporting a bank that provides innovative banking services to unbanked or underserved segments.

i. IFC's proposed senior loan provides BCN with access to long-term funding. The loan will help the Bank manage its maturity mismatch and support the growth of SME loan portfolio. Long term funding to SMEs is scarce due to the perceived risk associated with the SME segment. ii. IFC's "stamp-of-approval" would facilitate the Bank's access to scarce long term funding in a challenging macroeconomic environment. iii. The project is complemented by Advisory Services that will enable the Bank to better design a Strategy & Business model that will help it scale up its SME lending. Institutional Capacity Building will be achieved through improved corporate governance and enhanced social & environmental management system ("SEMS").

E&S Category Rationale / Risks and Mitigation

The proposed project consists of a 5-year straight senior loan of up to EUR5.0 million equivalent to US$5.0 million, a Trade Line facility of up to US$2.0 million. The IFC loan under this project will be targeted at SMEs. Overall BCN’s SME portfolio risks are of medium to low nature, concentrated in real estate, tourism, commerce and services sectors and typically related to occupational, health and safety. The project has therefore been categorized as FI-2 according to the IFC's Sustainability Framework. The applicable requirements for this project will include compliance with national laws and exclusion list.

The main E&S risks and impacts related to the Project derive both from the Bank’s capacity to manage SME E&S risks as well as to maintain good practices with regard to labor and working conditions. The Bank has an existing ESMS ensuring compliance of lending provided with the Cape Verde Environment and Social National Laws and Regulations and BCN’s exclusion activities list. As per the proposed project, BCN will be required to enhance its ESMS to include procedures for SME sub-projects, apply the IFC Exclusion List, improve its implementation process through internal capacity building programs and enhance its internal grievance mechanisms.

Contacts

For Inquiries About the Project, Contact

BANCO CABOVERDIANO DE NEGOCIOS
Ana Carvalho Vicente
Director, Finance & International Management
+ 238 9827146
avicente@bcn.cv
Ave. Amilcar Cabral, CP n.º97, Praia
www.bcn.cv

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Task Title & Description	Anticipated Completion Date
Enhance procedures to evaluate SME and apply the IFC Exclusion List	05/15/2018
Implementation of enhanced procedures and capacity building	11/11/2018
Enhance internal grievance mechanism	05/15/2018

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