41133 - Co-op Bank III

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Summary of Investment Information

Project Number

41133

Company Name

THE CO-OPERATIVE BANK OF KENYA LIMITED

Date SPI Disclosed

Feb 26, 2018

Country

Kenya

Region

Africa

Projected Board Date

Mar 29, 2018

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Sep 23, 2018

Department

Regional Industry - FIG ME & Africa

Industry

Financial Markets

Previous Events

Approved : Mar 27, 2018
Signed : Mar 29, 2018
Invested : Sep 21, 2018

Sector

Commercial Banking - General

Project Description

The Project comprises of a senior loan of US$150 million to The Co-operative Bank of Kenya Limited (“Co-op” or the “Bank”) to help strengthen the Bank’s long-term funding position and enable it to expand its lending operations to the underserved micro small and medium enterprises (MSMEs) segment in Kenya.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	150.0
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 SME Borrowers

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

Development Impact

1) Project Impact Assessment: i) Stakeholder impact - IFC anticipates that the Project will increase access to finance for underserved MSMEs in Kenya, particularly those operating in the agricultural value chain, manufacturing and trade sectors. ii) Economy-wide effects - By supporting the growth of MSMEs, the Project is expected to help drive economic growth and job creation in the country. 2) Market Impact Assessment: i) Inclusiveness - IFC anticipates that the Project will increase access to financial services for underserved groups, particularly bottom of the pyramid borrowers and microenterprises, through its demonstration and market awareness effect which enhances its potential for replication by the rest of the banking sector.

- Long-term financing: IFC will provide Co-op with long-term financing which is scarce in the market. IFC's investment will allow the Bank to meet its long-term funding needs for on-lending to MSMEs in clearly identified sectors (i.e. agriculture, trade, and manufacturing). - Advisory assistance: The Project is directly aligned with the on-going IFC advisory services engagements with the Bank which aim to increase the Bank's penetration into underserved segments and provide new market benchmarks in reducing cost of delivery to MSMEs and bottom of the pyramid borrowers, reducing turnaround time, and understanding and managing risks better in the context of the informality that characterizes these segments.

E&S Category Rationale / Risks and Mitigation

The project has been categorized as FI-2 in accordance with IFC's Environmental and social Review Procedures. Co-operative Bank Kenya provides financial services and products including retail finance, trade finance, SME lending as well as project/corporate finance to clients in Kenya in a wide range of sectors including: trade and commerce; real estate and construction; utilities; manufacturing; agriculture and financial services. The focus of this project is to support the growth of the Bank's SME portfolio and cooperative societies. The overall portfolio risk is therefore considered medium. The bank's key sectors typically have limited adverse E&S risks and impacts which can be managed through specific mitigation measures. The identified applicable requirements are the IFC Exclusion List, the applicable national social and environmental laws in Kenya and the Performance Standards.

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 required under Performance Standard 1, as well as the bank's labor standards as required under Performance Standard 2. Co-operative Bank is an existing IFC client and the bank currently has a dedicated E&S team as well as an E&S risk management framework for managing the E&S risks and impacts associated with its lending activities, including SME lending. The implementation of this framework is considered adequate. The bank will ensure adequate E&S risk management training is provided to the E&S team. In relation to IFC Performance Standard 2, as an existing client, the bank's labor standards meet the requirements of this Performance Standard.

Contacts

For Inquiries About the Project, Contact

Co-operative Bank of Kenya Limited
Dr. Gideon Muriuki, CBS
Group Managing Director
+254 020 327 6000

P.O. Box 48231 - 00100
https://www.co-opbank.co.ke

For Inquiries and Comments About IFC, Contact

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IFC Communications
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384

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.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

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/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

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.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

Task Title & Description	Anticipated Completion Date
Nominate officers	03/30/2018
Establish SEMS	03/30/2018
Formalize procedures	03/30/2018
Staff Training	03/30/2018

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