42435 - NBI SME Loan

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Summary of Investment Information

Project Number

42435

Company Name

NATIONAL BANK OF IRAQ

Date SPI Disclosed

Feb 26, 2020

Country

Iraq

Region

Middle East

Projected Board Date

May 21, 2020

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Aug 5, 2023

Department

Regional Industry FIG MCT

Industry

Financial Markets

Previous Events

Approved : May 29, 2020
Signed : Jun 29, 2020
Invested : Dec 16, 2020

Sector

Commercial Banking - General

Additional Project Attributes

Blended Finance

Project Description

The proposed project (the Project) involves an aggregate IFC’s investment amount of up to US$20 million to National Bank of Iraq (NBI) in the form of: (i) a senior loan of up to US$10 million with maturity of up to 5 years; and (ii) a senior loan of up to US$10 million with a maturity of up to 3 years. An interest rate buy-down from the Global Small and Medium Enterprises Financing Initiative (“GSMEF”) will complement the investment package to help address a key market barrier of access to finance for small and medium enterprises (“SMEs”) in Iraq. The Project also includes an Advisory Services (AS) component to support NBI's expansion into the underserved SMEs segment in the country – the main drivers of job creation. IFC’s AS/IS comprehensive proposal aims to help increase the financial inclusion of the SME segment, provide capacity building, improve the product offering and strengthen NBI’s lending operations.

Associated Advisory Engagement

IFC has proposed an Advisory Services package that is designed to set the foundations for sustainable SME Banking operations. The support will include establishing a clear segmentation criteria to improve needs analysis and risk assessment, developing of tailored SME products, strengthening the end to end credit management process, introducing an application scorecard and carrying out a digital financial services assessment to identify areas to improve efficiency in serving the SME and Retail segment.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	22.29
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 SME Borrowers

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

Development Impact

E&S Category Rationale / Risks and Mitigation

The proposed Project consist of a senior loan and a Working Capital Solutions (WCS) to NBI to support SME segment growth. NBI’s SME portfolio includes mostly schools, restaurants, small industries (Fast-moving consumer goods), trade, and utilities. The E&S risks and impacts associated with the activities of SMEs are considered limited, largely reversible and can be addressed through mitigation measures. As such, the project portfolio is considered medium risk and this project is classified as Category FI-2 project according to IFC's Environmental and Social Policy. For this project NBI will be required to screen the SME transactions against the IFC Exclusion List, host country laws and regulations. In addition, the Bank will comply with the requirements of IFC's PS2 on Labor and Working conditions. Given the use of proceeds, this project is not expected to support higher-risk transactions 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, transactions involving coal mining, coal-related activities, upstream oil and gas activities and certain activities will be excluded from the project portfolio.

The main E&S issues of this investment relate to NBI’s capacity to manage environmental and social risks associated with its lending activities in line with Performance Standard 1 as well as, risks associated with the Bank’s practices regarding labor and working conditions in line with the requirements of Performance Standard 2. NBI does not have an Environmental and Social Management System (ESMS) in place and no designated environmental and social officer. NBI will be required to establish an ESMS to screen loans against the applicable requirements and designate staff members responsible for E&S issues and provide them with the necessary training for implementation of the ESMS. In relation to IFC Performance Standard 2, the bank’s labor standards mostly meet the requirements of this Performance Standard; minor amendments are required to meet the requirements of this Performance Standard.

Contacts

For Inquiries About the Project, Contact

National Bank of Iraq
Mr. Ayman Abu Dhaim
CEO
+964-7807777444
ayman.abudhaim@nbirq.com
Building – 66 Sadoon St., near Al- Ferdous Square
www.nbirq.com

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Fax: 202-974-4384

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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.

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	03/31/2020
Establish SEMS	04/08/2020
Staff Training	07/07/2020
Develop Staff Training plan	04/08/2020
Revise HR policies and Procedure in line with PS2	04/08/2020

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