42824 - DCM NSIA ABS

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Summary of Investment Information

Project Number

42824

Company Name

Fonds Commun de Titrisation de Creances NSIA Banque

Date SPI Disclosed

Feb 10, 2020

Country

Cote D'Ivoire

Region

Africa

Projected Board Date

Jan 13, 2020

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Apr 20, 2025

Department

Regional Industry - FIG Africa

Industry

Financial Markets

Previous Events

Approved : Jan 13, 2020
Signed : Feb 6, 2020
Invested : Mar 13, 2020

Sector

Commercial Banking - SME Finance

Additional Project Attributes

Blended Finance

Project Description

The proposed project consists of a securitization of loans originated and serviced by NSIA Banque Cote d’Ivoire (NBCI or the Bank). Under the Project, IFC will purchase up to XOF17.5 billion local currency-denominated asset-backed securities (the “ABS”) to be issued by a Fonds Commun de Titrisation de Créances, a securitization special purpose vehicle (the “SPV”) incorporated in Côte d’Ivoire. The ABS will have a scheduled maturity of up to 5 years and will be placed publicly (Appel public à l’Epargne) and listed on the BRVM, the regional stock exchange. The issuance will be rated, and the proceeds will be used by NBCI for on-lending to small and medium enterprises (SMEs). The Project will be supported by the Local Currency Facility of the IDA18 IFC-MIGA Private Sector Window (IDA PSW LCF), created by the World Bank Group and implemented by IFC, to catalyze private sector investment in IDA countries, with a focus on providing long-term local currency investments in countries where capital markets are not developed and market solutions are not sufficiently available.

In addition, IFC as implementing entity of: (i) IDA PSW LCF would provide up to [US$1.32 million] to mitigate the risk associated with the USD/XOF cross-currency swap, and (ii) the Global SME Facility is expected to provide a performance based incentive of up to 25 basis point of the IFC investment amount in the form of a rebate payment to incentivize the client to expand its on-lending to SMEs in Côte d'Ivoire (the Rebate Incentive). IDA PSW LCF’s support under this Project will enable IFC to provide the long-term local currency financing needed to unlock financing for SMEs by supporting the development of asset backed securities, a new asset class in the WAEMU capital markets, starting with Côte d'Ivoire. In addition, the Rebate Incentive to be provided by the Global SME Facility will incentivize the client to expand its SME lending. In aggregate, the level of concessionality (i.e., “subsidy”) of US$1.78 million to be provided by IDA PSW LFC and the Global SME Facility is estimated to be 2.66% of the Bank’s ABS issuance of US$67 million. In the case of the Global SME Facility, the estimate is based on the assumption that the Project will fully achieve the agreed stretch targets and shall only be paid out upon achievement of such pre-defined targets. Further details and historical information on estimated subsidy levels in IFC’s blended finance portfolio can be found at: www.ifc.org/blendedfinance. As is the case with all of IFC’s blended concessional finance co-investments, this project has been assessed against the Enhanced Blended Concessional Finance Principles for DFI Private Sector Operations adopted by IFC and more than 20 other DFIs in 2017. Further information on these Enhanced Principles and IFC’s blended finance approach and governance can also be found at: www.ifc.org/blended finance”

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	29.95
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

Project Outcome: Increased Access to Finance for SMEs. The Project is expected to increase access to finance for SME as it will help NBCI scale up its lending towards SMEs, which in turn is expected to drive economic growth and job creation. Market Creation: IFC's role as an anchor investor is expected to provide comfort to investors, mostly regional institutional investors, on the new asset class being introduced, not only for the successful completion of the transaction but also for future investment in similar ABS issues. In addition, the successful completion of the ABS issue anchored by IFC is expected to demonstrate that capital markets can be leveraged by commercial banks to raise much needed long-term funding for SME lending.

Financing Structure - Long term local currency: IFC is providing long-term local currency funding to NBCI in a sub-regional context where 5-year local currency financing for private entities is scarce and/or prohibitive. Resource Mobilization: Through its anchor investor role in a public placement issuance, IFC will play a catalytic role in crowding-in other private sector investors, especially as the ABS introduces a new asset class to the market. Knowledge, Innovation and Capacity building: For the proposed ABS issue, IFC brings its global expertise and regional experience in Sub-Saharan Africa to ensure it meets international best practices. IFC will also facilitate discussions between the various stakeholders (the originator, the arranger, the SPV manager, counsels, rating agency, regulatorâ?¦etc.) and add credibility with its independent due diligence.

E&S Category Rationale / Risks and Mitigation

The project has been categorized as FI-2, in accordance to IFC’s Environmental and Social Sustainability Policy. The proposed investment consists of purchasing up to US$30 million in local currency denominated asset-backed securities to be issued in the amount of up to XOF35 billion ($60 million equivalent) by a securitization special purpose vehicle (SPV) in the West African Economic and Monetary Union (“WAEMU”) capital market based on a pool of eligible SME and retail loans originated by NSIA Banque Côte d’Ivoire (NBCI) which will be placed publicly and listed on the regional securities exchange. NBCI’s current SME portfolios is manly exposed to construction/property development, distribution (cement, beverages) and selected agrivalue chain. No SME client in the agriculture sector has exposure to raw material such as cocoa, cotton, cashews. Coal related projects, hydro power plants, and any assets exposed to any unresolved reputational or E&S risks such as (a) involuntary resettlement, (b) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage, or (c) significant occupational health and safety risks will not be eligible for financing. The overall portfolio risks includes a limited number of business activities that have potential limited adverse environmental or social risks or impacts that are few in number, generally site specific, largely reversible, and readily addressed through mitigation measures. For this project, NBCI will be required to screen all SMEs loans against the IFC Exclusion List and the environmental and social laws and regulations of Cote D’Ivoire.

The key E&S risks and impacts derive from the capacity of the bank to identify and manage the potential environmental and social risks associated with its lending activities to the SME sector which typically have low environmental risks (waste management, effluent treatment, air emissions, disposal of hazardous materials, etc.) and social risks primarily related to occupational, health and safety, in particular in the construction business (lack of occupational training, use of personal protective equipment, lack of emergency training, etc). Additional E&S risks and impacts of the project derive from the capacity and systems that are in place to manage these risks, and the Bank’s practices with regards to labor and working conditions. At present NBCI is in the process of rolling out an Environmental and Social Management System (ESMS) which was reviewed and deemed satisfactory by IFC. The bank has also nominated E&S staff responsible for the implementation of the E&S process and provided E&S training. As part of this investment, the bank will be required to apply the ESMS to the entire bank’s SME sector to ensure that all SMEs are compliance with the applicable environmental and social requirements. NBCI’s human resources policies and procedures were found to be overall in line with IFC Performance Standard 2 on Labor and Working Condition

Contacts

For Inquiries About the Project, Contact

NSIA Banque Cote d’Ivoire
Mr. Léonce Yacé
Managing Director

Leonce.yace@groupnsia.com

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