44183 - BOP La Regionale

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Summary of Investment Information

Project Number

44183

Company Name

LA REGIONALE SA

Date SPI Disclosed

Nov 19, 2022

Country

Cameroon

Region

Africa

Projected Board Date

Dec 20, 2022

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Dec 26, 2024

Department

Regional Industry - FIG Africa

Industry

Financial Markets

Previous Events

Approved : Apr 3, 2023
Signed : Jun 2, 2023
Invested : Dec 24, 2024

Sector

Microfinance and Small Business - Non Commercial Banking

Additional Project Attributes

Blended Finance

Project Description

The proposed project (the “Project”) consists of an unsecured senior loan of up to XAF3 billion (“Central African Franc”) or approximately US$4.6 million equivalent to La Régionale (the “Company” or the “MFI”). The Project will provide local currency funding to support the microfinance institution (“MFI”) in increasing its lending capacity to the retail segment, including Micro, Small and Medium Enterprises (“MSMEs”) in Cameroon. The project will be processed under IFC’s COVID Base of Pyramid (“BOP”) Facility and will be supported by IDA-PSW Blended Finance Facility (“IDA PSW-BFF”) and IDA-PSW Local Currency Facility (“IDA PSW-LCF”).

Associated Advisory Engagement

Concurrently with the senior loan, IFC’s integrated investment and advisory support to La Régionale will help enhance its risk management framework, advance digital transformation strategy and design new products to support MSMEs more efficiently with a focus on agribusiness.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	4.97
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

The most significant expected project-level outcome for the project is access to finance for SMEs to support economic activity and resilience in the aftermath of the COVID-19 crisis. Beyond the project outcome, IFC anticipates that the Project will support resilience amongst base-of-pyramid (BoP) finance providers demonstrating the viability of lending to BoP providers and crowding in other sources of international and domestic finance in support of these lenders.

The overall CG risk is deemed Low/Medium to IFC. La Régionale adheres to the regulator’s CG requirements and operates within a defined governance framework and set of policies and procedures. The Company could benefit from improving its CG practices, especially in light of majority shareholder also being both CEO and board member: this would include, by way of example, (1) no presence of the executive team in the 3 'regulatory' Board committees, (2) more independent directors, and (3) a succession plan to address the existing keyman risk. Consideration could also be given to engaging CG Advisory at the appropriate time.

IFC's role in the Project generates both financial and non-financial additionality. The financial additionality will come from IFC providing longer term financing at a rate and tenor that are not readily available in the market and increasingly scarce since the outbreak of the COVID-19 pandemic. The non-financial additionality would be from sharing IFC's global knowledge, innovation and capacity building through an advisory project seeking to strengthen La Regionale's risk management, advance digital transformation strategy and design new products to support MSMEs more efficiently with a focus on agribusiness.

E&S Category Rationale / Risks and Mitigation

The project will support on-lending to individuals and MSMEs in Cameroon. The MSME portfolio includes exposure to sectors such agriculture, manufacturing (craft activities), services and trade amongst others, with overall medium environmental and social (E&S) risks. Therefore, the project has been categorized as FI-2 in accordance with IFC's Sustainability Policy. The key risks and impacts of the project derive from La Regionale capacity to identify and manage potential E&S risks associated with its lending activities. These risks are typically associated with labor and working conditions, occupational health and safety, pollution prevention and atmospheric emissions, and waste and wastewater management, amongst others.

IFC will periodically disclose the names, locations and sectors for Category A sub-projects that have been supported by IFC investments through financial intermediaries, subject to regulatory constraints and market sensitivities. The sub-project(s) listed below reflect(s) the status of the portfolio as of July 1, 2020.

The project will not support coal-related activities and 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.

La Regionale has developed a Credit Policy that addresses activities/sectors deemed risky for the Bank that should be excluded from its funding scope, a few of which overlap with the IFC Exclusion List. As a first time IFC client and has yet to develop an environmental and social management system (ESMS) for assessing and managing E&S risks and impacts. An assessment of the Bank's labor practices in relation to Performance Standard 2 revealed that La Regionale largely meets IFC's labor requirements, though as part of this project it will strengthen its internal grievance mechanism and update its life and fire safety protocols. As part of this Project, La Regionale will also: (i) develop and implement an ESMS; (ii) designate an E&S Officer responsible for the ESMS implementation and maintain appropriate capacity to implement the ESMS; (iii) provide E&S risk management training to relevant company staff;. IFC's investment will not be used to support any coal-related activities or any 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. For this project, IFC's applicable requirements for MSMEs will be the IFC Exclusion List and E&S laws in Cameroon. La Regionale will be required to meet labor and working conditions in line with IFC Performance Standard 2 and IFC's Life and Fire Safety Standards for FIs.

Contacts

For Inquiries About the Project, Contact

La Régionale de l’Epargne et de Crédit
Henri Blaise Tiam
Director
+237 675 92 03 88
blaisetiam@gmail.com
Rond-Point Nlongkak, Yaounde, Cameroon
www.laregionalesa.com

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IFC Communications
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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	12/31/2022
Staff Training	04/10/2023
Develop ESMS and training plan	01/10/2023
Update employee grievance mechanism and formalize life and fire safety protocols	04/10/2023

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