The project falls under IFC’s Small Loans Guarantee Program (“SLGP”) which provides a risk sharing instrument to client banks looking to expand SME lending in underserved markets. SLGP is supported by the IDA18 IFC-MIGA Private Sector Window Blended Finance Facility (IDA PSW-BFF), which was created by the Word Bank Group to catalyze private sector investment in IDA countries, with a focus on fragile and conflict-affected states. The IDA PSW BFF support would enable IFC to rapidly roll out a program of risk sharing facilities to reach segments facing serious market failures in IDA countries and provide access to finance to such underserved targeted market segments which IFC could not otherwise serve due to the associated high risk. The concessional support from IDA PSW BFF, will, therefore, enable Standard Chartered Bank to expand lending to SMEs, including WSMEs in Nigeria with inadequate or no collateral or weak cash flow but with potential to grow and realize their business initiatives.

This project benefits from the IDA PSW BFF support and the concessionality embedded in the Program. The level of concessionality (i.e., “subsidy”) to be provided by IDA PSW BFF is estimated to be 4 to 9 percent of the total portfolio of US$800 million, for the whole SLGP. This estimate is based on the present value of the difference between (i) a “reference price” (either a market price if available; the price calculated using IFC's pricing model, which comprises three main elements: risk, cost and profit, or a negotiated price) and (ii) the “concessional price” being charged under the Program.

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 IFC’s blended concessional finance co-investments, this project has been assessed against the Enhanced Blended Concessional Finance Principles for Development Finance Institution (“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/blendedfinance. The SLGP is a platform approach that can be accessed by other financial institutions in Nigeria and other IDA PSW markets.                           

Summary of Client Environmental and Social Management System (ESMS)

The main E&S risks and impacts of the project derive from the Bank's capacity to maintain its management system to identify and manage the potential E&S risks and impacts associated with the sub-projects supported under this transaction. These risks are typically associated with labor and working conditions, occupational health and safety, pollution prevention and atmospheric emissions, waste and wastewater management, among others. Standard Chartered Nigeria (SCN) is a subsidiary of Standard Chartered Group and follows the Group's E&S policies and procedures. The E&S review for the SME segment includes screening against a list of prohibited activities that is in line with IFC Exclusion List, checking that sub-clients have the necessary E&S permits and licenses, legal agreements with E&S clauses, and monitoring on an annual basis. E&S issues are reported to senior management. The Group's E&S policies and procedures are in line with IFC's requirements. SCN is largely aligned with IFC's labor standards under PS2: Labor and Working Conditions, except for the grievance mechanism. As part of the Project, the Bank will be required to: (i) maintain its ESMS procedures; (ii) designate an E&S Officer with primary responsibility in supporting the ESMS implementation within the Bank; (iii) train Bank staff involved in the ESMS implementation; (iv) ensure PS 2 compliance; and (v) submit a periodic report to IFC.