45510 - FCS RE SCE Senior Loan

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Summary of Investment Information

Project Number

45510

Company Name

SOCIETE CAMEROUNAISE D'EQUIPEMENT S A

Date SPI Disclosed

May 24, 2022

Country

Cameroon

Region

Africa

Projected Board Date

Jun 23, 2022

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Jul 30, 2023

Department

Regional Industry - FIG Africa

Industry

Financial Markets

Previous Events

Approved : Jun 23, 2022
Signed : Jun 30, 2022
Invested : Jul 18, 2023

Sector

Other Non-Banking Financial Institution (NBFI)

Additional Project Attributes

Blended Finance

Project Description

The proposed project consists of a 4-year unsecured senior loan of up to 5.5 billion Central African Franc (“XAF”) or approx. US$8.4 million equiv. comprising up to 1.8 billion XAF (US$2.8 million equiv.) from IFC’s own account and mobilization from other lenders of up to 3.7 billion XAF (US$5.6 million equiv.) to Société Camerounaise d’Equipement (“SCE” or the “Company”), the second independent leasing company in Cameroon by market share for on-lending and leasing services to Small and Medium Enterprises (“SMEs”) (the “Project” or the “Loan”). As per the Company’s strategy, the Project will provide SCE with funding to support SMEs operating in Cameroon’s priority sectors, including construction and public works (38% of the activity) and transport (25%) while growing its agriculture and medical equipment portfolio. The project is expected to be supported by IDA20 IFC-MIGA Private Sector Window Local Currency Facility (“IDA-PSW LCF”) as described in the Blended Finance Section.

SCE is a Non-Bank Financial Institution (NBFI) in Cameroon established in 1963. Through its 12 branches, SCE operates 3 lines of business namely (a) equipment sales to corporates and households, (b) equipment financing in the form of traditional credit and leasing to corporates and households, and (c) money transfer services using established agents such as Express Union, Money Gram, Western Union, and WafaCash. SCE is the second largest specialized NBFI in Cameroon with a market share of 17% and the fifth provider of leasing solutions in Cameroon with a market share of 4.2%.

Associated Advisory Engagement

The proposed investment would be associated with a Risk Management Diagnostic, a corporate governance (CG) advisory program and an environmental and social (E&S) risk governance advisory program to strengthen SCE’s risk management, E&S and CG frameworks.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	3.20
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 is the increase in access to finance for SMEs through the extension of additional leases and loans to SMEs. IFC also anticipates that the Project, together with complementary regulatory and sector capacity-building provided through the Africa Leasing Program launched in April 2021, has the potential to promote greater market competitiveness by aiming to address sector bottlenecks at the policy and industry levels and by enticing more financial institutions to offer leasing solutions to SMEs.

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, to increase access to lease equipment longer term finance. IFC will also mobilize additional funds to complete the financial plan. The non-financial additionality would be from sharing IFC’s global knowledge through advisory services and supporting the adoption of international best practices in terms of risk management, environmental &social (E&S) and corporate governance.

E&S Category Rationale / Risks and Mitigation

The project will support on-lending and leasing to SMEs. The client’s SME sectors are primarily in road transportation of passengers and merchandise, construction and public works, and sylviculture and forestry with overall E&S medium risks. Therefore, the project has been categorized as FI-2 in accordance with IFC’s Sustainability Policy. The Project will not support coal-related activities, forestry activities, or higher risk business activities that may include: a) involuntary resettlement, b) risk of 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 investment, the client will be required to screen leases and loans to SMEs against the IFC Exclusion List and E&S laws and regulations in Cameroon. In addition, the company will be required to meet Life & Fire Safety requirements and the requirements of IFC’s Performance Standard 2 on Labor and Working conditions. The key risks and impacts of the project derive from the client’s capacity to identify and manage potential environmental and social risks associated with its lending and leasing activities to the sub-projects supported under this transaction. These risks are typically associated with occupational health and safety issues, road safety, waste management, labor and working conditions, biodiversity, and community impacts, among others. SCE is 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 company's labor practices in relation to Performance Standard 2 revealed that SCE is largely compliant with IFC's labor requirements but will need to update its human resources policies to include a grievance mechanism and sexual harassment policy. As part of this Project, SCE will be required to: (i) develop an ESMS and implement it for the asset class supported by the Project; (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 with responsibilities in the ESMS implementation, including conducting E&S screening, assessment, and monitoring in line with the applicable E&S requirements; (iv) develop a formal grievance mechanism and sexual harassment procedures; and (v) formalize life and fire safety protocols.

Contacts

For Inquiries About the Project, Contact

Société Camerounaise d’Équipement
Nazarius Effa
Chief Finance Officer
+237 696 20 21 74
n.effa@sce-cameroun.com
Société Camerounaise d'Équipement, BP 178 YDE
Websitehttp://sce-cameroun.com

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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.

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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.

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Task Title & Description	Anticipated Completion Date
Nominate officers	06/22/2022
Establish SEMS	06/29/2022
Staff Training	09/29/2022
E&S training plan	06/22/2022
Development of sexual harassment policy and grievance mechanism procedures	12/29/2022
Formalize life and fire safety protocols	06/29/2022
Evidence of ESMS implementation	12/29/2022

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