45554 - GTLP ABSA

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Summary of Investment Information

Project Number

45554

Company Name

ABSA GTLP

Date SPI Disclosed

May 28, 2021

Country

South Africa

Region

Africa

Projected Board Date

Jun 11, 2021

Environmental Category

FI-3 - No Impact

Status

Pending Approval

Last Updated Date

Aug 5, 2021

Department

CFGPD - Global Industry, Financial Markets/Trade & Supply Chain, Products

Industry

Financial Markets

Sector

Commercial Banking - Trade and Supply Chain

Project Description

GTLP Absa is a proposed risk sharing facility whereby Absa Bank Ltd (“Absa” or the “Bank”) and IFC would share the risk, on an up to 50:50 basis, in a portfolio of up to US$250 million of trade transactions originated by Absa (maximum up to US$125 million for IFC's own account) (the “Project”). The Project will use the Global Trade Liquidity Program (“GTLP”) platform, an innovative and demonstrated trade finance program launched by IFC in 2009, through which IFC will play a countercyclical role to support trade across Africa as the region responds to and recovers from the COVID-19 crisis.

In addition to the above Project, an uncommitted trade finance guarantee facility of US$50 million under IFC's Global Trade Finance Program (“GTFP”) is proposed (“GTFP Absa” and, collectively, with the Project, the “Projects”).

Associated Advisory Engagement

Sponsor / Cost / Location

Development Impact

IFC will play a countercyclical role to help protect cross-border trade finance linkages that support regional and global trade. By sustaining Absa's ability to provide trade finance services, despite COVID-19 impacts, the Projects are intended to promote the resilience of trade finance connections within Africa and between Africa and global markets. In addition, IFC aims to contribute to the maintenance of financial stability by providing comfort to other market participants that, beyond the Projects, are under pressure to reduce exposure in Africa and other markets during this economic crisis.

IFC's additionality is driven largely by its countercyclical role during crises, especially at a time when other lending institutions or investors' appetite may be subdued. In this instance, IFC's additionality is a combination of: (i) IFC's successful experience with rapid crisis response efforts, especially in the trade finance space; (ii) an extensive network of client banks that support emerging markets' sub borrowers; and (iii) a set of programs aimed at investing both large scale and transactional liquidity and capital for trade finance, working capital finance, and mobilization capacity.

E&S Category Rationale / Risks and Mitigation

IFC’s involvement will support short-term trade finance activities. The E&S risks and impacts associated with these activities are considered low, and the Projects have therefore been classified as FI-3 in accordance with the IFC’s Sustainability Policy. The trade finance activities supported will be required to meet the requirements of the IFC Exclusion List and other exclusions such as coal-related activities. These Projects will not support any activities with significant E&S concerns such as: (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. The Projects will also not support any activities related to coal such as coal mining, coal transportation, coal-fired power plants, or infrastructure services exclusively dedicated to support any of these activities. For the GTLP Absa facility, IFC will have the ability to exclude or suspend from the program any Emerging Market Issuing Banks (“EMIBs”) based on their E&S performances and ability to implement the above. Each trade pool will be supported by underlying documentation with the EMIB. For both the GTLP Absa and GTFP Absa facilities, the agreement with Absa will specify that the underlying traded goods meet the IFC Exclusion List requirements and the other exclusions and will require the Bank to report on implementation. IFC will review the details of the underlying trade transactions to confirm their compliance with the IFC Exclusion List and the other exclusions.

Given the E&S risk nature of this project, development of a robust ESMS was not needed.

Contacts

For Inquiries About the Project, Contact

Absa Bank Limited
Bohani Hlungwane
Managing Principal- Head of Trade and Working Capital Sales
+27 11 89 5699
Bohani.Hlungwane@absa.africa
7th Floor, Absa Towers West, 15 Troye Street, Johannesburg, 2001, PO Box 7735, Johannesburg, 2000 SA
www.absa.africa

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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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