45636 - SLGP RSF NSIA Guinee

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Summary of Investment Information

Project Number

45636

Company Name

NSIA Guinee SME RSF

Date SPI Disclosed

Apr 25, 2023

Country

Guinea

Region

Africa

Projected Board Date

Apr 3, 2023

Environmental Category

FI-2 - Limited

Status

Pending Disbursement

Last Updated Date

Apr 25, 2023

Department

CF3S1 - Regional Industry - FIG Africa/FIG Africa Wst & Cen

Industry

Financial Markets

Sector

Commercial Banking - SME Finance

Project Description

IFC’s proposed investment in NSIA Banque Guinée or (“NSIA Guinée” or the “Bank”) will consist of:

SLGP RSF Project # 45636: An unfunded Risk Sharing Facility (“RSF”) in an amount of up to GNF 50 billion (or approximatively US$5 million) to be committed in two equal tranches, that will guarantee up to 50% of a portfolio of small and medium enterprises (“SME”) in an amount of up to GNF100 billion (or approximatively US$10 million), under IFC’s Small Loans Guarantee Program (“SLGP”). IFC’s SLGP program is supported by the IDA18 IFC-MIGA Private Sector Window Blended Finance Facility (IDA PSW-BFF) to de-risk and scale-up lending to SMEs, including women-owned SMEs, in Guinea.

The Project will also be potentially supported by the Women Entrepreneurs Finance Initiative (“We-Fi”) in the form of a performance-based incentive should NSIA Guinea to achieve significant growth in lending to women-owned SMEs (WSMEs). We-Fi is a collaborative partnership among 14 governments, six multilateral development banks (MDBs), and other public and private sector stakeholders, hosted by the World Bank Group. It seeks to address financial and non-financial constraints faced by women-owned small and medium enterprises around the world. IDA PSW BFF and We-Fi’s support would enable IFC to rapidly roll out a program of risk sharing facilities to reach underserved SME segment of the market including women SMEs/VSEs that are otherwise not commercially bankable without this support.

GTFP ATRI NSIA Guinée Project # 42761: A Trade Finance facility of up to EUR5 million for NSIA Banque Guinée with a maturity of up to 1 year. The investment falls under the IFC’s Global Trade Finance Program (“GTFP”) and the African Trade and Supply Chain Finance Program (“ATRI”) with a pooled first loss of 25% from IDA19 PSW BFF to de-risk the investment. The investment will support the Bank trade business and enhance acceptability of Letter of Credits, Guarantees and other trade instruments issued by NSIA Banque Guinée in favor of its Correspondent Banks (CB).

Associated Advisory Engagement

SLGP RSF Project # 45636: The proposed engagement aims to support NSIA Guinée to build its capacity to grow and expand its SME Banking business, while strengthening its risk management practices. IFC ‘s intervention aims to provide support on focus on areas such as market segmentation and product development and end-to-end risk management to be able to serve the SME segment well.

GTFP ATRI NSIA Guinée Project # 42761: The proposed engagement aims to support NSIA Guinée to build its capacity to grow and expand its Trade Finance business, while strengthening its risk management practices through trainings and workshops to reinforce the Bank’s processes.

Sponsor / Cost / Location

SLGP RSF Project # 45636: The IFC Investment consists of an unfunded RSF on a portfolio of SME loans totaling up to GNF100 billion (or approximately US$10 million). IFC’s maximum exposure will be up to GNF50 billion (or approximately US$5 million).

GTFP ATRI NSIA Guinée Project # 42761: The IFC Investment consists of a Global Trade Finance Program of up to EUR5 million with maturity of up to 1 year. IFC’s maximum exposure will be up to EUR5 million.

Blended Finance

The level of concessionality (i.e., “subsidy”) to be provided by IDA PSW BFF is estimated to be up to 6.3 percent of the total portfolio of US$800 million, for the whole SLGP. This project benefits from the SLGP and the concessionality embedded in the Program. 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 by IDA PSW-BFF under SLGP. In addition, assuming that the Project receives approval for the PBI from We-Fi and subject to achieving the agreed impact targets, the Women Entrepreneurs Finance Initiative is expected to provide up to US$0.056 million (equivalent to 0.56% of the total project cost of US$10 million) as a performance-based incentives to support NSIA Guinée’s lending to underserved women SMEs/VSEs in Guinea.

Additionally, IFC as implementing entity of the IDA PSW BFF is expected to support trade finance in PSW eligible countries under the ATRI Program with a pooled first loss guarantee of up to US$225 million from IDA (“blended concessional finance co-investment”). Without the support of blended finance, IFC will be limited in its ability to finance regional and local African banks and other trade clients in IDA PSW countries given the higher risk. The level of concessionality (i.e., “subsidy”) provided for the ATRI program as a whole is estimated to be approximately 6.85% of the total project cost of US$1 billion. This estimate is based on 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 by the blended concessional finance co-investment.

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, IFC’s blended finance approach and governance, and historical information on estimated subsidy levels in IFC’s blended finance portfolio can be found at: www.ifc.org/blendedfinance. The SLGP is a platform approach that can be accessed by other financial institutions in Guinea and other IDA PSW markets. The ATRI Program is also available to existing and new clients and IFC is open to engaging with eligible financial institutions and companies engaged in trade under this initiative.

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	5.0
Loan
Equity

Development Impact

By partnering with the Bank to share underlying SME borrower’s risk, the RSF will support the gradual evolution of the Bank into this segment, including WMSEs based on PBI metrics. The proposed advisory engagement encompasses risk management, corporate governance, and targeted product development, and should complement the investment in embedding SME risk management global best practices for the long term.

Financing Structure: Financial institutions in Guinea are overly cautious about lending to SMEs, due to high perceived risk. The IFC’s RSF under SLGP will provide a critical tool that will allow NSIA Guinée to mitigate the challenge it faces in terms of perceived and real risk in lending to SMEs, by covering up to 50% of principal losses on all eligible loans that the Bank extends to this segment. The RSF will also reduce the capital charge on the portfolio covered by IFC’s guarantee due to its AAA credit rating. This will enhance the Bank’s capital base and improve its capacity to take higher risk associated with increased lending to SMEs. Knowledge, innovation and capacity building: The Bank will benefit from an integrated advisory service embedded in the RSF under SLGP for the facility and is intended to help the Bank better utilize the RSF facility. Specifically, the advisory will incorporate the lessons learned from IFC’s first generation of RSF to better manage the utilization of the RSF and focus on areas such as market segmentation and product development. By partnering with IFC, NSIA Guinée will be able to leverage the breadth and depth of IFC’s industry knowledge to enhance its capacity in financing SMEs. Finally, the advisory project will also include WSMEs-linked recommendations to help the Bank improve its WSME reporting capabilities, products and sales approach. Over the years, this onboarding advisory project has proven to greatly enhance readiness to effectively maximize the use of the IFC’s RSFs with SLGP clients. Standard setting (E&S): The Bank will put in place an E&S risk management system embedded in the group’s credit underwriting policies and procedures. IFC expects that eligible SME loans under the proposed project, and potentially all new loans will be screened against an IFC vetted E&S risk management framework. To that effect, dedicated human resources will be designated and trained on the IFC E&S performance standards.

E&S Category Rationale / Risks and Mitigation

The proposed investment consists of a risk sharing facility for NSIA Guinea, a subsidiary of NSIA Group, on a portfolio of eligible Small and Medium Enterprises (SMEs) loans. NSIA's current SME portfolio sectors are mainly active in trade, real estate and construction, transport, and services sectors, with overall medium E&S risks. The Project has been categorized as FI-2, in accordance with IFC's Environmental and Social Sustainability Policy. The Project will not support coal-related 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. The key E&S risks and impacts derive from the capacity of NSIA Guinee to identify and manage the potential environmental and social risks associated with its lending activities to its SME clients. These risks typically include occupational health and safety, pollution prevention, waste and wastewater management, labor and working conditions issues, biodiversity, and community impacts, among others. The Bank's HR policies and practices are largely in line with IFC's Performance Standards 2 on Labor and Working conditions with the exception of the lack of a formal employee grievance mechanism. For this project, NSIA Guinea will be required to screen the eligible loans against the IFC Exclusion List and local environmental and social laws and regulations. In addition, the Bank will be required to meet Life & Fire safety requirements and the requirements of IFC's Performance Standard 2 on Labor and Working conditions.

The Bank does not currently have designated E&S capacity or an E&S management system that covers the E&S risks and impacts related to its lending activities. For this Project, the Bank will be required to assign an E&S officer, establish and implement E&S policies and procedures, entailing reviewing eligible SME transactions against the relevant applicable requirements, provide E&S risk management training to bank staff implicated in the ESMS, and establish a formal employee grievance mechanism. A satisfactory ESMS will be a condition to IFC's commitment while evidence of ESMS compliance will be a condition to IFC meeting a payment demand by the Bank.

Contacts

For Inquiries About the Project, Contact

NSIA Banque Guinée
Christelle Zongo Dieng
Managing Director
+224 628 683 611
christelle.zongo@nsiabanque.com
Immeuble NSIA, Avenue de la République, Kaloum, Conakry
www.groupensia.com

For Inquiries and Comments About IFC, Contact

General IFC Inquiries
IFC Communications
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384

Local Access of Project Documentation

NSIA Banque Guinée

Max Ange Didier Djecketh

Deputy Managing Director

didier.djecketh@nsiabanque.com

Immeuble NSIA, Avenue de la République, Kaloum, Conakry

www.groupensia.com

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.

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	04/30/2023
Establish SEMS	04/30/2023
Staff Training	05/31/2023
Update HR policies and procedures	05/31/2023
Submit ESMS implementation evidence	05/31/2023

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