IFC as implementing entity of the IDA19 Private Sector Window Blended Finance Facility is expected to provide up to US$3.75 million in the form of a concessional subordinated loan (“blended concessional finance co-investment”). High country and sector specific risks and limited track record for IFC in the country create a mismatch in the risk and return profile that constrain IFC’s participation in the project. Subordination provided by PSW is helping de-risk the project, enabling IFC and the Company to overcome participation constraints and achieve the required long-term financing for the project. Without the de-risking provided by PSW, the project would either be significantly delayed or not move forward. The level of concessionality (i.e., “subsidy”) provided by the blended concessional finance co-investment is estimated to be 5.9% of the total project cost. The total cost of the project is US$20.05 million. 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. Further details and historical information on estimated subsidy levels in IFC’s blended finance portfolio can be found at: www.ifc.org/blended finance. As is the case with all of IFC’s blended concessional finance co-investments, this project has been assessed against the Enhanced Blended Concessional Finance Principles for 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/blended finance.

3.75 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	3.75
Equity

* These investment figures are indicative

The most important project level outcomes are: (i) Economy wide effects: The Project which will support the expansion and modernization of the hotel is expected to have various positive economy-wide effects including: (a) direct job creation/preservation and contribution to GDP during the construction and operation phase of the hotel as well as indirect effects across the supply chains; (b) higher tax revenues for local government; (c) provision of infrastructure supporting the development of the tourism sector; and (d) increase in economic activities through increased international arrivals. These benefits will be important in South Sudan, where unemployment rates, exports are heavily dominated by oil and tourism & travel represent a small share of the GDP; and (ii) Stakeholder impacts: (a) Employees: The Project will also contribute to local skill development. Dembesh Hotel will provide training to all its employees, addressing the skills gap and (b) benefit local suppliers through increased linkages. Beyond the Project, IFC anticipates that the investment will facilitate market creation in terms of: (i) Competitiveness: The Project is anticipated to be the second internationally branded hotel to enter the market, contributing to the development of the country’s business infrastructure; and (ii) Integration: The Project has the potential to promote integration of local suppliers within domestic supply chains. As suppliers receive training and contingent to level of training they receive, they can expand their reach beyond the hotel and start working with other local players.

Financial Additionality: Financing structure: IFC will provide a long-term loan with a grace period, which is not readily available to the Company in South Sudan. The loan will improve the Company’s debt profile and enhance its access to outside complementary capital, thus reducing its vulnerability to domestic financial and banking shocks. Moreover, with the COVID-19 pandemic, funding for large projects is not readily available as local banks become more risk averse. Non-financial Additionality: Knowledge, innovation, and capacity building: IFC’s Guidance based on its expertise in TRP sectors will be valuable input to the Sponsor and the Project. IFC will use its expertise in Food Safety and Green Buildings to: (i) help the Project increase the quality and safety of the available local supply; and (ii) provide best practice assistance in terms of E & S Standards and implementation of the EDGE Green Building tool in a country where energy costs are extremely high. Team will explore potential for advisory engagements during appraisal.

Please refer to the related Environmental and Social Review Summary (ESRS) document for this project.

Please refer to the Environmental and Social Action Plan (ESAP) tab in the related Environmental and Social Review Summary (ESRS) document for this project.