46204 - BOP CRDB TZ-Senior Loans

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Summary of Investment Information

Project Number

46204

Company Name

CRDB BANK PLC

Date SPI Disclosed

Jul 21, 2022

Country

Tanzania

Region

Africa

Projected Board Date

Jun 24, 2022

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Aug 5, 2022

Department

CF3S2 - Regional Industry - FIG Africa/FIG Africa East & South

Industry

Financial Markets

Previous Events

Approved : Jun 24, 2022
Signed : Jun 29, 2022
Invested : Aug 3, 2022

Sector

Commercial Banking - SME Finance

Additional Project Attributes

Blended Finance

Project Description

The proposed investment entails (i) Senior loan facilities of up to US$ 100 million to CRDB Bank PLC (CRDB or the Bank) with a maturity of up to 5 years and; (ii) a Senior loan of up to $5 million with a maturity of up to 3 years to the Bank's subsidiary, CRDB Burundi S.A (CRDB-BI). The proposed investment will support the growth of the Bank's Micro, Small, and Medium Enterprises (MSMEs) and Women-Owned SMEs (WSMEs) portfolio in Tanzania and Burundi. (the Project).

Associated Advisory Engagement

The project will be complemented by advisory support to CRDB to help it grow its SME Banking business in line with its ambitious goals for the segment, in both Tanzania and Burundi. Potential areas of support include improving the Bank’s customer value propositions for SME customers, including women-owned businesses; improving sales force effectiveness (enabling it to build a robust pipeline of SME customers), improving its risk management practices, especially in the area of SME credit; and providing training to CRDB staff responsible for serving SME customers and assessing SME credit. In addition, support would be provided to help CRDB upgrade its Environment & Social systems, processes and skills.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	105.0
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 MSME (mix of Micro and SME)

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

The most significant expected project-level outcome for the project is access to finance for MSMEs to support economic activity and resilience in the aftermath of the COVID-19 crisis. Beyond the project outcome, IFC anticipates that the Project will support resilience amongst microfinance and BOP finance providers catalyzing investments in the sector by demonstrating the viability of lending to BOP providers and crowding in other sources of international and domestic finance in support of these lenders.

The Project will support CRDB TZ with 5-year term financing, not readily available in the market and increasingly scarce since the outbreak of the COVID-19 pandemic. IFC's longer tenor investment of 5 years would help the company increase its long-term funding to manage its assets and liability mismatch and to grow its MSME portfolio and provide stability in the Bank's financing strategy. In addition, IFC will share its knowledge and best practices on SME lending and help CRDB through proposed AS: (i) develop its capacity for a targeted value proposition for SME and WSME segment (ii) enhance its sales techniques and credit analysis, and (iii) help the Bank improve its risk management processes.

E&S Category Rationale / Risks and Mitigation

The project will support the banks MSME portfolio lending in Tanzania, and its subsidiary in Burundi. The Bank's MSME sectors are mainly wholesale/retail trading, hotels, manufacturing; Construction and Real Estate, Crop Production with overall E&S medium risks and, therefore, the project has been categorized as FI-2 in accordance with IFC's 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. For this investment, the client will be required to continue to screen MSMEs loans against the IFC Exclusion List, and Tanzania and Burundi E&S 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 key risks and impacts of the project, is the hinged on the Bank's capacity to maintain its management system to identify and manage the potential environmental and social risks associated with the MSME sub-projects supported under this transaction. These risks are typically associated with occupational health and safety issues, pollution prevention, waste and wastewater management, labor and working conditions issues, and community impacts. CRDB is a repeat client and has an E&S policy and an E&S management system approved by the Board. The Bank has an internal E&S screening procedure, formally incorporated in the credit manual. The bank's E&S client appraisal, using a questionnaire include IFC exclusion list screening, initial categorization based on sector and associated E&S risks. Based on the level of risk, the bank then conducts an internal ESDD through a specific questionnaire, assessing sub-clients against national E&S regulations, sector specific tools for assessing collaterals E&S risks. As part of the credit workflow, legal agreement E&S clauses are inserted. The ESMS has provision for monitoring and reporting. The credit committee receives E&S reporting on a regular basis The E&S procedures are implemented within the risk management and compliance division by an experienced team of five including two dedicated E&S officers. The E&S team provides E&S awareness training to all staff. CRDB is largely aligned with IFC's labor standards under PS2: Labor and Working Conditions. As part of the Project, the Bank will be required to: (i) maintain its ESMS procedures; (ii) remain committed to applying the labor standards established by the IFC Performance Standard; and (iii) submit an annual report to IFC.

Contacts

For Inquiries About the Project, Contact

CRDB Bank PLC
Joseph Maji
Head of Treasury-ALM
+255(0)222197700
joseph.fmaji@crdbbank.co.tz
CRDB Bank Headquarters,Azikiwe Street, Dar Es Salaam, Tanzania
www.crdbbank.co.tz

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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.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

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CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

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.

Shareholder	Ownership
Danida Investment Fund (DIF)	21.0%
Public Services Social Security Fund (PSSSF)	13.3%
National Social Security Fund (NSSF-Uganda)	7.5%
Kimberlite Frontier Master Africa Fund LP RCKM	4.3%
Aunali F. Rajabali and Sajjad F. Rajabali	2.6%
Others- approx. 30,000 Shareholders (All less than 2%)	51.3%
Total	100%

Task Title & Description	Anticipated Completion Date
Staff Training	07/18/2022
ESMS implementation	12/25/2022

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Summary of Investment Information

Project Description

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Sponsor / Cost / Location

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E&S Category Rationale / Risks and Mitigation

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Summary of Investment Information

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Project Sponsor and Major Shareholders of Project Company

Total Project Cost and Amount and Nature of IFC's Investment

Blended Finance

IFC's Investment as Approved by the Board

FIG Use of Proceeds/Beneficiaries

Location of Project and Description of Site

Development Impact

Anticipated Impact Measurement & Monitoring (AIMM) Assessment

IFC's Role and Additionality

E&S Category Rationale / Risks and Mitigation

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Environmental & Social Management System (ESMS)

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