46504 - CDel SLGP BICICI

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Summary of Investment Information

Project Number

46504

Company Name

BICICI RSF SLGP

Date SPI Disclosed

Mar 1, 2023

Country

Cote D'Ivoire

Region

Africa

Projected Board Date

Mar 31, 2023

Environmental Category

FI-2 - Limited

Status

Pending Approval

Last Updated Date

Mar 1, 2023

Department

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

Industry

Financial Markets

Sector

Commercial Banking - SME Finance

Project Description

The proposed project consists of an unfunded Risk Sharing Facility (the “RSF”) for up to XOF10 billion (or approximately US$16.5 million) committed in two equal tranches to Banque Internationale pour le Commerce et l'Industrie de la Côte d’Ivoire (“BICICI” or “the Bank”) with a maturity of up to 8 years under IFC’s Small Loans Guarantee Program (“SLGP”). The RSF will cover up to 50% of the risk on a portfolio of small and medium enterprise (“SME”) and women-owned/led SME (“WSME”) loans in an amount of up to XOF20 billion (or approximately US$33.0 million) to help scale up the Bank's SME lending in Côte d’Ivoire (the “Project”). The loans will be originated by BICICI, the sixth largest bank in Côte d’Ivoire in terms of gross loans.

Associated Advisory Engagement

The accompanying Advisory Services (“AS”) offering under SLGP includes complementary advisory support organized around two pillars: (a) reporting training to equip BICICI to meet the quarterly and annual reporting requirements under the facilities, and (b) operational implementation support to assist BICICI to integrate the risk mitigation product into its systems and procedures for immediate execution. In addition, a complimentary diagnostic report will be provided to further assist the Bank with a gap analysis and recommendations to improve its SME banking operations. Finally, the AS project will also include WSME-linked recommendations to help the Bank improve its WSME reporting capabilities, products and sales approach.

Sponsor / Cost / Location

The Project, under IFC’s SLGP, is supported by a first loss tranche from the IDA18 IFC-MIGA Private Sector Window’s Blended Finance Facility (“IDA PSW-BFF”) to de-risk and scale up lending to SMEs, in this case with a focus on SMEs and WSMEs in Côte d’Ivoire. IDA PSW-BFF was created by the Word Bank Group to catalyze private sector investment in IDA countries, with a focus on fragile and conflict-affected states.

The level of concessionality (i.e., “subsidy”) to be provided by IDA PSW-BFF is estimated to be 4.9% of the total portfolio of US$800 million for the 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 the Project fully reaches the agreed impact targets, We-Fi is expected to provide up to US$0.186 million (equivalent to 0.56% of the total project cost of US$33.0 million) as a performance-based incentives to support BICICI’s lending to underserved women VSEs/SMEs in Côte d’Ivoire.

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 and 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 Côte d’Ivoire and other IDA PSW markets.

The Project is also expected to be potentially supported by the Women Entrepreneurs Finance Initiative (“We-Fi”) in the form of a performance-based incentive (“PBI”) should BICICI achieve significant growth in lending to women-owned SMEs. 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 the support

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	16.78
Loan
Equity

Development Impact

IFC's expected additionality through this Project is both financial and non-financial. On Financial Additionality, through its financing structure, the IFC's RSF under SLGP, and including with the support of IDA Private Sector Window (“PSW”), will provide a critical tool that will allow the Bank to mitigate the challenges it faces in terms of perceived and real risk in lending to SMEs, by covering up to 50 percent of principal losses on all eligible loans that the Bank extends to this segment. On Non-financial Additionality, there will be a component “Knowledge, innovation, and capacity building” where the Bank will benefit from an integrated AS embedded in the RSF under SLGP which is complimentary for the facility and is intended to help the Bank better utilize the RSF facility.

E&S Category Rationale / Risks and Mitigation

The proposed investment consists of an unfunded RSF on a target portfolio of loans to Small and Medium Enterprises ('SMEs') to be processed under the Small Loan Guarantee Program. The Bank's current SME portfolio includes exposures to sectors such as rubber and plastics, coffee and cocoa, wholesale trade, cashews and other industries and services. As such, the portfolio supported under the RSF is expected to comprise business activities with limited adverse environmental and social risks or impacts that are few in number, generally site-specific, largely reversible and readily addressable through mitigation measures. The Project has been categorized as FI-2, in accordance with IFC's Environmental and Social Sustainability Policy. As part of the project, the Bank will be required to screen eligible SMEs against the IFC Exclusion List and national E&S laws and regulations in Cote d'Ivoire. The Bank is required no to fund Coal and Higher Risk Transactions that may include: a) involuntary resettlement, b) risk of adverse impacts on Indigenous Peoples, c) significant risks to or impacts on environment, community health and safety, biodiversity, cultural heritage, or d) significant Occupational Health and Safety risks. The main E&S risks and impacts of this project relate to the ability of BICICI to identify and manage the potential E&S risks and impacts associated with the lending activities to SMEs, as well as the bank's labor practices. The E&S risks and impacts associated with SME activities are typically low to medium environmental and social risks such as waste management, pollution prevention, labor and working conditions and occupational health and safety, etc.

BICICI is a former client of IFC. BICICI has an E&S management system (ESMS) applicable to the SME for assessing E&S risks and impacts associated with its lending activities, and a designated E&S officer. This ESMS was applicable to the eligible SMEs under the former RSF facility provided by IFC. The ESMS details the internal process steps for E&S risk management, including categorization, E&S due diligence, inclusion of E&S conditions into loan agreements, and monitoring. As part of this project, BICICI will be required to: (i) update and adopt the ESMS and (ii) provide an ESMS implementation report. In relation to labor standards, the Bank has developed HR procedures generally in line with the requirements of IFC Performance Standard 2 on Labor and Working Conditions except for the absence of a formal employee grievance mechanism. The Bank is required to develop a formal internal grievance mechanism.

Contacts

For Inquiries About the Project, Contact

BICICI
Mr. Yao Gérard Kouadio

+225 27 20 24 24 24

Avenue Franchet d'Espérey 01 BP 1298 Abidjan Plateau, Côte d’Ivoire

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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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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.

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Task Title & Description	Anticipated Completion Date
ESMS Implementation report	06/30/2023
Develop a formal internal grievance mechanism	06/30/2023

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