46540 - BOPACTB

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Summary of Investment Information

Project Number

46540

Company Name

ACTB SAVINGS AND LOANS LIMITED

Date SPI Disclosed

Oct 25, 2023

Country

Sierra Leone

Region

Africa

Projected Board Date

Nov 30, 2023

Environmental Category

FI-3 - No Impact

Status

Active

Last Updated Date

Jun 23, 2024

Department

Regional Industry - FIG Africa

Industry

Financial Markets

Previous Events

Approved : Mar 7, 2024
Signed : Mar 21, 2024
Invested : Jun 21, 2024

Sector

Microfinance and Small Business - Non Commercial Banking

Additional Project Attributes

Blended Finance

Project Description

The proposed project is a senior loan of up to US$3 million (in local currency equivalent) to ACTB Savings and Loans Limited (“ACTB” or the “MFI”). The loan will have a tenor of up to 3-years with a grace period of 1-year and will enable ACTB to provide much needed local currency funding to micro, small and medium enterprises (“MSMEs”) that have been negatively affected by the COVID-19 pandemic in Sierra. The project will be processed under IFC’s COVID Base of Pyramid (“BOP”) Facility and will be supported by IDA Private Sector Window (“PSW”) Blended Finance Facility (“BFF”) and IDA-PSW Local Currency Facility (“LCF”).

Associated Advisory Engagement

There will be no advisory service accompanied with the proposed investment.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	3.0
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 Microfinance

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

Development Impact

The project is expected to provide access to finance for MSMEs and SMEs to support economic activity and resilience in the context of a fragile economy. Beyond the project outcome, IFC anticipates that the project will support resilience amongst microfinance and BOP finance providers catalyzing investments in the sector by fostering confidence on the stability of BOP lenders in a context of continuing uncertainty. The project is expected to demonstrate to other investors the viability of supporting the growth of BOP portfolios among financial institution in Sierra Leone and attract longer-term financing for lenders in the market.

- Financial Additionality: Financing structure: IFC will be providing medium-term local currency financing with a 3-year tenor (and a 1-year grace period), of a quantum which is not readily available in the market and has become even more scarce in the aftermath of COVID-19. Long term savings or the capital market is still at its infancy in Sierra Leone – meaning institutions such as ACTB are reliant on equity to grow their loan books. A significant portion of ACTB’s term funding is in the form of small tickets (amounts of less than US$1mn) implying the need for constant fundraising, increasing the operational costs for an MFI operating in Sierra Leone. Furthermore, IFC’s investment will provide comfort to other investors to provide ACTB with larger loans and help provide stability to focus on expanding access to finance for MSMEs. - Non-Financial Additionality: Knowledge, innovation, and capacity building: The financing complements an ongoing advisory relationship which seeks to improve the institutional capability of ACTB in a manner consistent with best market practices. A first IFC project focused on an institutional assessment and provided recommendations to strengthen ACTB’s financial management, business model, information systems, risk management, human resources, and other operational areas. A second engagement is in discussion with ACTB to help the institutional develop its 5-year business plan and is expected to lead to further support to implement core strategic activities.

E&S Category Rationale / Risks and Mitigation

The Project is categorized as FI-3 (low risk) as per IFC's Policy on Environmental and Social Sustainability. The Project entails a senior loan of USD 3 million to support ACTB's on-lending to micro and small enterprises in Sierra Leone. ACTB's portfolio is mainly composed of microenterprises and very small enterprises active in trade and commerce, education, and agriculture with typically low E&S risks. Lending activities to be supported by the Project predominantly have minimal or no adverse environmental or social impacts. IFC's investment will not be used to support any coal-related activities or any higher risk activities that may include: (a) involuntary resettlement; (b) potential 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, ACTB will be required to screen its lending activities against IFC Exclusion List and national E&S laws and regulations. In addition, ACTB will be required to meet the requirements of the national labor laws, IFC's Performance Standard 2 on Labor and Working conditions and Life & Fire safety requirements in its own operations. The main E&S risk of this proposed investment are related to ACTB's capacity to develop and correctly implement a simple environmental and social management system to manage the E&S risks associated with its lending activities. Typical E&S risks associated with the micro and small enterprises could include occupational health and safety, labor & working conditions, pollution, and waste.

Contacts

For Inquiries About the Project, Contact

ACTB Savings & Loans Limited
Mr. David Kamara
Chief Executive Officer
+232-77-980000
dkamara@actb.sl
admin@actb.sl
acalltobusiness.co.uk/sierra-leone

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