46698 - BOP MAIB MSME Loan

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Summary of Investment Information

Project Number

46698

Company Name

Banca Comerciala Moldova-Agroindbank SA

Date SPI Disclosed

Jan 9, 2023

Country

Moldova

Region

Europe

Projected Board Date

Feb 15, 2023

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Oct 6, 2023

Department

CF2S8 - Regional Industry - FIG - ECA/FIG Inv Operations - Europe

Industry

Financial Markets

Previous Events

Approved : Mar 2, 2023
Signed : May 2, 2023
Invested : Oct 4, 2023

Sector

Commercial Banking - General

Additional Project Attributes

Blended Finance

Project Description

The proposed investment consists of a 4-year senior loan of up to $30.8 million for IFC’s own account to be disbursed in EUR and $ to Moldova Agroindbank (MAIB or the Bank) under IFC’s COVID-19 Base of the Pyramid Program (BOP Program). IFC’s loan will be used to increase access to finance for micro, small and medium enterprises (MSMEs) in Moldova with 50% of the proceeds earmarked for on-lending to women-owned MSMEs (WMSMEs).

Proposed investment will be accompanied by a $5 million trade finance facility under IFC’s Global Trade Finance Program (GTFP) to support cross border trade financing for local exporters/importers.

Associated Advisory Engagement

The investment will be complemented by a targeted advisory project with the following main objectives:

i) Capacity building on agriculture lending and climate smart agriculture opportunities/solutions to help MAIB expand its current climate-smart services and products in agriculture;

ii) Supporting in developing and piloting a value proposition towards Ukrainian Forcibly Displaced People (FDP), with a particular focus on women as consumers and entrepreneurs/businesses.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	31.22
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 Woman-Owned SMEs
Straight Senior Loan	Loans to MSME (mix of Micro and SME)
Straight Senior Loan	Loans to Woman-Owned SMEs
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 including WSMEs 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 Base of Pyramid (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 MAIB with a 4-year term financing, not readily available in the market and increasingly scarce since the outbreak of the COVID-19 pandemic. Furthermore, IFC’s engagement will provide comfort to other potential lenders, particularly in this current environment where the pandemic and the war in Ukraine have adversely impacted investor appetite to provide long term financing. IFC will also provide knowledge and capacity building through a proposed advisory project focused on building MAIB’s capacity to build and expand its existing agriculture business as well as develop and pilot the value proposition to Ukrainian FDPs with particular focus on women.

E&S Category Rationale / Risks and Mitigation

The Project has been categorized as FI-2 in accordance with IFC’s Sustainability Policy. The key sectors in MAIB’s MSME loan portfolio are medium/low risk activities including mainly agribusiness, trade, manufacturing, construction. Most of the portfolio to be supported through this Project is expected to have potential limited adverse environmental and social risks or potential impacts that are few in number, generally site specific, largely reversible, and can be readily addressed through mitigation measures. Applicable requirements for this Project will be the IFC Exclusion List and the applicable environmental and social (E&S) national laws and regulations applied to the asset class. The Project will not be used to support any activities on IFC Exclusion List, coal-related activities, and 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 In addition, MAIB will be required to be in line with life & fire safety requirements and the requirements of IFC’s Performance Standard 2 on labor and working condition.

The key E&S risks and impacts of this Project are related to the ability of MAIB to identify and manage potential E&S risks associated with its lending to MSMEs. As a former IFC’s client, MAIB has established and is implementing an environmental and social management system (ESMS) which outlines the E&S policy, procedures, tools, monitoring, reporting and responsibilities for E&S risk management. The E&S staff has been assigned. MAIB will be required to enhance its ESMS in line with IFC’s requirements for this Project, maintain proper internal capacity, providing E&S training to the relevant staff in accordance with a training plan. The ESMS is required to be approved by the Bank’s management and will be implemented to the asset class as per the timeline agreed with the Bank.

Contacts

For Inquiries About the Project, Contact

BC MAIB SA
Macar Stoianov
Deputy Chairman of the Executive Committee

aib@maib.md
Constantin Tanase 9/1, MD-2005, Chisinau, Republic of Moldova
www.maib.md

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Task Title & Description	Anticipated Completion Date
Staff Training	05/16/2023
Enhance the ESMS in line with IFC's requirements	02/15/2023
Develop training plan	02/15/2023
Enhance Grievance procedure	05/16/2023
Submit ESMS implementation records	08/14/2023

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