46798 - SLGP NBS

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Summary of Investment Information

Project Number

46798

Company Name

NBS SLGP

Date SPI Disclosed

Apr 14, 2023

Country

Samoa

Region

East Asia and the Pacific

Projected Board Date

May 15, 2023

Environmental Category

FI-2 - Limited

Status

Pending Approval

Last Updated Date

Apr 14, 2023

Department

CF4S4 - Regional Industry - FIG Asia & Pac/FIG Inv Ops East Asia & Pacific

Industry

Financial Markets

Sector

Commercial Banking - General

Project Description

The proposed investment consists of an unfunded Risk Sharing Facility (RSF) with a maturity of up to 8 years in an amount of up to US$4 million equivalent in Samoan Tala that may be committed in two equal tranches. The RSF will cover up to 50% of the risk on a portfolio of small and medium enterprises (SME) loans to be originated by National Bank of Samoa (the Bank), including loans to women-owned/led SME (WSME) and SMEs in the agriculture sector, in an amount of up to US$8 million equivalent to help the Bank scale up its relevant lending portfolios in Samoa. The RSF is proposed to be processed under IFC’s Small Loan Guarantee Program (SLGP), which is supported by the IDA18 IFC-MIGA Private Sector Window’s Blended Finance Facility. Proposed investment will be accompanied by a trade finance guarantee facility of up to US$2 million under IFC’s Global Trade Finance Program (GTFP) with tenor of up to 12 months to support cross border trade financing for local exporters/importers.

In addition to the RSF and GTFP components, the investment is under consideration to potentially be supported by the Women Entrepreneurs Finance Initiative (We-Fi) in the form of a performance-based incentive (PBI), should the Bank achieve strong growth in lending to WSMEs. We-Fi is a collaborative partnership among 14 governments, six multilateral development banks 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.

Associated Advisory Engagement

Advisory Services are expected to provide a training to support the Bank for reporting requirements under the facilities, and operational implementation to integrate the risk mitigation product into its systems and procedures. Other Advisory Services may also be considered to strengthen the Bank’s SME banking capacity, including for gender and agriculture finance.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	4.0
Loan
Equity

Development Impact

IFC’s expected additionality 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 de-risking tool that will allow the Bank to mitigate the challenges it faces in terms of perceived and actual risk in lending to SMEs, including WSMEs and SMEs that are part of agriculture value chains in Samoa, by covering up to 50% of principal losses on all eligible loans that the Bank extends to these segments. Non-financial additionality includes (i) Knowledge, innovation, and capacity building through advisory services, and (ii) Standard setting, as the Bank establishes and implements an environmental and social (E&S) risk management system (ESMS).

E&S Category Rationale / Risks and Mitigation

The project entails an unfunded RSF under the Small Loan Guarantee program and GTFP to National Bank of Samoa. The RSF will support the Bank's lending to small and medium enterprises (SMEs) in Samoa. The Bank's SME portfolio is mainly in such sectors as building and construction, agriculture, hotels and professional services. Overall E&S risks and impacts of the project is medium and, therefore, the project has been categorized as FI-2 in accordance with IFC's Sustainability Policy. The project will not be allowed to 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 project, the applicable performance requirements will include the IFC Exclusion List and relevant host country E&S laws and regulations. The key E&S risks and impacts derive from the Bank's capacity to identify and manage the potential E&S risks associated with the SME lending activities. The typical risks and impacts may include site-specific occupational health & safety, labour and working conditions and waste management.

The Bank does not currently have an ESMS. For this project, the Bank will be required as part of the Environmental and Social Action Plan (ESAP) to (i) nominate E&S officer; (ii) develop an E&S management system screening and assessment of SME loans in line with the applicable E&S requirements; and (iii) provide E&S risk management training to Bank officers involved in the E&S management system implementation. The Bank's labor practices are aligned with IFC's Performance Standard 2 requirements. The Bank will be required to formalize its internal grievance mechanism.

Contacts

For Inquiries About the Project, Contact

National Bank of Samoa Limited
Sam Swann
Chief Executive Officer
+685 7702222
sswann@nbsamoa.com
Upolu Level 1 ACC Building, Apia, Samoa
Websitehttps://www.nbsamoa.com/

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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
Nominate E&S Officer	04/15/2023
Develop ESMS	10/31/2023
Staff Training	01/31/2024
Internal grievance mechanism upgrade	07/31/2023

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