47637 - CRDB TZ Sustainability Bond

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Summary of Investment Information

Project Number

47637

Company Name

CRDB BANK PLC

Date SPI Disclosed

Oct 23, 2023

Country

Tanzania

Region

Africa

Projected Board Date

Aug 3, 2023

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Apr 2, 2024

Department

CF3EA - Regional Industry - FIG Africa/FIG East Africa

Industry

Financial Markets

Previous Events

Approved : Aug 3, 2023
Signed : Oct 2, 2023
Invested : Oct 23, 2023

Sector

Commercial Banking - General

Additional Project Attributes

Blended Finance

Project Description

The Project entails an investment of up to US$60 million in Tanzanian Shillings (“TZS”) equivalent in a senior unsecured Green bond with a tenor of five years (“Green Bond” or “Bond”) by CRDB Bank Plc. (“CRDB” or the “Bank”). CRDB expects to issue a US$300 million multi-currency Medium Term Note (MTN) program in various tranches aimed at financing green, social, and sustainability projects. The project pertains to an investment in the first tranche of up to TZS 40 billion (approximately US$16 million), with a Green Shoe Option of TZS 15 billion (approximately US$6million). This is CRDB’s first Green Bond and the first to be issued in Tanzania. The proceeds will be used to provide access to finance for green transactions and will be in accordance with CRDB’s Green Bond Framework to finance or refinance eligible sub-projects that would contribute to sustainable and inclusive growth in Tanzania. IFC intends to anchor up to 40 percent of the entire program, however, IFC’s own account investment will be limited to no more than US$60 million [or TZS equivalent] in the first tranche.

Associated Advisory Engagement

IFC and CRDB are considering a potential climate finance advisory encompassing technical assistance to the Bank on (i) the definition of eligibility criteria for climate finance, (ii) the identification of eligible bank assets to enhance CRDB’s climate finance pipeline, (iii) performance reporting and GHG savings calculation to meet the reporting and monitoring requirements of the sustainability bonds and (iv) Excellence in Design for Greater Efficiencies (EDGE) certification training for green buildings. In addition, IFC and CRDB are considering potential advisory services on SME Finance and Risk Management.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	60.0
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	Labeled: Green;Blue;Social-Loans/Bonds

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

Development Impact

The Project is anticipated to increase access to climate, affordable housing and MSME/WMSME finance in Tanzania. At the market level, IFC will promote greater market integration by introducing one of the first publicly listed sustainability bonds by the largest Tanzanian bank, thereby introducing an investable asset class to the market to raise medium to longer term funding for eligible assets. This is expected to strengthen Tanzania’s financial sector and help establish its capital markets as a viable tool for channeling private sector financing to support sustainability in Tanzania and the country’s inclusive growth priorities.

IFC’s expected additionality in this Project is both financial and non-financial. Financial additionality is provided through (i) innovative financing structure by the introduction of one of the first Green, Social and Sustainability Bond Programs in Tanzania and one of the first in SSA; (ii) financing structure by providing local currency and longer tenor with the support of IDA PSW; and (iii) resource mobilization. Non-financial additionality includes knowledge, innovation, and capacity building.

E&S Category Rationale / Risks and Mitigation

The Project entails an investment of up to US$60 million in TZS equivalent in CRDB’s maiden Green Bond. Proceeds from the Bond issuance will support eligible activities in the following areas: (i) sustainable agriculture; (ii) sustainable forestry and aquaculture; (iii) renewable energy; (iv) energy efficiency and pollution; prevention and control; (v) green buildings; (vi) sustainable water and wastewater management; (vii) clean transportation; (viii) gender equality; (ix) health and education; (x) microfinance; (xi) food security and sustainable food systems. The Project will not support Excluded Activities, coal-related activities, palm oil except for Roundtable on Sustainable Palm Oil certified oil, mining, hydropower projects with a production capacity of more than 10MW, as well as 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. The main E&S risks of the Project relate to the Bank’s capacity to correctly implement its environmental and social management system to manage the E&S risks associated with the portfolio supported through the Project proceeds. These include occupational health and safety, pollution, waste and wastewater, labor and working conditions issues, among others. Overall, the portfolio E&S risk to be supported by IFC is considered medium and likely to entail medium adverse E&S risks and impacts that are few, generally site-specific, largely reversible and can be readily addressed through mitigation measures. The Project has therefore been categorized as FI-2 according to IFC’s Sustainability Policy. The applicable environmental and social requirements to the portfolio of eligible loans will be the IFC Exclusion List and additional exclusions, host country laws and regulations, and screening against the IFC Performance Standards to identify and exclude higher-risk activities. The IFC Performance Standard 2 on labor and working conditions and Life and Fire Safety requirements are applicable at the Bank level.

In line with the requirements of IFC Performance Standard 1, the Bank has an E&S management system (ESMS) which applies to its whole portfolio. The E&S risk assessment process includes screening potential loans against the Exclusion List, identification of E&S risks and categorization according to E&S risks, an E&S due diligence assessment against the local environmental and social laws and regulation and the IFC Performance Standards where applicable, development of mitigation measures to manage the E&S risks identified, inclusion of E&S clauses in the loan agreements, and monitoring. For this Project, the Bank will be required to: (i) update their ESMS to improve tools used for E&S screening for agricultural activities, include screening for higher risk activities, and to align the CRDB exclusion list with the IFC Exclusion List, and (ii) provide evidence of ESMS implementation. The Bank’s Human Resources policies and practices are in line with the requirements of the IFC Performance Standard 2.

Contacts

For Inquiries About the Project, Contact

CRDB Bank Tanzania
Alex Ngusaru
Director of Treasury and Capital Markets
+255 22 2197700
info@crdbbank.co.tz
Plot No. 25 & 26, Ali Hassan Mwinyi Road and Plot No. 21 Barack Obama Drive, P.O. Box 268, 11101, Dar es Salaam, Tanzania
www.crdbbank.co.tz/en

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Telephone: 202-473-3800
Fax: 202-974-4384

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.

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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.

Task Title & Description	Anticipated Completion Date
Update ESMS	10/15/2023
ESMS implementation	10/14/2024

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