47911 - ETI Investement II

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Summary of Investment Information

Project Number

47911

Company Name

ECOBANK TRANSNATIONAL INCORPORATED

Date SPI Disclosed

Feb 28, 2024

Country

Africa Region

Region

Africa

Projected Board Date

Apr 15, 2024

Environmental Category

FI-2 - Limited

Status

Pending Signing

Last Updated Date

May 30, 2024

Department

Regional Industry - FIG Africa

Industry

Financial Markets

Previous Events

Approved : May 20, 2024

Sector

Commercial Banking - SME Finance

Additional Project Attributes

Blended Finance

Project Description

The proposed project is a multi-currency financing facility in the aggregate amount of up to US$345 million to eight affiliates of Ecobank Transatlantic Incorporated (“ETI” or the “Group”), consisting of multi-country risk sharing facilities (“RSF”) and loan facilities to scale-up lending to small and medium enterprises (“SMEs”), including women-owned SMEs (“WSMEs”). Countries considered – namely Burkina Faso, Cameroon, Côte d’Ivoire, Ghana, Senegal, Togo, Malawi, and Mali – are subjected to considerate SME and WSME finance gaps and challenging macroeconomic conditions characterized by high interest rates and tightening liquidity. The proposed project is expected to be processed under existing IFC programs, including the Small Loan Guarantee Program (“SLGP”) as well as trade facilities under the Global Trade Finance Program (“GTFP”) under the Africa Trade Recovery Initiative (“ATRI”) umbrella.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	120.0
Loan	200.0
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
Guarantee	Loans to SME Borrowers
Straight Senior Loan	Loans to SME Borrowers
Guarantee	Loans to SME Borrowers

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

Development Impact

The most significant expected Project-level outcome is the expansion of access to finance for and enhanced affordability of lending to SMEs and WMSEs in eight Sub-Saharan African markets where access to finance remains challenging for SMEs/WSMEs and leaves them largely underserved. Beyond the Project, IFC anticipates a potential to promote greater competitiveness in the SME-finance market by demonstrating the commercial viability of SME/WSME-focused business models in challenging markets subject to macroeconomic and political challenges.

IFC’s expected additionality in this Project is both financial and non-financial. Financial Additionality is provided through a financing structure where IFC will provide: (i) senior loans and risk-sharing facility (“RSF”) envelopes that will cover 50 percent of the SME portfolio risk taken by ETI subsidiaries; and (ii) trade finance facilities under IFC’s Global Trade Finance Program. Non-financial additionality will be provided through an advisory program aimed at strengthening the lending capabilities to the SME/WSME market across selected ETI subsidiaries.

E&S Category Rationale / Risks and Mitigation

The Project consists of a multi-country SME risk sharing facility (“RSF”) to be spread across several affiliates of ETI Group (“Participating Affiliates” or “PAs”), SME loans to be deployed selectively to solid and performing PAs of the Group, and a GTFP line to the same entities. The SME portfolios include exposure to sectors such as wholesale & retail trade, manufacturing, construction, services, agriculture, petrol distribution, telecom, non-banking financial institutions, and education. The Project entails limited adverse E&S risks and impacts that are few in number, generally site-specific, largely reversible and readily addressed though mitigation measures. The overall portfolio risk is thus considered medium, therefore the Project has been categorized as FI-2 in accordance with IFC’s Sustainability Policy. The main E&S risks and impacts of this Project relate to the ability of PAs to conduct adequate E&S due diligence and monitoring to identify and manage the E&S risks associated with the financed activities in line with IFC’s E&S requirements. These risks are typically associated with labor and working conditions, occupational health and safety, supply chain, gender-based violence and harassment (GBVH), pollution prevention and atmospheric emissions, or waste and wastewater management, amongst others. The Group was an IFC partner with satisfactory E&S performance. A review of labor and working conditions and life and fire safety showed that PAs act in line with IFC’s requirements. For this Project, PAs will be required to enhance the ESMS, train staff on E&S, and report annually to IFC. The Project will not be used to support higher-risk transactions 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. In addition, investments involving coal mining, coal-related activities, upstream oil and gas, and mining activities will be excluded from the SME portfolios. The applicable E&S requirements for SME will be the IFC Exclusion List and the national E&S laws and regulations of those countries in which PAs are located. Additionally, PAs will be required to continue implementing IFC Performance Standard 2 on Labor and Working Conditions and Life and Fire Safety requirements for financial intermediaries.

ETI has established an E&S governance structure and developed an ESMS that describes the process of identifying, assessing, and managing E&S risks associated with the financing activities. The ESMS includes categorization, E&S due diligence and monitoring procedures, E&S action plan and contract clauses. The scope of the ESMS applies to SMEs and corporates, and the applicable requirements for SMEs are exclusion list and host country E&S laws and regulations. As part of the Project, ETI will be required to better describe the integration of E&S risk assessment into the credit process. In addition, ETI will further enhance the ESDD process to better address risks related to agri supply chain and GBVH risks related to the education sector. Finally, ETI will train relevant staff on the updated procedures.

Title	Anticipated Completion Date
Implementation Report	11/30/2024
Enhance ESMS	06/30/2024
Staff training	08/30/2024

Contacts

For Inquiries About the Project, Contact

Ecobank Transnational Incorporated
Sebastian Ashong-Katai
Group Head, Financial Institutions & International Organizations
+27 844012855
Sashong-katai@ecobank.com
Headquarters, Ecobank Transnational Incorporated 2365, Boulevard du Mono B.P. 3261, Lomé, Togo
http://ecobank.com

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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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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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