SLGP EC/PSW is supported by: (i) by the EC’s European Fund for Sustainable Development which was launched in 2016 and designed to leverage additional financing by allowing risk-sharing with private investors, international financial institutions and development banks; and (ii) IDA19 IFC-MIGA Private Sector Window (PSW) Blended Finance Facility (BFF), which was created by the Word Bank Group to catalyze private sector investment in IDA and non-IDA countries. The EC and PSW BFF support would enable IFC to rapidly roll out a program of risk sharing facilities to reach segments facing serious market failures in IDA and non-IDA countries and provide access to finance to such underserved targeted market segments which IFC could not otherwise serve due to the associated high risk.

In addition, IFC as implementing entity of We-Fi is expected to provide a subsidy to be structured in the form of a performance-based incentive, to further incentivize the banks to reach underserved women-owned SMEs. We-Fi is a collaborative partnership among 14 governments, six multilateral development banks (MDBs), 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 SMEs around the world.

For SLGP EC/PSW, the level of concessionality (i.e., “subsidy”) provided by the blended concessional finance co-investment is estimated to be up to 9.8% of the total portfolio of €486 million for the entire SLGP EC/PSW. This Project benefits from the EFSD-only portion of the support provided under SLGP EC/PSW and the concessionality embedded in the program. The estimate is based on the difference between (i) a “reference price” (either a market price if available; the price calculated using IFC’s pricing model, which comprises three main elements: risk, cost, and profit; or a negotiated price) and (ii) the “concessional price” being charged by the blended concessional finance co-investment under the program. This level of subsidy is considered the minimal amount of subsidy required based on the expected risk level of the overall portfolio to achieve pricing levels that are viable. SLGP EC/PSW is a platform approach that can be accessed by other financial institutions in the eligible countries. In addition, assuming that the Project receives approval for the PBI from We-Fi and subject to achieving the agreed impact targets, IFC as implementing partner for We-Fi is expected to provide PBI to support OTP Bank and OTP Leasing to increase financing to women-owned SMEs in Ukraine. The We-Fi support is estimated at this early stage to be $0.286 million, which results in an additional estimated subsidy level of 0.44% of this Project’s total cost of €60 million (approximately $65.4 million equivalent)

As is the case with all IFC’s blended concessional finance co-investments, this Project has been assessed against the Enhanced Blended Concessional Finance Principles for DFI Private Sector Operations adopted by IFC and more than 20 other DFIs in 2017. Further information on these Enhanced Principles, IFC’s blended finance approach and governance, and details and historical information on estimated subsidy levels in IFC’s blended finance portfolio can be found at: www.ifc.org/blendedfinance.”