48532 - BOP BOA Group

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Summary of Investment Information

Project Number

48532

Company Name

BANK OF AFRICA GROUP SA

Date SPI Disclosed

Dec 22, 2023

Country

Africa Region

Region

Africa

Projected Board Date

Dec 20, 2023

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Aug 2, 2024

Department

Regional Industry - FIG Africa

Industry

Financial Markets

Previous Events

Approved : Dec 22, 2023
Signed : Jun 24, 2021
Invested : Feb 17, 2025

Sector

Commercial Banking - SME Finance

Additional Project Attributes

Blended Finance

Project Description

The proposed project is a multi-currency facility in the aggregate amount of up to US$171.2 million to nine Bank of Africa (“BOA”) affiliates in IDA and FCS countries – namely Bank of Africa Benin, Bank of Africa Burkina Faso, Bank of Africa Cote d’Ivoire, Bank of Africa Kenya, Bank of Africa Mali, Bank of Africa Niger, Bank of Africa Senegal, Bank of Africa Togo, and Bank of Africa Uganda. The facility will support the Group in scaling up its lending to micro, small, and medium enterprises (“MSMEs”) in the context of high interest rates which led to tightening liquidity in the region. For all entities except for BOA Uganda, the Project will be processed under the Base of the Pyramid (“BOP”) program (see the Blended Finance section for more details).

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	156.20
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 SME Borrowers
Straight Senior Loan	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 MSMEs in nine Sub Saharan African markets which are particularly challenging for MSMEs. Beyond the Project, IFC anticipates a potential to promote greater competitiveness in the MSME finance market by demonstrating the commercial viability of lending to MSMEs and Women owned/led small, and medium enterprises. The project will also support MSME finance providers by demonstrating the viability of lending to BOP finance providers and crowding in funding from international investors in a challenging context.

IFC’s additionality is on the financing structure. Medium to long-term financing directed to financial institutions for targeted on-lending to MSMEs is scarce in the target countries. The project will provide a three to five-year tenor loans, with one-year grace period in USD and XOF/EUR. In the current banking environment, the BOA affiliates cannot access similar financing from commercial sources with the same tenor.

E&S Category Rationale / Risks and Mitigation

The Project entails a senior loan across nine BOA subsidiaries to support SMEs. The SME sectors supported by the BOA subsidiaries primarily include trade, services, manufacturing, transportation, and construction. The E&S risks and impacts associated with the supported SME activities are considered limited and readily addressed through mitigation measures. The overall portfolio risk is considered medium. Thus, the Project has been categorized as FI-2 in accordance with IFC’s Sustainability Policy. The Project will not 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 investment, the respective subsidiaries will be required to screen eligible SME loans against the IFC Exclusion List and host country environmental and social laws and regulations. In addition, the subsidiaries will be required to meet Life and Fire Safety requirements and the requirements of IFC’s Performance Standard 2 on Labor and Working Conditions. The key E&S risks and impacts derive from the subsidiaries’ capacity to identify and manage the potential environmental and social risks associated with the SMEs supported under this transaction. These risks are typically associated with occupational health and safety, waste and wastewater management, resource utilization, and labor and working conditions, among others. Eight of the subsidiaries are existing IFC clients whose E&S performance to date is considered satisfactory. The subsidiaries labor practices are generally aligned with IFC Performance Standard 2: Labor and Working Conditions and the life and fire safety protocols are aligned with life and fire safety requirements, with a need for more formal protocols at several of the subsidiaries. The E&S requirement for this project includes enhancing the ESMSs of the subsidiaries and training of relevant staff. BOA Benin will be required to formalize its human resources policies and procedures and life and fire safety protocols. BOA Cote d’Ivoire, Mali, Niger, and Senegal will be required to formalize their life and fire safety protocols.

BOA Group has developed an E&S management system. The subsidiaries supported under the Project have adopted the BOA Group ESMS. The ESMS describes the E&S assessment process steps required in the loan review process to identify, assess, manage, and monitor the E&S risks associated with each transaction. The ESMS requires screening transactions against the BOA Group Exclusion List, national E&S laws and regulations, and the IFC Performance Standards (as applicable). The ESMS details the internal process steps for E&S risk management, including categorization, E&S due diligence, inclusion of E&S conditions into loan agreements, and monitoring. The subsidiaries supported under the project generally have E&S Officers in place to support the implementation of the ESMS. As part of this project, the subsidiaries will be required to enhance the ESMS to incorporate the IFC Exclusion List, develop guidelines to screen out higher risk activities in the SME portfolios, develop an E&S monitoring framework applicable to the SME portfolios, establish E&S risk management training plans for the supported subsidiaries, deliver E&S risk management training to staff at the subsidiaries involved in the ESMS implementation.

Title	Anticipated Completion Date
Enhance ESMS	03/28/2024
Staff Training Plan	03/28/2024
Formalize life and fire safety protocols	06/28/2024
Staff Training	12/28/2024
Develop human resources policies and procedures	06/28/2024

Contacts

For Inquiries About the Project, Contact

BOA Group
Laura TRAN DUC MINH
Head of Investments
00212522585950
ltran@boaholding.com
Lot Mandarona, Lot n° 1, Immeuble Promoffice - 20270 Casablanca.Sidi Maarouf
www.bank-of-africa.net

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