49300 - CAF MSMEFacility

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Summary of Investment Information

Project Number

49300

Company Name

SME RESILIENCE RECOVERY FACILITY

Date SPI Disclosed

Dec 7, 2023

Country

Western Africa Region

Region

Africa

Projected Board Date

Dec 22, 2023

Environmental Category

FI-2 - Limited

Status

Pending Signing

Last Updated Date

Dec 6, 2024

Department

CFGFI - Global Industry, Financial Markets/Financial Inclusion - FIG

Industry

Financial Markets

Previous Events

Approved : Dec 21, 2023

Sector

Microfinance and Small Business - Non Commercial Banking

Additional Project Attributes

Blended Finance

Project Description

The proposed Project is a financing envelope of up to US$85 million for IFC’s own account to eligible partner financial institutions (FIs) in Ghana and Cote D’Ivoire, that may include, Republic Bank Ghana Limited and Fidelity Bank (together Ghana Banks), NSIA Banque CI, and Bridge Bank Group CI (together Ivorian Banks) to support lending to micro, small and medium enterprise (“MSME”) operating in the country. IFC will provide medium-long term financing with a tenor of up to 2-years and renewable for additional 2 years for up to 4years to the eligible clients to support working capital and long-term financing needs of MSMEs, including women-owned SMEs.

The projects will be supported by a pooled first loss guarantee of up to US$21.25 million provided by International Development Agency IDA Private Sector Window Blended Finance Facility (IDA-PSW BFF).

Sponsor / Cost / Location

The eligible FIs may include:

Formerly known as HFC Bank Ghana Limited, Republic Bank was incorporated as a PLC in 1990. It is the first mortgage institution in Ghana, issued with universal banking license in 2003. It is the largest home loan provider in Ghana, while ranking16th in share of industry deposits (2.5%); 12th in share of industry loans (3.3%) as of Dec 22. Republic Bank is listed on the Ghana Stock Exchange and its majority shareholder, Republic Financial Holdings Limited (RFHL) is a large banking group in Trinidad and Tobago with access to both debt and capital markets to support the bank when needed. The Bank’s main shareholders are Republic Financial Holdings Ltd (“RFHL”) (66.50%), Social Security and National Insurance Trust (“SSNIT”) (25.87%), Ghana Union Assurance Company (4.97%) and Ghana International Bank (1.08%).

Fidelity Bank was established in 1998 as a discount house and later obtained a Universal Banking license in 2006. As at September 2023, it is the 5th largest bank in Ghana in terms of Total Assets, 6th bank in the market in terms of loans (4.84%) and 5th in terms of deposits (6.27%). Fidelity Ghana is owned by a mix of Ghanaian and foreign individuals and institutional investors; Africa Capital LLC owns shareholding 37.01% in the Bank, AfricInvest 4.5 LLC owns 16.94%, Social Security and National Insurance Trust owns 9.5%, Amethis Finance Netherlands B.V. owns 8.47%, ERES Invest Cooperative U.A. owns 8.47%, SIC Life Company Limited owns 4.22%, ENO International owns 3.03%, and the remaining 12.35% is owned by other investors holding less than 2% individually.

NSIA Banque CI is a universal bank offering financial services to corporate, SME and retail clients. It is listed on the BRVM, the West African regional stock exchange based in Abidjan, Côte d’Ivoire. The Bank belongs to the NSIA Group, a leading regional financial services provider founded in 1995, with footprint in 12 countries across West and Central Africa. Insurance and banking are the core business lines of the Group and account for over 95% of its revenue.

BBGCI is a second tier Bank in Côte d’Ivoire (10th largest Bank in Côte d’Ivoire out of 28 Banks in terms of loans with a market share of 4% and 11th bank in terms of assets). The bank was established in 2004 and started operations in 2006 focusing on the Corporate and SME segments and expanded in 2011 to the Retail, Professionals and VSEs segments. The bank offers various financial services and products to its clients via its 14 branches mainly located in Abidjan. It serves approximately 14,000 clients, 3,541 of which are Corporate and SMEs.

BBGCI’s largest shareholders are Bridge Group West Africa (77.2%), a financial holding company, Caisse Nationale de Prévoyance Sociale (20%), the social security trust of Côte d'Ivoire, and the Senegalese businessman Mr Oumar Sow (2.8%).

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	106.25
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

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

Development Impact

Project Outcome: The primary development impact claim will relate to providing SMEs with access to finance by helping clients grow their portfolio despite some sectoral headwinds. While IFC is supporting several of the clients in the facility with SME RSFs, liquidity support is expected to help maintain the client’s SME growth strategies. Both Ghana and Cote d’Ivoire face large SME finance gaps. Contribution to Market Creation Competitiveness/Resilience: These projects represent a continuation of a significant pipeline of SME projects with FIs in Ghana and Cote d’Ivoire, aimed at collectively scaling lending to SMEs. The banking sector assets in both markets remain heavily skewed towards government securities and, within the private sector, on select large corporates. The relatively high yield on these traditionally safer assets has meant risk appetite for SME finance has remained low, and potentially distorted the SME finance market. IFC’s liquidity support is expected to serve as demonstration on the viability of continued SME lending in the face of macroeconomic uncertainty, as well as be a comfort to other potential lenders to FIs.

E&S Category Rationale / Risks and Mitigation

This Program will support MSMEs through a pre-identified set of banks in select IDA countries. The E&S risks of these activities are typically considered low to medium, although contextual risks present in those countries and poor E&S management can increase the E&S risk. Higher risk transactions will not be eligible and additional sector restrictions may be applicable – the program is therefore categorized as FI-2. The pre-identified clients are either existing clients or former clients with recent IFC projects. IFC will categorize, appraise, and supervise each underlying project individually, consistent with IFC’s existing E&S policies and procedures. This will include review against the applicable IFC Performance Standards, which for financial institutions normally consist of PS1 and PS2, disclosure, and approval.

At appraisal, prior to each individual client’s approval, IFC will review if their ESMS is sufficient to manage the E&S risks associated with the asset class to be supported. Where the need for ESMS improvements is identified, IFC will require corrective actions, as necessary. Applicable E&S requirements for each Project will be IFC’s Exclusion List, national E&S laws, and regulations. Additional E&S requirements may be required depending on the E&S risks identified. IFC will also monitor the ongoing E&S performance of each underlying project by reviewing periodic reports provided by the client, as well as by conducting follow-up supervision visits as needed.

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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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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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Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

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.

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