Up to EUR11.7 million equivalent of the proposed IFC loan will be funded by a cross-currency swap with IDA through the IDA PSW LCF. IDA PSW BFF would also be providing a first loss guarantee of up to EUR6.3 million to help de-risk IFC’s investment (“blended concessional finance co-investment”). The project requires long-term financing to provide CM with adequate time for development of their production unit and to ramp up their distribution of medical equipment. However, the high sector and project specific risks lead to a mismatch of risk and return, limiting the project’s ability to secure the required long-term financing. Without the support provided by IDA PSW, the project would not move forward. By supporting the project, IDA PSW would help in reducing the demand-supply gap for medical equipment in the country while also creating jobs and substituting imports for local production.

The level of concessionality (i.e., “subsidy”) provided by the blended concessional finance co-investment is estimated to be 16% of the total project cost. The total cost of the project is €31.16 million. This estimate is based on the difference between (i) a “reference swap rate” and (ii) the “concessional swap rate” received by the IDA PSW LCF. For the BFF portion, 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 IDA PSW first loss guarantee. 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 Development Finance Institution (“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 historical information on estimated subsidy levels in IFC’s blended finance portfolio can also be found at: www.ifc.org/blendedfinance.