PROJECT

Projects

Summary of Proposed Investment

Project Number

20173

Company Name

Enterprise Bank of Angola

Date SPI Disclosed

Jan 22, 2003

Country

Angola

Industry

Financial Markets

Projected Board Date

Feb 27, 2003

Status

Completed

Sector

Commercial Banking - Microfinance and Small Business

Department

Regional Industry - FIG Africa

Environmental Category

FI-1 - Significant

Previous Events

Approved : Mar 13, 2003
Signed : Jan 15, 2004
Invested : Feb 9, 2004

Project Description



EBA will be a new, target group oriented bank with the objective of providing, on a country-wide, financial services basis that are specifically tailored to the needs of client groups at the lower end of the market. In its business operations, the bank will focus on credit extension to private micro and small enterprises and on savings mobilisation from these enterprises, salaried workers, private individuals and the general public. EBA will have two main groups of products: instalment loans and other banking services, including current and savings accounts (in Kwanzas and in USD) and national and international payment services. EBA will provide loans of between $100 and $50,000, to finance fixed assets and working capital of micro enterprises and small businesses.

IFC is a leader in Microfinance: IFC''s experience over a range of microfinance projects has shown that establishment of a specialized financial institution dedicated to microfinance provides a focused and efficient means of reaching the SME target group. Due to the small size of typical microfinance banks, streamlined credit evaluation procedures and appropriately tailored MIS and micro-loan monitoring technologies can be put in place quickly. High efficiency levels for SME lending are therefore achieved in a relatively short timeframe. EBA will draw on these and other lessons from IFC’s experience with building financial institutions and emerging best practice in microfinance institutions.



The proposed investment in EBA is expected to be strongly developmental -- in terms of its economic impacts, stimulus for business reconstruction, employment generation, confidence-building in the banking sector, and introduction of commercially-oriented microfinance techniques to Angola.

In addition to poverty alleviation and related impacts within the SME target group, IFC''s involvement in EBA is expected to yield a number of important demonstration effects. First, establishment of EBA will provide for a best-practice financial institution with sound operating policies, transparent financial reporting, environmental screening procedures and a clear governance structure. Over time, IFC’s involvement in EBA is expected, to lead to the replication of commercially-oriented MFIs in the market and downscaling by Angola’s existing commercial bank operations to serve SMEs. Third, technical assistance provided to EBA is expected to generate spill-over benefits in the form of trained managers and employees available to other Angolan financial institutions. Lastly, EBA will contribute to mobilizing SME savings in due course, although this will not be its initial focus.

Sponsor / Cost / Location

Development Impact