24498 - BNI-Leasing

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Summary of Proposed Investment

Project Number

24498

Company Name

BNI MADAGASCAR SA

Date SPI Disclosed

Feb 7, 2006

Country

Madagascar

Industry

Financial Markets

Projected Board Date

Mar 10, 2006

Status

Completed

Sector

Leasing Services

Department

Global Industry, Financial Markets

Environmental Category

FI-2 - Limited

Previous Events

Approved : Mar 6, 2007
Signed : Mar 8, 2007
Invested : Jul 11, 2007

Project Description

The proposed transaction consists of an equity investment of up to Euro 80,000 ($100,000 equivalent) for a 20% stake in BNI-Leasing, a private sector leasing company in Madagascar, which IFC will help establish. The company is being sponsored by BNI-Credit Lyonnais Madagascar, the largest commercial bank in the country in terms of total assets, will be considered a subsidiary of BNI-CLM and is expected to be capitalized at approx. Euro 400,000. It will also be one of only two leasing companies in the country and will cater to both corporate and SMEs operating in the private sector.

The project will address the country’s growing demand for long-term equipment financing in the tourism, construction, transportation, textile and fishery sectors. This proposed project would be considered part of IFC’s participation in the IDA-IFC MSME project for Madagascar, which is part of the IDA Integrated Growth Poles project (the IG2P project). Under the IG2P project, BNI-Leasing is expected to have a high developmental impact on the Malagasy economy, especially given IFC’s active role as advisor to the Malagasy government in that it helped to:
- establish the regulatory framework for leasing and
- draft the Leasing Law.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	0.10

Development Impact

This project is expected to have a strong impact in financial market development and in supporting under-served SMEs in Madagascar. Leases are often the only form of term financing SMEs or start-ups can obtain in developing markets, since banks often do not serve them well. In this case, IFC will be able to promote the development of domestic financial markets by helping BNI-CLM introduce leasing as an alternative source of equipment finance for industrial, agricultural and commercial enterprises. An immediate impact would be the possibility for SMEs operating in the public works sector to take advantage of the sub-contracting opportunities offered by the 14,000 km/$1 billion-road rehabilitation program: an effective leasing scheme would allow them to acquire the needed equipment. In addition, IFC will be encouraging competition from Equipbail, the sole leasing company in Madagascar, which has been in existence for about 5 years.

Also, by helping the Malagasy Government establish the regulatory framework for leasing and draft the Leasing Law, this project will help strengthen the leasing industry in Madagascar and increase competition in the sector.

IFC’s Role: IFC is instrumental in helping establish this company, which would be the second leasing company in Madagascar. The IFC has already played an active role as advisor to the Malagasy government in that it helped establish the regulatory frameworks for leasing and helped draft the Leasing Law. As a follow-up on the work on legal framework, IFC is also currently setting up a leasing registry which would later become a movable assets registry, to help develop secured finance mechanisms. IFC’s role in this project is the natural continuation of the TA work, with the provision of finance to BNI-Leasing. A leasing market study performed by the Monitor Group indicated that there is great potential for leasing in the country given that Madagascar is recovering from the 2002 crisis.

This is a category FI type 2 project according to IFC''s Environmental and Social Review Procedure. BNI-Leasing will be required to designate individuals who will have responsibility for environmental issues and reviews and who will attend environmental training; submit a proposed environmental management plan; implement an environmental management system to ensure that its leases are consistent with applicable host country and IFC/World Bank environmental and social standards, including IFC''s exclusion list and for Category A investments, World Bank Group environmental, health and safety guidelines; obtain IFC''s prior approval for any Category A lease agreement; and submit to IFC annual environmental performance reports.
Location of environmental documents In locally affected community

Contacts

For Inquiries About the Project, Contact

Mr. Luc Beiso, Deputy Managing Director
74, Rue du 26 juin 1960, Antananarivo 101, Madagascar

This Summary of Project Information (SPI) is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC's activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC's Disclosure of Information Policy that went into effect September 1998.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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