ABC Holdings Limited is a bank holding company listed in the Botswana (Primary) and Zimbabwe stock exchanges, with banking subsidiaries in Botswana, Mozambique, Tanzania, Zambia, and Zimbabwe, and a representative office in South Africa. ABCH was created by various sponsors in 2000 in Zimbabwe, as a result of the merger of three local institutions and with a vision of creating a pan-African financial institution in the long term. Today, ABCH is a group present in the southern and eastern African region with a market capitalization of $43.3 million and shareholders funds of $38.6 million (as of June 2006). ABCH is looking to grow its footprint in the markets that it operates, while reducing the relative weight of the Zimbabwe operation.

ABCH is a publicly held company with a shareholding structure characterized by 80% corporates (largely local companies and institutional investors) and 20% individuals. The main sponsors and founders of ABCH, are Mr. Oliver Chidawu, Chairman of the Group, and Mr. Doublas Munatsi, Group’s Chief Executive Officer, who jointly have a 20% shareholding of the Group’s equity.

The proposed project is a combined IFC equity and subordinated loan (IFC C loan) of up to $20 million to ABCH.

20.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	12.0
Equity	8.0

* These investment figures are indicative

ABCH operates through five banking subsidiaries located in Botswana, Mozambique, Tanzania, Zambia, and Zimbabwe, and a representative office in South Africa

This project will strengthen and diversify ABCH’s funding base and bring about the transfer of technical know-how and best practices to enable the Group to develop a solid platform from which to increase the provision of banking services to segments of the market that are generally underserved by foreign banks in Southern and Eastern Africa and will result in an increase in the volume and number of loans to MSMEs.

IFC’s role in the project is to:

- stimulate confidence in the regional banking sector by investing equity on its own account in a locally-owned bank and to attract other investors to fund the expansion and consolidation of ABCH;
- help demonstrate the viability of a local indigenous regional financial institution; and
- help strengthen ABCH’s viability by arranging technical assistance in the area corporate governance, credit risk management and mortgage lending.

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.
During appraisal, IFC will analyze the FI portfolio, for types of transactions, size, tenor and industry sectors and determine the Applicable Requirements, if any, that would include a combination of:

- The IFC FI Exclusion List; and/or
- The applicable National Social and Environmental Laws and regulations.

IFC will also review, if required, the capacity of the FI to manage social and environmental risks and to establish and maintain a Social & Environmental Management System (SEMS). If required, IFC will suggest Supplemental Actions to address any gaps in the SEMS.

Based on the review, the project will be required to:

- develop an, or upgrade, if necessary, any existing Social & Environmental Management System (SEMS), prior to disbursement to the satisfaction of IFC;
- identify responsible, qualified persons to manage and implement the SEMS;
- commit to implement the SEMS, to ensure that its investments/activities are in compliance with the Applicable Requirements;
- commit to take action to remedy any gaps in SEMS implementation on an ongoing basis;
- submit a periodic report to IFC as per a format to be provided by IFC.