Created in 1939 and formerly known as Banque Nationale pour le Commerce et l’Industrie, the bank was renamed Banque Internationale pour le Commerce et l’Industrie (BICIS) in 1962 when it was taken over by BNP for 51% of the shareholding, Société Financière pour les pays d''Outre-Mer (SFOM) for 41%, and private Senegalese for 8%. SFOM is itself a holding company created and owned by BNP-Paribas and Dresdner Bank. In 1975, the GoS joined the shareholding of BICIS acquiring a 42% stake through a capital increase, leaving BNP-Paribas with 22.3%, SFOM with 27% and the private Senegalese with 8.7%. In 1991, the GoS reduced its stake to 24.8% and the consortium BNP-Paribas/SFOM/SIFIDA increased its shareholding to 54.1% with the remaining shares (21.1%) controlled by Senegalese private interests.

- BICIS is the third largest bank in terms of total assets in Senegal.
- SFOM is 100% controlled by BNP Paribas since February 2001.
- Société Internationale Financière pour les investissements et le Développement en Afrique (a BNP Paribas subsidiary).

The proposed RSF is a risk-sharing facility developed under the IDA-IFC program for Sub-Saharan Africa and aims to encourage selected commercial banks to lend to SMEs. The RSF, issued by IFC as facility agent for its account and for the account of the GoS, would cover up to 50% of the loan principal amount of the banks'' portfolio of selected SME loans for an 8-year period, thus encouraging the banks to lend while also ensuring good credit appraisal since the banks still retain 50% of the risk on the portfolio.

The IDA RSF for the BICIS portfolio will be up to $1 million; hence the portfolio can be up to $10 million equivalent. IFC will provide a guarantee directly to BICIS for the CFAF equivalent of up to $5 million to cover 50% of all portfolio losses. The IDA guarantee will act as a first-loss piece for the benefit of IFC.

The project will be located in Dakar, Senegal. Please see project description above.

This project is part of a much larger IDA project, the Private Investment Promotion Project (PIPP), a. multi-sector project that seeks to stimulate private investments and to build capacity.

Development Impact:

Consistent with the objective of supporting sustainable private sector development, this RSF contributes to high development impact in two key, high-priority areas:

- Development of the financial sector in Sub-Saharan Africa:

Improving the capacity of banks can lead to increased efficiency and stability in the financial markets. A sound financial sector contributes to the development of the local economy and attracts foreign investment.

- Development of the SME sector:

The SME sector makes up a large share of Senegal’s economic output and makes several vital contributions, including the creation of jobs and increasing economic activity. Increased access to finance and capacity building for this sector, facilitated by the PCG, can lead to higher levels of entrepreneurial activity, private sector development and improvement in economic output.

Furthermore, the project would support the GoS’s objective of accelerating poverty reduction by furthering sustainable, equitable economic growth and will:

- increase SME access to medium term finance;
- promote the competitiveness of selected industries, including enhancing linkages and know-how transfer between large businesses and SMEs and working within high potential value chains to alleviate critical bottlenecks identified through careful supply chain analysis;
- promote a conducive business environment for domestic and foreign investment.

In developing this project, IFC played two important roles:

- as an advisor to the GoS on the program design including setting criteria for selecting banks and TA; and
- as an investor intending to provide financial support to the banks. As a result of the potential conflicts of interest arising from these two roles, IFC assigned two separate teams to work on this initiative. The IDA/IFC Advisory Team worked with IDA and the GoS in designing the program and is continuing to support its implementation. A separate IFC Investment Team provided technical input, appraised the Bank and is processing the risk sharing arrangements.

IFC has and will continue to bring knowledge of global best practice in structuring commercial risk-sharing instruments and will also play a very important role in administering the RSF. The local commercial banks consider IFC’s presence in this project as key to their participation and IDA is relying on IFC’s expertise and abilities to implement the RSF (skills/abilities that are more difficult for IDA to mobilize).

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.

IFC will analyze the FI portfolio, for types of transactions, size, tenor and industry sectors and determine the Applicable Performance Requirements, if any, that would include a combination of:

- The IFC FI Exclusion List(s) and
-The applicable National Social and Environmental Laws and regulations

- IFC will also review 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 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 Performance Requirements
- Submit a periodic report to IFC as per a format to be provided by IFC.