Stanbic Bank Uganda Limited (Stanbic) registered and incorporated in the Republic of Uganda is an 80% subsidiary of Stanbic Africa Holdings Limited which in turn is owned by the Standard Bank Group Limited. The remaining 20% is publicly listed on the Uganda Stock Exchange. Stanbic is the largest bank in the country with total assets under management of $735 million.

Celtel Uganda Limited operates in the country since 1998. The company is fully owned by Celtel Group one of the largest mobile telecommunications operator in Sub-Saharan Africa. Celtel Group is 100% owned by Zain one the leading Middle Eastern telecoms operator. Celtel Uganda’s subscriber base totaled 1.4 million subscribers at the end of 2007, equivalent to a 34% market share, with revenues over $90 million, and was the fastest growing operation within the Celtel Group, registering a customer growth over 200%. Celtel Uganda Limited is an existing client of IFC.

This transaction would be structured as a risk-sharing facility with Stanbic. IFC’s risk-sharing will cover Stanbic’s a portion of principal losses up to an agreed limit with respect to the credit performance of a designated portfolio of loans of Celtel’s distributors originated by Stanbic. The portfolio is expected to reach a maximum size of Ugandan Shillings 20 billion (equivalent $12 million) over the next 18 to 36 months. IFC’s partial guarantee would be denominated in local currency.

2.60 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	2.60
Loan	0.0
Equity

* These investment figures are indicative

The participating Dealers will be located throughout Uganda.

The proposed investment is expected to have a high development impact. The demand for banking services by the SME sector in Uganda is currently unmet, in large part because SME’s lack the necessary financial and management capabilities that would allow banks to lend to them at an affordable cost. This investment will permit IFC to support the small and relatively unsophisticated telecom distributors that play such an important role in providing access to telecommunications services in throughout the country: the risk-sharing investment with Stanbic will facilitate access to affordable medium term financing for these Dealers while the advisory service program will help increase their management capacity. The proposed investment will prove this SME sub-sector as a viable and profitable segment of the market thus encouraging banks to serve this crucial yet largely untapped market.

IFC’s risk sharing facility will enable the Bank to expand the reach of its medium-term lending to the Dealers who are in critical need of such financing for development. The accompanying advisory services program (ASP) will prepare these operators to borrow from the formal sector and provide comfort to the Bank. The ASP is also expected to improve the business environment and the availability of telecom products, which, apart from the social benefits, will make them less risky borrowers. This Facility is, therefore, helping to promote the basic conditions for medium-term lending in this sub-sector.

This investment has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. During appraisal, IFC analyzed the proposed activities to be supported by the facility and determined the Applicable Performance Requirements based on an analysis of the potential social and environmental risks. The Applicable Performance Requirements are:

- the IFC FI Exclusion List, and
- the applicable National Social and Environmental Laws and regulations.

IFC will review the capacity of the Stanbic 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 Bank will be required:

- Develop an, or upgrade, if necessary, any existing Social & Environmental Management System (SEMS), prior to commitment or according to a time-bound action plan related to the SEMS, 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 supported by the facility are in compliance with the Applicable Performance Requirements
- Submit a periodic report to IFC as per a format to be provided by IFC