27278 - StanbicGhana PCG

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Summary of Proposed Investment

Project Number

27278

Company Name

STANBIC BANK GHANA LTD

Date SPI Disclosed

Nov 4, 2008

Country

Ghana

Industry

Agribusiness and Forestry

Projected Board Date

Dec 5, 2008

Status

Completed

Sector

Storage (Including Agricultural Products)

Department

Gbl Ind, Manufact, Agribus & Services

Environmental Category

C - No Impact

Previous Events

Approved : Jun 23, 2009
Signed : Jun 25, 2009

Project Description

The project consists of an investment program which allows IFC to support the Cocoa sector in Ghana by providing partial credit guarantees (“PCGs’, together the ‘IFC Guarantee” or the “Program”) to Stanbic Ghana Limited (“Stanbic Ghana”), for short term working capital credit lines and guarantee facilities Stanbic Ghana extends to eligible LBCs. For the 2008/09 cocoa crop season, IFC has appraised Akuafo Adamfo Marketing Company Limited (“Akuafo”) and Kuapa Kokoo Limited (“Kuapa”) for the program. Both companies are existing Licensed Buying Companies (“LBC’). It may add new LBCs in subsequent crop seasons.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	40.0
Loan
Equity

Development Impact

The Project:

- will encourage efficient lending to the LBCs in the critical cocoa sector in Ghana and the timely payment to farmers for cocoa purchased will encourage them to increase cocoa production;
- support the development and growth of LBCs involved in the supply chain of cocoa in Ghana by making funding available to them more efficiently;
- sustain employment in the cocoa sector, especially in the rural areas where most agricultural production takes place;
- encourage the LBCs to consider expanding production financing support to the farmers due to improvements in their accessibility to funding.

1. Introduce innovative agribusiness guarantee product:

IFC is introducing and structuring a risk sharing arrangement which is adapted to the agribusiness sector. It will also be replicated for other banks in Ghana lending to LBCs. This facility will ultimately serve as a catalyst for incremental exposure to the sector by Ghanaian banks.

Sector expertise: The cocoa industry possesses certain risks inherent in global agricultural commodities that are dependent on global supply and demand factors as well as regional dynamics that impact local markets. IFC will contribute sector knowledge to provide guidance for lending criteria and perspective of the supply chain in agricultural commodities on a global level.
Financial structuring: Through IFC’s independent review of the LBCs financial strength, IFC will supplement Stanbic Ghana’s evaluation of the LBCs.

This project involves the financing of licensed cocoa buyers in Ghana by a financial intermediary and has been classified as a Category C project according to IFC’s Environmental and Social Review Procedure. No further review is required. The financial intermediary is required to inform IFC in the event of any change in nature or scope of this lending activity. The LBCs supported by the financial intermediary will not employ child or forced labor.

Like other cocoa buyers in Ghana, the LBCs essentially act as buying agents for the Ghana Cocoa Board (COCOBOD) and have little leverage over farmers and farming practices hence the Category C classification. Nonetheless, the LBCs can partner with other organizations already operating in Ghana to develop a program aimed at reducing work-related injuries among children in the Ghana cocoa industry.

Contacts

For Inquiries About the Project, Contact

Alhassan Andani, Managing Director
Valco Trust House
P. O. Box CT 2344
Cantonments
Accra-Ghana

Tel: + 233 21 667670-8
Fax: + 233 21 667669

www.stanbic.com.gh

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This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. 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 Policy on Disclosure of Information that went into effect April 30, 2006.

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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