The Project will be jointly sponsored by Standard Bank, a leading Malawian bank, and Zain, a leading mobile telecommunications operator in Malawi. Standard Bank: Standard Bank Limited was established as Commercial Bank of Malawi Limited on 15th March 1969 by the Malawi Government and other stakeholders. Following banking sector reforms, the Bank was privatized in 2001 and the Malawi Government exited. The Bank is now a subsidiary of the Standard Bank Group of South Africa, Africa’s largest banking group, with a 60.18% ownership. The other 39.82% is owned by a combination of institutional and public shareholders. As of December 31, 2008, the Bank had total assets of about MK41 billion (US$290 million equivalent) and shareholders’ funds of about MK6 billion (US$42 million equivalent). The Bank is listed on the Malawi Stock Exchange (“MSE”). Zain: Zain (previously Celtel Malawi), was awarded its 15 year nationwide GSM-900 license and launched its commercial operations in October 1999. It has been the market leader since shortly thereafter. It was re-branded Zain Malawi in August 2008 following the acquisition of Celtel International by MTC Group, which transformed to Zain Group. As at the end of December 2008 Zain Malawi’s market share was 70% with 1.25 million active subscribers. Zain Malawi’s network currently covers over 87% of the population of Malawi.

The proposed IFC investment will be a partial credit guarantee for up to MK0.94 billion (zero point nine four billion Malawi Kwacha) to support a risk sharing facility of approximately MK2 billion (two billion Malawi Kwacha). In addition, IFC will provide advisory services for capacity building which will include a training program for Zain’s distributors.

5.84 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	5.84
Loan	0.0
Equity

* These investment figures are indicative

The project will be located in Malawi.

The Project is expected to deliver strong development impact by: Improving Access to Telecommunication Services: The financing of Zain’s distributors through this Project would help strengthen the capital base of the distributors, enabling them to expand to previously underserved regions of Malawi. Catalytic Effect: The demand for financing by the SME sector in Malawi is mostly unmet due to the perceived lending risks involved. The Project would encourage Standard Bank to provide funding to Zain’s distributors, who are part of the SME sector, based on IFC’s assumption of partial credit risk and the demonstrated viability of such a structure. Job Creation: The Project would lead to creation of new jobs as the distributors will need additional staff to support their expanding businesses. Capacity Building: The Project will provide needed training to Zain’s distributors that should help build their capacity and improve corporate governance.

Product & Service Innovation: The joint Project Sponsors are relying on IFC to provide leadership in structuring the risk sharing facility. IFC would be leveraging deep expertise in financial markets, telecoms and structured finance to create a viable risk sharing facility. This innovation fosters collaboration between Zain and Standard Bank to address the needs of the distributors. Risk Sharing: IFC will assume a significant portion of the risk of lending to Zain’s distributors who are a core part of the Zain distribution model. This will help provide confidence to Standard Bank and Zain to assume increased risk exposure to these distributors.

The key issues identified in this project are avoidance of incidents potentially harmful to distributor workers and reporting on them if they occur, and avoidance of harmful child labor among distributors. A condition of IFC''s guarantee will be that these issues be managed in compliance with IFC Performance Standards. This has been classified as a Category FI project according to IFC’s Procedure for Environmental and Social Review of Projects.