The sponsor of the project is MicroCred SA, a microfinance investment company, based in Paris, France that was created in 2005 under the initiative of PlaNet Finance an NGO dedicated to the support and development of microfinance. Investors expected to join the shareholder group of MC Nigeria include IFC, Proparco and a local investor. Upon completion of these transactions, the Bank’s share capital of NGN1 billion ($6.7 million) and is likely to be distributed as follows: Microcred SA: (50.10%), IFC (15.00%), Proparco (15.00%), and other investor(s) (19.90%). MicroCred SA has created a strong base of expertise in the field of microfinance with four operating companies in Nigeria, Senegal, China (Nanchong), and Madagascar, and two pending operations in China (Chengdu) and Ivory Coast. The total paid in capital of the holding company stands at EUR 21,7 million as at August 2010 with the following shareholding structure: Axa Belgium 21%, Genefinance (Societe Generale) 11,8%, IFC 8,75%, AFD 16,1%,  EIB 21%, DWM 18,5% and PlaNet Finance 2,8%.

The total cash out of the project is $54 million equivalent over the first four years (including one year of pre-operational phase), founded by a mix of equity, debt/deposits, and technical assistance resources for a little above $14, and loan reimbursement and income from portfolio for the remaining part. IFC is considering investing $1.0 million equivalent in equity, $2.0 million equivalent in debt, and provide $700,000 in technical assistance.

2.96 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	1.97
Equity	0.99

* These investment figures are indicative

MC Nigeria will focus on MSMEs and low income populations with credit and savings services. The Bank has set up its first branch and head-office in Kaduna city and plans to expand throughout the [Kaduna] state by creating a network of branches and service points. At a later stage, MC Nigeria will consider expanding its activities to Kano State and FCT Abuja.

The project will have a high development impact considering that microfinance has been shown to play a major positive role in reducing poverty and unemployment in developing countries. The initiative will strengthen the provision of microfinance services in Nigeria, where access to finance remains extremely limited for low-income populations. By supporting a new institution able to sustain microfinance on commercial terms and following best practices, the project has the potential to generate a substantial increase in the long-term availability of financial services for the poor. The project will also have a demonstration effect by showing local financial institutions that microfinance can be sustainable and generate commercial returns.

IFC’s participation in the project brings extensive microfinance expertise and a relatively unique combination of investment and technical assistance funds. These contributions will support the Bank’s ability to initiate operations, effectively scale up and build local staff/management capacity. IFC has unique credibility among prospective microfinance investors and local banking authorities, built on the back of its significant microfinance program and its recognized commercial orientation. This credibility helps sponsors raise financial resources and is often a crucial factor in convincing the banking authorities to grant operating licenses for the new microfinance entities. In addition, IFC has extensive contacts in the financial sector and can help mobilize additional local investors for the future expansion of the Bank. IFC’s participation will promote high social and environmental standards, as MC Nigeria will follow IFC’s requirements in this regard. This is also true in terms of anti-money laundering and combating the financing of terrorism (“AML/CFT”).

This project involves IFC support for the business of Microfinance and has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. Considering the nature of activities supported, the project will be required to: (i) Develop a procedure relevant to its business process, prior to disbursement, that is satisfactory to IFC, and that ensures that all its investments are screened and processed to avoid supporting activities on the Microfinance exclusion list, (ii) Identify qualified persons to manage and implement the procedure, (iii) Commit to implement the procedure, (iv) Demonstrate commitment to applying the labor standards established by the IFC Performance Standard 2: Labor and Working Conditions, and (v) Submit a periodic report to IFC as per a format to be provided by IFC.