AFRICA GUARANTEE FACILITY I - WEMA

Promoter – Financial Intermediary

WEMA BANK PLC

Location

• Nigeria

Description

This facility will provide a Partial Portfolio Guarantee (PPG) to Wema Bank plc to support financing eligible investments by SMEs in Nigeria. The facility will be dedicated to SMEs owned or managed by women and/or young people, and to start-ups. This operation will contribute to inclusive growth and innovation in Nigeria, the most populous country in Africa, a key EU partner in the region, a significant market for EU exports, and a strategic partner of Europe in terms energy. It is conducted under the SME Access to Finance Initiative supported by the European Fund for Sustainable Development (EFSD) under the EU's External Investment Plan. The proposed risk sharing facility is fully aligned with the EU's 2021-2027 Nigeria Multi-Annual Indicative Programme (MIP) and with Nigeria's Financial Inclusion Strategy.

Objectives

This is one of the last operations presented under the EU Mandate EFSD Guarantee "Access to Finance Initiative", a mandate received from the European Commission which covers capped guarantees provided by EIB to selected financial intermediaries for portfolios of SME financing. Following the outbreak of the Covid-19 pandemic crisis, and in order to provide an immediate response to alleviate the socio-economic consequences linked to it in the EU Neighbourhood and Sub-Saharan Africa, the EC proposed to redirect and accelerate some of the operations under the EFSD Guarantee by increasing and prioritising those supporting the SME sector. Against the backdrop of heightened risk and vulnerability in the geographies targeted by the SME Access to Finance Initiative, at the end of 2023 the European Commission and EIB agreed to extend the enhanced guarantee to all eligible SMEs in priority areas. Its main added-value lies in the fact that SMEs operating in Nigeria face various obstacles and uncertainty, making it almost essential to go through the intermediary of a reputable commercial bank, as opposed to directly lending to SMEs or through a Government-linked entity. The proposed operation is a partnership with Wema Bank to bolster investments by Small and Medium Enterprises (SMEs) in Nigeria. The range of applicable investments is as defined in the Term Sheet. The EIB will commit to sharing risks over an extended duration, enabling Wema Bank to expand its lending activities in underserved market segments, securing loans to SMEs with an 80% guarantee, up to 20% of a portfolio of maximum EUR 50,000,000. This intervention aims to enhance inclusive growth, innovation, and access to finance for SMEs owned or managed by women and/or youth, and for start-ups.

Sector(s)

• Credit lines - Credit lines

Proposed EIB finance (Approximate amount)

EUR 8 million

Total cost (Approximate amount)

EUR 50 million

Environmental aspects

The EIB will require Wema Bank to take all the requisite measures to ensure that the procedures, including procurement procedures, carried out by the final beneficiaries for the sub-projects receiving an underlying loan covered by the partial portfolio guarantee of the Bank, will comply with the applicable national legislation and ElB's Environmental and Social Standards as well as international treaties and conventions signed and ratified by or otherwise applicable and binding in the targeted countries.

Procurement

The EIB will require Wema Bank to take all requisite measures to ensure that any procurement procedures carried out by the Final Beneficiaries for the sub-projects receiving an underlying loan covered by EIB's partial portfolio guarantee are in accordance with the EIB's Guide to Procurement.

Status

Signed - 22/10/2024