|
|  |
| EKI CL II |
|
| Summary of Proposed Investment |
| 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. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 27425 |
| Company name | Ekonomska Kreditna Institucija |
| Country | Bosnia and Herzegovina |
| Sector | Finance & Insurance |
| Environmental category | FI |
| Department | Global Financial Markets Group |
| Status | Active |
|
| Date SPI disclosed | October 10, 2008 |
| Projected board date | November 19, 2008 |
| Previous Events | Invested: October 15, 2009
Signed: March 9, 2009
Approved: January 7, 2009 |
|
| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
The project consists of a subsequent loan investment of up to EUR5 million in Micro Credit Foundation EKI (“EKI”), for on lending to “Eligible Sub-Borrowers”, with a particular focus on loans for housing refurbishment purposes.
EKI stands as the third largest and one of the most profitable microfinance institutions (“MFIs”) in Bosnia and Herzegovina commanding approximately 15% of the market share, and having close to 52,000 active loans. EKI’s loans and services are targeted at small businesses, crafts, services and agricultural activities. EKI’s clients are low income households, women, invalids, returnees and persons whose businesses create new jobs or sustain existing ones. As of June 2008, EKI had a loan portfolio of $155.6 million equivalent which has grown 2.5x in the last 3 years, and an equity base of $27.4 million equivalent composed of donated capital and retained earnings. As of that same date, ROAA and ROAE stood at 3% and 16.7% respectively.
This project is aimed at complementing IFC’s initial investment in EKI, a EUR$3 million senior loan granted in 2006. |
|
| Project sponsor and major shareholders of project company |
| EKI’s founder is World Vision International (“WVI”). WVI is an international Christian relief and development organization working to promote the well being of all people - especially children – that operates in 98 countries. EKI represents one of WVI’s largest and most successful operations. |
| Total project cost and amount and nature of IFC's investment |
| The proposed project consists of an up to EUR5 million senior loan (the “Loan”) with a 5-years tenor including a 2-years grace period on principal repayments. |
| Location of project and description of site |
| EKI is headquartered in Sarajevo, Bosnia and Herzegovina, although it operates in a decentralized manner. EKI has 14 offices and 52 branch offices covering rural areas across the entire country. |
|
| Anticipated development impact of the project |
| In this project, IFC will be supporting a successful commercially oriented microfinance company in its mission to provide access to finance for the Bosnian micro entrepreneurs in the rural areas. Specifically, through this investment there will be a significant direct contribution to poverty reduction – as the loan is expected to reach an estimated 5,000 new micro entrepreneurs during the life of the loan. In addition, the current facility offered would enable EKI to tap into long-term maturities not currently available in the local market to a microfinance company and therefore lengthen the maturities offered to its clients. Therefore, the project’s development impact is expected to be high and far reaching in terms of its economic support for productive micro enterprises, of its stimulus for employment generation and for confidence building for the Bosnian microfinance sector. |
| IFC's expected development contribution |
| IFC has an important role to play providing sustainable long-term financial resources that complement short-term loans from the domestic banks and that will enhance EKI’s capacity to serve more customers and expand its outreach. In addition, IFC will support lending to housing refurbishment loans, a niche that is typically not core for local and international banks. Furthermore, IFC’s support and commitment to EKI in its transformation stage will signal confidence and a seal of approval of its future strategy of becoming a self-sustainable for-profit MFI. |
| Environmental and social issues - Category FI |
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.
EKI is an existing IFC client with requirements to establish a process to screen investments against IFC’s microfinance exclusion list and appoint responsible staff. The company was assigned an ESRR of F2-Moderate in the most recent annual environmental performance review. The review identified some follow-up actions which will be conditions of disbursement for this investment.
EKI will be required to:
- Revise, if needed, its environmental procedures prior to disbursement to the satisfaction of IFC
- Continue to ensure that qualified persons are appointed to manage and implement the procedure
- Demonstrate commitment and resources to implementing the procedure
- Continue to submit a periodic report to IFC as per a format to be provided by IFC |
|
| For inquiries about the project, contact: |
Mikrokreditna fondacija EKI
Džemala Bijedića bb
71000 Sarajevo
Bosna i Hercegovina
Telephone: +387 33 754 380
Fax: +387 33 754 388 |
|
| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
|
|
|
|