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| This Summary of Project Information 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. |
Summary of Project Information (SPI) |
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| Project number | 10331 |
| Project name | Algerie Leasing |
| Country | Algeria |
| Sector | Finance & Insurance |
| Department | Global Financial Markets Group |
| Company name | Arab Leasing Corporation |
| Environmental category | FI |
| Date SPI disclosed | October 18, 2000 |
| Projected board date | November 30, 2000 |
| Status | Active |
| Previous Events | Invested: November 28, 2001
Signed: November 7, 2001
Approved: December 12, 2000 |
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| Project sponsor and major shareholders of project company |
| AIL’s sponsor, Arab Banking Corporation Algeria (ABCA, the Sponsor), a local private commercial bank established in 1998 with IFC’s assistance, will hold 34% of the Company's share capital. Tunisie Leasing, an experienced Tunisian leasing company established in 1984 with the assistance of IFC, will act as AIL’s Technical Partner with 25% of the Company’s share capital. The remainder of AIL’s share capital will be held by: (i) The Arab Investment Company (TAIC) (25%), (iii) IFC (7%), (iv) Compagnie Algerienne d’Assurance et de Reassurance (CAAR), a local private insurance company (5%), and (v) local private investors (4%). |
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| Total project cost and proposed IFC investment |
| Total Project Cost: US$20 million. IFC Investment: (i) US$700,000 in equity, and (ii) US$4.0 million in a local currency garantee representing 40% of the US$10 million equivalent in local currency funding. |
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| Location of project and description of site |
| The project will be located in Algiers, Algeria. |
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| Description of company and purpose of project |
Project Description: The project consists of the establishment of Algérie Leasing (AL, the Company) as the first private leasing company in Algiers, Algeria, to offer medium term lease finance mainly to Small and Medium Enterprises (SMEs) in various sectors of the economy, including the transport, construction, agribusiness, and other sectors. AL will be established with a proposed share capital of US$10 million equivalent. The equivalent of a total funding of US$10 million for the Company's lease operations is expected to be provided in local currency by the Caisse Nationale d'Epargne et de Prévoyance (CNEP), with a partial garantee from IFC (about 40%).
Developmental Impact: The developmental impact of the project is expected to be broad and far-reaching. First, the project will provide SMEs with increased access to finance, many for the first time in the formal financial sector. Currently, most SME investment requirements are not met by the existing commercial banks which require heavy collateral and overburdening administration. Projected AL leases over US$500 million are expected to help finance the expansion and modernisation of SMEs in various productive sectors. This would in turn help boost growth and job creation. Second, the project is expected to promote growth and increase competition in the financial sector as the leasing industry grows and brings new players and instruments into the market. Third, the project will introduce new technology, know-how and skills transfer. Tunisie Leasing will provide external and internal training to its staff in the various areas of leasing. Fourth, the project will support Algeria's economic diversification by financing economic activities in non-oil related sectors.
IFC Role: IFC has been a supporter of establishing leasing as an appropriate vehicle for addressing the financing needs of SMEs in Algeria and has assisted the World Bank in drafting the country's leasing regulations. IFC has approached Tunisie Leasing to act as the technical partner and has put ABC in contact with Tunisie Leasing as the foreign technical partner. IFC is also playing a key role in structuring the project and securing the agreement of all parties by truly assuming its role as “honest broker”. Furthermore, IFC’s involvement is providing comfort to the Government, as well as to both local and foreign investors. IFC is expected to continue to play a role in further developing the Company and the leasing sector. Lastly, this project will also have the added benefit of expanding and developing the Algerian financial markets, especially through non-bank financial institutions.
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| Environmental and social issues - Category FI |
This is an FI type 1 project according to IFC's environmental and social review procedure. For relevant operations, AIL will be required to implement an environmental management system to ensure that leased assets comply with the environmental, health and safety standards of Algeria. AIL will be required to provide IFC with an annual environmental performance report.
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| To contact the project company, please write to: |
| Houria Sammari, Investment Officer, MENA Dept. - Hsammari@ifc.org |
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