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| UBA Health Facil |
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| 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 | 26488 |
| Company name | UBA Health Facility |
| Country | Nigeria |
| Sector | Health Care |
| Environmental category | FI |
| Department | Health and Education |
| Status | Pending Approval |
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| Date SPI disclosed | February 8, 2008 |
| Projected board date | March 14, 2008 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
| This proposed investment involves the establishment of a risk sharing facility (the Facility) with the United Bank for Africa (UBA or the Bank) in Nigeria. The Facility is proposed to share risks in a portfolio loans to private companies operating in the health care sector. These private operators include hospitals, clinics, laboratories, HMOs, health insurance providers, and other similar entities involved in the provision of health-related services in Nigeria. The total portfolio volume is proposed to be up to NGN4 billion ($32 million) in size. This will represent IFC’s first risk sharing facility in the health sector. |
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| Project sponsor and major shareholders of project company |
| UBA is registered as a commercial bank under Nigerian Law and remains the largest bank in the country with total assets under management of NGN 1.1 trillion (approximately $9.3 billion) and more than five million customer accounts. The Bank is publicly held with a well diversified shareholding: over 140,000 shareholders as of September 30, 2007. Nigerian citizens and institutions own approximately 80% of the Bank and the remaining shares are owned by foreign banks and institutional investors. The Bank is an existing client of IFC. |
| Total project cost and amount and nature of IFC's investment |
| This transaction would be structured as a risk-sharing facility with UBA, who will hold a first loss position covering the first 3-5% of losses. This first loss would have to be fully exhausted before IFC would have to pay any risk-sharing claims under the Program. After the exhaustion of the 3-5% first loss, IFC’s risk-sharing will cover 50% of the principal losses up to a maximum of NGN1.94 billion (equivalent of $15.52 million) with respect to the credit performance of a designated portfolio of loans in the health care sector originated by UBA. The portfolio is expected to reach a maximum size of NGN4 billion ($32 million) over the next 18 to 36 months. IFC’s partial guarantee would be denominated in local currency. |
| Location of project and description of site |
| The participating private health sector operators will be located throughout Nigeria. |
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| Anticipated development impact of the project |
| The proposed investment is expected to have a strong development impact. Public sector expenditure in Nigeria is unable to keep up with the demand for health-related goods and services. In addition, the poor quality and unreliable public provision of services has given rise to an increased prominence of the role of the private sector. However, many private operators face the challenge of little access to affordable, long-term financing, and little training in financial management. This investment will permit IFC to support the small and relatively unsophisticated health care companies that play such an important role in Nigeria’s health care system: the risk-sharing investment with UBA will facilitate access to term financing for these private providers while the advisory service program will help increase their management capacity. |
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| IFC's expected development contribution |
| IFC’s risk sharing will enable the Bank to expand the reach of its medium-term lending to the private health sector operators who are in critical need of such financing for development. The accompanying advisory services program (ASP) will prepare these operators to borrow from the formal sector and provide comfort to the Bank. The ASP is also expected to improve the business environment and the quality of health services and products, which, apart from the social benefits, will make them less risky borrowers. This Facility is, therefore, helping to promote the basic conditions for medium-term lending in the health sector. |
| Environmental and social issues - Category FI |
| This investment has been classified as a Category FI investment according to IFC’s Environmental and Social Review Procedure. UBA will be required to manage environmental and social risks and to maintain a Social & Environmental Management System. For the Facility, UBA will be required to include in the eligibility criteria that its borrowers under this Facility apply IFC's Exclusion List and meet environment, health and safety standards in line with the laws of Nigeria. |
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| For inquiries about the project, contact: |
Valentine C. Ozigbo
Head International Banking, Global Bank Directorate
UBA House,
57 Marina, PO Box 2406,
Lagos, Nigeria.
Website: www.ubagroup.com |
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| 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 |
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