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AB Bank Zambia Limited
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.
Commercial Banking - Microfinance and Small Business
Reg Ind, Financial Markets, CAF/CLA
Date SPI disclosed
April 14, 2010
Projected board date
May 17, 2010
Invested: January 5, 2011
Signed: July 28, 2010
Approved: June 7, 2010
The project consists of an equity investment and technical assistance funding for the establishment and expansion of AB Bank Zambia (AB Zambia or ABZ). ABZ will be a greenfield microfinance bank sponsored by Access Microfinance Holding AG (AccessHolding), an investment company, and LFS Financial Systems, an associated German consulting firm with recognized expertise in microfinance. The Bank will specialize in providing a broad range of financial services to urban and semi-urban micro, small and medium enterprises as well as low income individuals in Zambia. It is expected that after five years the Bank will have eight branches, a loan portfolio of $50 million, comprising over 25,000 customers. The purpose of the project is to expand crucial financial services to a sector that rarely has access to services offered by formal financial institutions.
Project sponsor and major shareholders of project company
The financial sponsor of the project is AccessHolding, which plans to take a 51% stake in AB Zambia. Other planned shareholders in AB Zambia include IFC (12.25%), KfW (12.25%), FMO (12.25%) and Rural Impulse Fund II (12.25%).
AccessHolding’s shareholders include LFS, the European Investment Bank (EIB), Kreditanstalt für Wiederaufbau (KfW), Omidyar-Tufts Microfinance Fund (OTMF), International Finance Corporation (IFC), Commonwealth Development Corporation (CDC), and MicroAssets GbR (MA).
Total project cost and amount and nature of IFC's investment
AB Zambia will finance approximately $50 million in loans within the first five years. IFC plans to provide funding in the amount of USD 2 million towards the project. The proposed IFC funding consists of an equity investment of up to $1 million and technical assistance funding of up to $1 million.
IFC investment as approved by Board
0.96 million (USD)
IFC Investment (million USD)
* These investment figures are indicative
Location of project and description of site
AB Zambia will provide financial services to urban and semi urban micro, small and medium enterprises in the capital of Lusaka and other main urban centers of Zambia.
Anticipated development impact of the project
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 Zambia, where access to finance is limited for low income populations. By creating 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 show local banks that sound microfinance can be sustainable and generate attractive returns. As a consequence, it is expected that the interest of local banks in the micro enterprise and SME sector will be strengthened.
IFC's expected development contribution
IFC’s participation in the project not only brings extensive microfinance expertise, but also the unique combination of investment as well as technical assistance funds. These contributions will support the newly created institution’s ability to jump-start and effectively scale up operations and build local management capacity.
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. Considering the nature of activities supported and as Access Bank Zambia is a greenfield micro-finance bank, the project will be required to: (i) develop a procedure relevant to its business process, prior to start of its operations, 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) demonstrate commitment and resources to implementing the procedure, (iv) demonstrate commitment to applying the labor standards established by the IFC Performance Standard 2: Labor and Working Conditions, (v) submit a periodic report to IFC as per a format to be provided by IFC.
For inquiries about the project, contact:
Access Microfinance Holding AG
Telephone: +49 30 30 87 47 0
For inquiries and comments about IFC, contact:
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
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