This is a proposed equity investment of up to EUR60 million in SGI Africa SAS ("SGI" or ''the Company") to support the phased development of c.20 malls in West and Central Africa at an estimated cost of EUR500 million (the "Project"). Target countries are Cameroon, Congo, Ivory Coast, Ghana, Nigeria, Senegal, Gabon and the Democratic Republic of Congo. The company is the property development and management arm of CFAO Retail, the retail division of CFAO S.A. ("CFAO" or the "Group" or the "Sponsor"), a front-ranking specialized distributor and preferred partner of major international brands, serving the high-potential equipment & services, healthcare and consumer goods markets in Africa and the French overseas territories.CFAO Retail was created in 2013 to develop modern retail in Africa and includes SGI Africa mandated to build and manage shopping malls across West and Central Africa. Depending on the country's assessment, 3 formats are considered: (i) hypermarket + shopping center + food court; (ii) supermarket + shopping center + food court; or (iii) standalone supermarket with a small gallery. Carrefour is expected to be the anchor tenant in all the malls. The expansion plan is already in motion with the first 14,500 m2 Gross Leasing Area (GLA) shopping mall (Marcory) to open in Abidjan, Ivory Coast, in December 2015.CFAO Retail will acquire or lease land lots in all 8 targeted countries. In Cote d'Ivoire, CFAO already acquired one land lot considered a willing buyer/willing seller transaction for its Marcory shopping mall. About 6 other sites have been prospected. In Cameroon, at least 5 sites have been prospected among which, one could be a lease. In all countries, lands are located in urban setting and cover 2-6 ha.
OVERVIEW OF IFC'S SCOPE OF REVIEW
IFC's review included a visit of the Marcory shopping mall, and of 2 proposed sites for future development in Abidjan; and 5 sites in Douala from November 10-13, 2015. Meetings were held with the CFAO Group Human Resources (HR) Manager, CFAO Retail Project Manager, Acquisition Manager, and Maintenance Manager in Paris the 6-7 October 2015. Meetings were held in Abidjan with CFAO Retail General Manager, HR Manager, Corporate Social Responsibility (CSR) Manager, Food Court Manager, Security Manager, Supply Chain Manager, Finance Manager, Quality and Food Safety Manager, Socotec General Manager (responsible for Occupational Health and Safety (OHS) during construction, and Life and Fire Safety), CIA Project Manager (EPC contractor). The CFAO Retail General Manager in Douala was also met. IFC reviewed the following documentation: Food Safety Management Plan, suppliers contracts, waste management contracts, security contract, procedures for Personal Protective Equipment (PPE), organizational charts, collective bargaining agreement, internal regulations for Cote d'Ivoire, HR procedures, and the Construction General Safety Management Plan.
IDENTIFIED APPLICABLE PERFORMANCE STANDARDS**
While all Performance Standards are applicable to this investment, IFC's environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards.PS 1 - Assessment and Management of Environmental and Social Risks and ImpactsPS 2 - Labor and working conditionsPS 3 - Resource Efficiency and Pollution PreventionPS 4 - Community Health, Safety and SecurityIf IFC's investment proceeds, IFC will periodically review the the project's ongoing compliance with the Performance Standards
There are no existing PS5 (Land Acquisition and Involuntary Resettlement) impacts identified for specified project sites and thus, PS5 was not found applicable at the time of IFC's appraisal. For future project-related land acquisitions, the applicability of PS5 will be established during the environmental and social risks and impacts identification process. All shopping malls will be constructed in modified habitat, therefore PS 6 (Biodiversity Conservation and Management of Living Natural Resources) is not applicable, while the nature of the site excludes PS 8 (Cultural Heritage). No Indigenous People will be impacted by the project, therefore PS7 (Indigenous Peoples) is not applicable.
ENVIRONMENTAL AND SOCIAL CATEGORIZATION AND RATIONALE
Projects of this nature have issues related to assessment and management of environmental and social risks and impacts, labor and working conditions, resource efficiency and pollution prevention, community health, safety and security, land acquisition and, therefore, IFC's Performance Standards (PS) 1 to 4 are relevant. This proposed investment is an Environmental and Social (E&S) Category B project according to IFC's Policy on Environmental and Social Sustainability, because potential adverse environmental or social risks and/or impacts are limited, few in numbers, site-specific, largely reversible and readily addressed through mitigating measures. Key environmental and social impacts include workplace safety during construction, labor and working conditions, energy efficiency, effluent treatment and disposal, food safety, supply chain management, fire and structural safety aspects of the building design during exploitation, land acquisition, and stakeholder engagement.
**Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability
ENVIRONMENTAL AND SOCIAL MITIGATION MEASURES
IFC's appraisal considered the environmental and social management planning process and documentation for the project and gaps, if any, between these and IFC's requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through the implementation of these measures, the project is expected to be designed and operated in accordance with Performance Standards objectives.
PS 1: ASSESSMENT AND MANAGEMENT OF ENVIRONMENTAL AND SOCIAL RISKS AND IMPACTS
PolicyThe CFAO Group has the following policies: environmental, health care, social, education, and corporate transparency. It also has a Code of Business Conduct with provisions on child and forced labor, non-discrimination, harassment, freedom of association, work safety, and personal data protection. The environmental policy focuses on pollution and waste management, and sustainable use of resources.SGI does not have an Environmental and Social Management System (ESMS) in line with IFC's Environmental and Social Performance Standards. As outlined in the ESAP, the ESMS will incorporate the following elements: (i) a policy that will indicate who within the SGI's organization will ensure conformance and be responsible for its execution; (ii) identification of risks and impacts through an E&S due diligence procedures to screen each new project; (iii) management programs/procedures for environmental aspects, occupational health and safety, and fire safety; (iv) organizational capacity and competency; (v) emergency preparedness and response; (vi) monitoring and review; and (vii) a community grievance mechanism in order to manage communication with customers and outside communities.Identification of Risks and ImpactsBased on the Environmental Decree 96-894 (dated 8 November 1996) of Ivory Coast, an environmental and social impact assessment was not required for the Abidjan development. However in Cameroon, national regulations (Decree 0070 dated 22 April 2005) require that an Environmental and Social Impact Assessment be conducted prior to the construction of shopping malls. As part of its ESMS, SGI will develop E&S due diligence procedures to screen each new project and ensure that the proposed investment will operate in line with the local environmental regulatory requirements and standards set out in CFAO's own policies guidelines, which should reflect international good practice such as the IFC Environmental and Social Performance Standards. Each project should have its own set of management plan to address the risks and impacts identified during the E&S due diligence process.Management Programs and Organizational CapacityDuring construction of the Marcory mall in Abidjan, SGI mandated Socotec to oversee OHS issues. Socotec devised a Construction General Management Plan for OHS and has a part time OHS Manager on site. Each of the 15 contractors developed a specific OHS Management Plan (not including environmental aspects) implemented by an OHS Officer. As outlined in the ESAP, for all future developments, the construction phase Environmental and OHS Management Plan will be developed by the construction contractor prior to start of any construction activities; in addition this contractor will have a full time Environment, Health and Safety (EHS) Officer on site. SGI will have an EHS Officer to supervise and audit the implementation of the construction phase ESMP.For the operation phase SGI has not yet developed its management programs for OHS, environment, quality and food safety. Quality and Food Safety procedures are already available for the international brands (e.g. Carrefour, Brioche doree). Procedures include cleaning of raw products, cleaning of workplace, verification of cleaning, identification of HACCP control points, temperature monitoring, etc. As set forth in the first action item of the ESAP, for all operations, SGI will develop procedures to manage, monitor, and report on risks and impacts related to OHS in the work place and on environmental aspects.Going forward, as set forth in the ESAP SGI will develop and implement a land acquisition and procedure clearly defining the steps that need to be undertaken at each of its site. This will include, but is not restricted to: (i) undertaking a screening procedure before acquisition, and identification of measures needed to manage potential resettlement in compliance with performance standards; (ii) obtaining all relevant national legal permits; (iii) developing a time bound action plan to bring about compliance with performance standards requirements; (iv) assigning appropriate human and financial resources to implement the action plan.At the time appraisal, CFAO Retail Cote d'Ivoire had a CSR Officer and a Quality, Food Safety Officer to oversee operations in the country. Attributions of the CSR Officer are mainly related to raising awareness and training of workers on health and safety, environment, and promoting scholarships. The Quality, Food Safety Officer is tasked in developing HACCP procedures, conducting monthly internal audit of the supermarket and all food court brands, organizing quarterly external audits, and inspecting suppliers products quality. To be in line with requirements of IFC's Environmental and Social Performance Standards, environmental and OHS attributions will be added to the tasks of the CFAO Retail Abidjan Quality and Food Safety Officer. An Environment, and OHS Coordinator will also be appointed at the SGI level to implement the overall ESMS and ensure harmonization of procedures and requirements in all operations in West and Central Africa. For Food Safety, SGI will include in lease agreements provisions requiring CFAO subsidiaries to comply to recognized good industry practice. CFAO Retail Cote d'Ivoire created a training institute where all staff receive trainings in Life and Fire Safety, OHS, and on technical aspects of their work. Managers are also sent to Europe to learn about management systems of the different brands.Monitoring and ReportingUnder the ESMS, SGI will adopt a structured EHS monitoring and reporting system on environmental, OHS and social impacts of its operations. Monitoring frequencies and methodology will be reflective of the risks and impacts and incorporated into the ESMS; monitoring data will be stored in a centralized database for quaterly and annual report production. SGI will also incorporate Key Performance Indicators (KPIs)related to operations in order to be able to report upon E&S performance: a) Safety - Lost Time Injury Frequency Rate (LTIFR), Accident Free Days; b) Water Usage, Energy Usage, and wastewater effluents, in line with IFC/WBG General EHS Guidelines; c) Staff - Retention and training days. The company will report annually to IFC as part of the Annual Monitoring Report (AMR). With this monitoring and reporting system in place SGI shall have readily available data providing good insight and feedback on its Environmental and Social performance and have a basis for a continual improvement process.Emergency Preparedness and ResponseFor both phases (construction and exploitation), SGI will develop an emergency preparedness and response plan during construction and operation for each site. The emergency preparedness and response system will be part of its ESMS and will include an evacuation plan; identification of muster points; nomination and training of fire wardens in first aid and first response in sufficient number to ensure adequate coverage. Fire drills will be undertaken at least twice a year and will involve the local fire department.
PS 2: LABOR AND WORKING CONDITIONS
Human Resources Policy and ProceduresDuring construction, there were about 200 workers on site hired by SGI's contractors in Abidjan. For exploitation, most of the staff have been hired by CFAO Retail and include 225 women and 246 men. Human Resources (HR) Procedures are available as well as HR Policies (''Rcglement interieur'') for each branch of CFAO Retail in Cote d'Ivoire (SDA: subsidiary responsible for food distribution; SDM: subsidiary responsible for the super market). Minimum wage of shopping mall workers is largely over the national minimum. All workers are covered by the national insurance (''Caisse national de prevoyance sociale''). In its policy CFAO includes provisions on child and forced labor, non-discrimination, harassment, freedom of association, work safety, and personal data protection. However policies and procedures do not include a grievance mechanism for workers. As outlined in the ESAP to be in line with IFC PS 2, the HR Policy will include a mechanism for grievance redress. Construction contractors for each site will ensure that good international practice is followed related to Occupational Health and Safety.Occupational Health and SafetyDuring construction, OHS issues are addressed in a Construction General Safety Management Plan and each of the 15 sub-contractors have a Health and Safety Management Plan and an OHS Officer. Socotec is responsible for controlling the design and execution of construction works including OHS and Life and Fire Safety. Weekly meetings are organized by Socotec with all OHS Officers to discuss about incidents and preventive measures. Some independent shops did not have OHS Officers during construction. No major accident or fatality occurred during construction (there is about one month left before the end of the construction phase). A medical doctor was available on site during the construction period and a medical doctor and a nurse were recently hired for the exploitation phase. In line with requirements of the Labor Law, a Health and Safety Committee will be set up in the first semester of 2016. As set forth in the ESAP for future constructions, SGI will include environmental aspects in its system to control risks and impacts and will ensure that all third party contractors, including those for independent shops, have an OHS Officer. All third party workers (contractors and subcontractors) shall be required to wear relevant personal protective equipment such as hard hats, gloves, steel toe boots, goggles, ear plugs, and harness which will be supplied by the construction contractor. As per the E&S performance monitoring requirements in PS1, the Company shall track, investigate, analyze, and report on incidents and accident of its employees as well as visitors. In the case of construction firms, SGI shall also report on onsite health and safety incidents and corrective measures during the construction phase. For operation, the ESMS mentioned above will include specific provisions to manage OHS issues.Supply ChainThe main tenant in Cote d'Ivoire (CFAO Retail) will be sourcing fruits, vegetables and meat from local cooperatives and farmers. Specifically, the company has already identified about 30 fruit and vegetable producers and at least 3 meat and poultry suppliers, among which one is an IFC client (Sipra for poultry), and another one is ISO 9001 certified (GID). The Fresh Produces Manager responsible for supply chain management has already established a set of criteria to identify producers (e.g. farm cleanliness, water quality for irrigation, and child labor). All countries targeted in this project are subject to child labor issues.As set forth in the ESAP, in order to mitigate any incidence of harmful child labor and risks of conversion of natural/critical habitats, SGI will adopt a management procedure for its CFAO subsidiaries (e.g. CFAO Foods and CFAO Brands), which will include the development and implementation of a Code of Conduct. This Code of Conduct will include provisions against child and forced labor, and against conversion of natural/critical habitats in the supply chain.
PS 3: RESOURCE EFFICIENCY AND POLLUTION PREVENTION
Resource EfficiencyEnergy needs for the operations in Abidjan will be provided by the local electric company, as well as back-up diesel generators (800 and 1,800 kVa) in case of power outage. Preliminary discussions have been held with IFC's Green Building Specialist. Some measures were developed in the Abidjan shopping mall design to reduce solar heat gain and minimize air conditioning load, which is expected to be the largest element of building energy use. Other measures include LED lighting, cold water production at night to reduce the need for air conditioning during the day, and building management system. In line with requirements of PS 3 and as outlined in the ESAP, SGI will implement cost effective measures for improving efficiency in its consumption of energy, water, as well as other resources and material inputs. Such measures will integrate the principles of cleaner production into shopping mall design.GHG EmissionsAnnual project's CO2 equivalent emissions are expected to exceed IFC's threshold of 25,000 tonnes and, thus the company will quantify direct emissions from the facilities owned or controlled within the physical project boundary, as well as indirect emissions associated with the off-site production of energy used by the project. Quantification of GHG emissions will be conducted by the company annually in accordance with internationally recognized methodologies and good practice.Water and Energy ConsumptionDuring the operational phase the water will be supplied through connections to municipal water and treated to applicable national acceptability standards or in their absence to the current edition of the World Health Organization (WHO) standards. Quantification of energy and water use has not yet been estimated given that the project is still at an early stage. The AMR will include requirements for monitoring and reporting on energy and water consumption for the project.WastesSanitary effluents generated during construction were not significant given the amount of workers. The construction contractor ensured that mobile toilets were in place and were emptied by a third party licensed contractor periodically. During operations, effluent discharge from the food court, super market as well as sanitary waste will be routed to the municipal drainage network. Prior meetings with the Ministry of Environment confirmed that the area is covered by a municipal wastewater treatment system. As set forth in the ESAP and given that this project covers multiple sites in West and Central Africa, E&S due diligence procedures will screen each new project to determine the need for wastewater treatment to ensure that effluents discharge comply with the local liquid effluent standards or World Bank Group effluent guidelines limits. In case adequate municipal treatment is not available, build a wastewater treatment system to ensure wastewater is treated prior to discharge. Each site will need to report on post-treatment effluent contaminants load.Waste generated during construction included excavated soil, domestic waste, various packaging, containers, wood, waste oil, batteries, etc. The Construction General Safety Management Plan includes generic provisions on waste management. SGI's ESMP will include waste management procedures. SGI will ensure that the construction contractor appropriately minimize and control release of hazardous materials. Waste will be segregated into construction, domestic, hazardous, and oily sludge and managed in a manner consistent with WBG EHS Guidelines or local regulatory requirements. Waste will be disposed-off by licensed contractors. Waste manifest will be required by SGI as part of its waste management procedures.Pollution Prevention and Hazardous Material ManagementGiven that there are no significant issues with power outage in Ivory Coast, the use of fuel for the backup generators should be limited. This could be different in other countries covered by this project. Onsite fuel supply will be stored in above ground storage tanks that will have secondary containment system that meet WBG EHS guidelines.Prior to construction of future sites, a noise assessment should be conducted at sensitive receptors such as the adjacent school and adequate mitigation measures put in place to reduce impact. Cement use during construction, excavation and vehicle movements will increase dust/particulate matter on the site. As part of its ESMS, SGI will require contractors to develop and implement procedures to mitigate impacts on air quality impacts and noise (i.e. heavy equipment and vehicle maintenance program, speed limit and use of water as dust suppressant).Pest control will be managed by a third party company. As outlined in the ESAP, SGI shall conduct a due diligence with regards to chemicals used and ensure that it does not fall in WHO Recommended Classification of Pesticides by Hazard Class Ia (extremely hazardous) or Ib (highly hazardous); and that appropriate measures are taken to ensure workers' and customers health and safety.
PS 4: COMMUNITY HEALTH, SAFETY AND SECURITY
Community Health and SafetyThe Abidjan shopping mall is located in an urban area, and adjacent to a school. To increase traffic safety during operation, CFAO Retail built a small access road in front of the shopping mall and installed signage limiting speed around it.To address potential fire and life safety risks, CFAO Retail used French Standards for the Abidjan project. For each development, SGI shall provide a formal statement from a suitably qualified fire safety professional acceptable to IFC that the life and fire safety-related aspects of the building and fire safety system designs meet all local life and fire safety regulations and an internationally-accepted life safety code. Following completion of construction and before public opening of any mall, SGI shall provide a second certification from a suitably qualified professional acceptable to IFC that the building and its fire safety systems were constructed according to the previously verified design or alternatively identify corrective features needed for design compliance and an implementation timeline.Security PersonnelAt the time of appraisal, security arrangements had already been made for the Abidjan site during construction with 26 non armed guards posted during the day and 11 during the night, and hired by a private security agency (G4S). CFAO Retail has also 20 staff directly responsible for surveillance of the shopping mall, CCTV management, and access control. CFAO Retail and G4S make reasonable inquiries to ensure that those providing security are not implicated in past abuses. The security agency trains agents adequately in the use of force and self-defense, fire safety, and appropriate conduct toward workers and Affected Communities; and require them to act within the applicable law.