Eastern and Southern African Trade and Development Bank - Non-Honoring of Financial Obligations - Regional Development Bank (MIGA-14662)

Regions
  • Africa
Geographic location where the impacts of the investment may be experienced.
Countries
  • Burundi
  • Comoros
  • Congo, Democratic Republic of
  • Djibouti
  • Egypt
  • Eritrea
  • Eswastini
  • Ethiopia
  • Kenya
  • Madagascar
  • Malawi
  • Mauritania
  • Mozambique
  • Rwanda
  • Seychelles
  • Somalia
  • South Sudan
  • Sudan
  • Tanzania
  • Uganda
  • Zambia
  • Zimbabwe
Geographic location where the impacts of the investment may be experienced.
Financial Institutions
  • Multilateral Investment Guarantee Agency (MIGA)
International, regional and national development finance institutions. Many of these banks have a public interest mission, such as poverty reduction.
Project Status
Proposed
Stage of the project cycle. Stages vary by development bank and can include: pending, approval, implementation, and closed or completed.
Bank Risk Rating
B
Environmental and social categorization assessed by the development bank as a measure of the planned project’s environmental and social impacts. A higher risk rating may require more due diligence to limit or avoid harm to people and the environment. For example, "A" or "B" are risk categories where "A" represents the highest amount of risk. Results will include projects that specifically recorded a rating, all other projects are marked ‘U’ for "Undisclosed."
Voting Date
Jun 18, 2020
Date when project documentation and funding is reviewed by the Board for consideration and approval. Some development banks will state a "board date" or "decision date." When funding approval is obtained, the legal documents are accepted and signed, the implementation phase begins.
Borrower
Standard Chartered Bank, Eastern and Southern African Trade and Development Bank
A public entity (government or state-owned) provided with funds or financial support to manage and/or implement a project.
Sectors
  • Finance
The service or industry focus of the investment. A project can have several sectors.
Investment Type(s)
Guarantee
The categories of the bank investment: loan, grant, guarantee, technical assistance, advisory services, equity and fund.
Investment Amount (USD)
$ 422.60 million
Value listed on project documents at time of disclosure. If necessary, this amount is converted to USD ($) on the date of disclosure. Please review updated project documents for more information.
Currency conversion note:
Bank reported 377
Converted using 2020-06-18 exchange rate.
Primary Source

Original disclosure @ MIGA website

Updated in EWS Aug 11, 2024

Disclosed by Bank May 15, 2020

Contribute Information
Can you contribute information about this project?
Contact the EWS Team

Project Description
If provided by the financial institution, the Early Warning System Team writes a short summary describing the purported development objective of the project and project components. Review the complete project documentation for a detailed description.

BURUNDI, COMOROS, DEMOCRATIC REPUBLIC OF CONGO, DJIBOUTI, EGYPT, ERITREA, ESWATINI, ETHIOPIA, KENYA, MADAGASCAR, MALAWI, MAURITIUS, MOZAMBIQUE, RWANDA, SEYCHELLES, SOMALIA, SOUTH SUDAN, SUDAN, TANZANIA, UGANDA, ZAMBIA, AND ZIMBABWE

According to bank provided information, this summary describes non-shareholder loan investments by a syndicate of commercial banks (including Standard Chartered Bank, as agent, on behalf of itself and other commercial banks to be identified, together the "Lenders") to the Eastern and Southern African Trade and Development Bank ("TDB"), formerly known as PTA Bank, with a principal office in Mauritius (dual-domiciled in Burundi, with the operational hub in Kenya). Standard Chartered Bank (as agent, on behalf of itself and the Lenders) has applied for a MIGA guarantee of up to EUR 377 million of principal plus interest and premium, for a period up to 10 years against the risk of non-honoring of financial obligations by a regional development bank ("NHFO-RDB").

TDB is a regional development bank operating in the Tripartite Free Trade Area ("TFTA") comprising the Common Market for Eastern and Southern Africa ("COMESA"), the East African Community ("EAC") and the Southern African Development Community ("SADC"),providing trade and project finance solutions to private and public borrowers. TDB aims to foster economic integration in the region through support of trade, infrastructure development, and private sector growth. TDB also supports national development agencies by co-financing their projects.

Under this proposed project, the Lenders will extend a loan facility denominated in Euros to TDB to support the growth and diversification of TDB's trade finance portfolio (the "Project"). The facility is expected to include EUR 50 million specifically earmarked for COVID-19 response.

Sovereign exposure is comprised of 3 products: FI line of credit (60%); commodity finance (37%); and asset financing and leasing (3%). Most sovereign exposure is through import LCs. Non-sovereign exposure is primarily FI line of credit (37%), export finance (29%) and structured trade and commodity financing (15%). Approximately 92% of non-sovereign exposure is import and export LCs, and the remaining 8% is working capital loans, guarantees and discounting and forfaiting. In terms of sector exposure, oil and gas comprises 50% (about 60% of sovereign exposure and 30% of non-sovereign), agricultural products (i.e. grain and wheat) and inputs (e.g. fertilizer) comprise 35% (about 40% of sovereign and 30% of non-sovereign) and banking and financial services comprises 10% (25% of non-sovereign exposure). All oil and gas exposures are LCs for import (bulk transportation) of petrochemical products.

TDB uses an Exclusion List that is consistent with MIGA’s, and therefore, does not have any exposure to MIGA Exclusion List sectors. TDB also does not have exposure to palm oil. There is one indirect exposure to coal of US$16 million. There are no upstream oil and gas exposures in the TF portfolio; however, there are a small number of upstream oil and gas exposures in the project and infrastructure finance portfolio.

Early Warning System Project Analysis
For a project with severe or irreversible impacts to local community and natural resources, the Early Warning System Team may conduct a thorough analysis regarding its potential impacts to human and environmental rights.

As stated by the MIGA, the Project is categorized as FI-2 according to MIGA’s Policy on Environmental and Social Sustainability (2013) because the use of proceeds is targeted to trade finance (“TF”) products, which are expected to have potentially limited adverse E&S risks and impacts that are few in number, generally site-specific, largely reversible and readily addressed through mitigation measures.

Investment Description
Here you can find a list of individual development financial institutions that finance the project.
Financial Intermediary
A financial intermediary is a bank or financial institution that receives funds from a development bank. A financial intermediary then lends these funds to their clients (private actors) in the form of loans, bonds, guarantees and equity shares. Financial intermediaries include insurance, pension and equity funds. The direct financial relationship is between the development bank and the financial intermediary.
Private Actors Description
A Private Actor is a non-governmental body or entity that is the borrower or client of a development project, which can include corporations, private equity and banks. This describes the private actors and their roles in relation to the project, when private actor information is disclosed or has been further researched.

As stated by Bloomberg, Standard Chartered Bank operates as a bank. The Bank provides savings account, loans, mortgages, credit cards, insurance, and investment services. Standard Chartered serves customers worldwide.

As stated on the company's website, established in 1985, TDB is an investment-grade African regional development finance group, with the mandate to finance and foster trade, regional economic integration, and sustainable development, with an asset base of USD 10 billion.
Private Actor 1 Private Actor 1 Role Private Actor 1 Sector Relation Private Actor 2 Private Actor 2 Role Private Actor 2 Sector
Standard Chartered Bank Investor Finance invests in Eastern and Southern African Trade and Development Bank (TDB) Client Finance

Contact Information
This section aims to support the local communities and local CSO to get to know which stakeholders are involved in a project with their roles and responsibilities. If available, there may be a complaint office for the respective bank which operates independently to receive and determine violations in policy and practice. Independent Accountability Mechanisms receive and respond to complaints. Most Independent Accountability Mechanisms offer two functions for addressing complaints: dispute resolution and compliance review.

*Contact information not provided at the time of disclosure*

ACCOUNTABILITY MECHANISM OF MIGA

The Compliance Advisor Ombudsman (CAO) is the independent complaint mechanism and fact-finding body for people who believe they are likely to be, or have been, adversely affected by an IFC or MIGA- financed project. If you submit a complaint to the CAO, they may assist you in resolving a dispute with the company and/or investigate to assess whether the IFC is following its own policies and procedures for preventing harm to people or the environment. If you want to submit a complaint electronically, you can email the CAO at CAO@worldbankgroup.org. You can learn more about the CAO and how to file a complaint at http://www.cao-ombudsman.org/

How it works

How it works