ABSA Capital Optimization (MIGA-15207)

Countries
  • Mozambique
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
May 23, 2024
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
Absa Group Limited
A public entity (government or state-owned) provided with funds or financial support to manage and/or implement a project.
Sectors
  • Finance
  • Industry and Trade
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)
$ 114.76 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.
Primary Source

Original disclosure @ MIGA website

Updated in EWS Aug 11, 2024

Disclosed by Bank Apr 23, 2024

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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.

According to the Bank’s website, ABSA Group Limited ("ABSA" or "The Group") has requested MIGA coverage a portion of its new and existing equity investments in its subsidiary in Mozambique, against the risk of Expropriation of Funds for mandatory cash reserves held at the Central Bank of the host country ("the Project"). The new investment is expected to be in the form of retained earnings in ABSA's subsidiary in Mozambique ("the subsidiary") relating to ABSA's banking operations in the host country.

The proposed transaction would be MIGA's second capital optimization project with ABSA, following the initial coverage in 2020, and is expected to provide regulatory capital relief to ABSA on a consolidated level by reducing the amount of Risk Weighted Assets (RWAs). The tenor of the proposed guarantee is expected to be up to 10 years (the remaining tenor of the first transaction). The proposed guarantee remains subject to approval by both ABSA and MIGA in accordance with their respective policies and procedures.

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.

ABSA Mozambique provides retail, small and medium enterprise (SME), and corporate finance services to clients in Mozambique. The MIGA project will support all of the bank's lending activities. The environmental and social ("E&S") risks and impacts associated with the main sectors financed by ABSA Mozambique are typically moderate to high; however, long-term lending to high-risk sectors is limited in number. This project has thus been categorized as FI-2 in accordance with MIGA's Policy on Environmental and Social Sustainability (2013).

The main E&S aspects of this project relate to ABSA Mozambique's ability to identify, assess, and manage the E&S risks and impacts associated with its lending activities and the management of labor matters. 

As of October 2023, ABSA Mozambique's portfolio included the following business segments - corporate loans, retail loans (mortgages and consumer loans), and SME loans. The main sectors financed by ABSA Mozambique include commerce, electricity and water, manufacturing, mining, transport, and state-owned enterprises. ABSA Mozambique currently has limited exposure to activities on the MIGA Exclusion List. The bank has no exposure to coal-related projects.

Investment Description
Here you can find a list of individual development financial institutions that finance the project.

A coverage a portion of the client's new and existing equity investments in its subsidiary in Mozambique, against the risk of Expropriation of Funds for mandatory cash reserves held at the Central Bank of the host country. The tenor of the proposed guarantee is expected to be up to 10 years (the remaining tenor of the first transaction). 

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.

Headquartered in South Africa, ABSA is one of the largest financial institutions in Africa in terms of total asset size. The Group has a presence in 12 countries across the African continent, as well as offices in the United Kingdom, the United States, and China, along with technology support colleagues in the Czech Republic. Absa offers an set of products and services across personal and business banking, corporate and investment banking, wealth and investment management and insurance.

Private Actor 1 Private Actor 1 Role Private Actor 1 Sector Relation Private Actor 2 Private Actor 2 Role Private Actor 2 Sector
- - - - Absa Bank Moçambique, SA Subsidiary -

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.

No contacts available at the time of disclosure.

ACCESS TO INFORMATION

You can submit a request for information disclosure at: https://www.miga.org/contact/access_to_information

You can also request general information about MIGA and for information on guarantees by emailing: migainquiry@worldbank.org

ACCOUNTABILITY MECHANISM OF IFC/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

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How it works