| Project Detail |
This project is expected to support a total of 12,375 people and businesses with access to finance, leveraging US $190 million of private capital mobilization. The achievement of the PDO will contribute to the World Bank Scorecard Corporate Results Indicators “People and businesses using financial services, including the number of women” and “Private Capital Mobilization”. The PDO will be monitored and reported through the following standard Scorecard sub-indicators and custom indicators : • Number of businesses using debt financing (i.e., Number of MSMEs provided with a loan from the BOAD Line of Credit) • Number of women-led businesses using debt financing (i.e., Number of women-led MSMEs provided with a loan) • Number of businesses using debt financing for green investments • Number of people using debt financing (i.e., Number of eligible households provided with a mortgage loan refinanced by the CRRH-UEMOA) • Number of women using debt financing (i.e., Number of women as sole or joint borrower provided with a mortgage loan) • Private Capital Mobilized (i.e., co-financing amounts by Participating Financial Institutions, and bond issuance through capital markets) This project will ensure private capital is mobilized to achieve its development objectives. Private capital mobilization (PCM) is critical in helping this project to achieve its ambitious PDO targets and the PCM has been incorporated in the project design and tagged as Performance Based Conditions (PBC) in the Results Framework. The housing finance component of this project is expected to mobilize between US$ 120 million of private capital, coming from private investment into bonds issued by the CRRH-UEMOA over the next 5 years. The MSME securitization component is expected to mobilize US$70 million in Participating Financing Institutions contribution to MSME loans. Project Components Component 1L Line of credit (LoC) to be on lent by the BOAD to PFIs to extend long-term loans to viable MSMEs including for green investments (US$140 million) : The World Bank will finance a Line of Credit to the BOAD which will on lend to eligible PFIs operating in WAEMU countries, which will in turn finance viable MSMEs, to fund their diverse financing needs, primarily for investment and working capital. The World Bank financing will allow for longer term loans with maturities of up to 10 years. 30 percent of the LoC will be allocated to MFIs and 70 percent to banks. a. 25 percent of the LoC will be allocated to MSMEs operating in green sectors and/or investments by MSMEs for climate adaptation and mitigation purposes. To that end, the project will adopt IFC’s Climate Assessment for Financial Institutions (CAFI) tool , which is a digital, web-based platform that helps banks and other financial institutions to assess the climate eligibility and measure development impact, including adaptation investments across sectors, and sectors including but not limited to: o Renewable Energy: Solar Power, Wind and Hydro Power and Biomass and Bioenergy. o Sustainable Agriculture and Agroforestry: Climate-Smart Agriculture (this includes practices that improve agricultural productivity while reducing greenhouse gas emissions, increasing resilience to climate change, and enhancing carbon sequestration), Agroforestry and organic farming. o Water and Waste Management: Water Efficiency (water conservation, efficient irrigation systems, and sustainable water management, etc.) and Waste-to-Energy: Turning waste into energy (e.g., through biogas or waste incineration) can help reduce landfill use, generate energy, and manage waste more sustainably. o Sustainable Forestry and Land Use: Reforestation, afforestation and sustainable forest management. o Green Transport: Developing electric transport systems (electric vehicles, buses, and shared electric mobility). o Green Construction and Buildings: The construction of energy-efficient buildings (e.g., through the use of sustainable materials, smart energy systems, and passive design). o Eco-Tourism: Focuses on conservation, low-impact travel and aligns with local community development and environmental preservation. b. 30 percent of the LoC will be allocated to Women-led MSMEs. The BOAD defines a woman-led firm a firm, either led by women, or owned at more than 50 percent by women, where women represent at least 30 percent of the workforce, or where women represent more than 50 percent of the beneficiaries. The green and gender allocations are not mutually exclusive. As such a loan to a green investment in a women owned SME will count towards both the green and the gender targets. c. An additional US$ 70 million will be mobilized in private capital from PFIs. One feature of the LoC requires that for each extended MSME loan, PFIs draw up to 80 percent from the LoC and contribute 20 percent from their balance sheets. This co-financing feature, which will mobilize an additional US$ 50 million in private capital, will (i) ensure an alignment of interest with PFIs; and (ii) increase the amount of funding to MSMEs, further increasing the impact and additionality of the project. The additional funds from PFIs balance sheet will be on the respective PFIs own terms. The eligibility criteria for beneficiary PFIs and MSMEs will be reflected in the project operational manual. These will include compliance by PFIs with governance standards, prudential norms and profitability benchmarks. For MSMEs, while there is no harmonized definition in the WAEMU, for the needs of this project MSMEs will be defined as those enterprises with annual turnover not to exceed 3 billion FCFA (approx. US$5 million) and with up to two hundred employees. Annex II provided additional information about the LoC process and procedures. Component 2. Housing Finance (US$60 million) This component will support the provision of affordable housing finance through refinancing long term housing loans and support to the regional housing guarantee product, through the following two sub-components: Line of credit to increase the capacity of the West African mortgage liquidity facility (CRRH-UEMOA) to finance banks and MFIs to offer long term affordable housing loans (US$ 40 million). This sub-component will support the CRRH-UEMOA mortgage refinancing window offering banks and microfinance institutions in WAEMU countries long term financing for mortgages to low- and middle-income eligible households. The component will support the development of the green and resilient housing finance market in the WAEMU countries by strengthening the capacity of CRRH members to finance this sector, as well as the capacity of CRRH-WAEMU to refinance them. Building on national efforts to increase the supply of resilient housing in the region, as well as green and resilient housing certification programs (such as the IFCs EDGE certification), CRRH-WAEMU, with the support of the World Bank Group, will enhance the understanding and capacity of its members to finance green and resilient housing for low- and middle-income households, with the goal that by the end of the project at least 25% of its members will be able to meet the demand for green and resilient housing finance. This will also include support for strengthening the capacity of its members to identify and regularly report on green housing loans. This will be measured through two studies conducted as part of the project, the first after 3 years and the second during the 5th and final year of the project, which will aim to analyze the activity in this sector by CRRH-WAEMU members, the capacity-building actions taken, and any additional needs to be covered based on national activities by governments as well as any financing provided by financial institutions and refinancing carried out, subject to the demonstration through analysis of the presence of a real and eligible supply of green and resilient housing in the WAEMU market . This sub-component will also support. To increase financial inclusion for households and MSMEs in the WAEMU region |
