This summary covers an investment by Equity Group Holdings Limited (EGHL) of Kenya in Equity Bank (South Sudan) Limited (EBSS) in South Sudan. The investor has applied for a MIGA guarantee of $36.0 million for a period of up to 10 years against the risks of transfer restriction, expropriation, and war and civil disturbance. MIGA also proposes to use its Conflict-Affected and Fragile Economies Facility on a first-loss basis.
The project involves the continuous operations of EGLH in its fully-owned subsidiary in South Sudan and will support EBSS’s diversified loan portfolio, which includes construction, transportation, trade finance and services, and other activities in the country.
Environmental and social risks (E&S) and impacts associated with Equity Bank’s portfolio are considered limited, generally site-specific, and manageable through the implementation of mitigation measures. Key potential E&S risks and impacts are associated with client’s local capacity to manage E&S risks and impacts associated with lending activities. The project is a category FI-2 under MIGA’s Policy on Environmental and Social Sustainability.
Equity Bank has an Environmental and Social Policy and Human Resources Policy at corporate level. During the acquisition of Equity Bank’s operations in South Sudan, EGHL will be required to develop and implement an Environmental and Social Management System (ESMS) in accordance with MIGA’s requirements and screen projects against MIGA’s Exclusion List, national environmental and social laws and regulations, and MIGA’s Performance Standards for its lending portfolio. EGHL will also be required to appoint an ESMS officer at the local level and complete training in an agreed timeframe. EGHL will update its human resources policies and procedures to ensure its compliance at all levels with the requirements of MIGA’s Performance Standard 2 on Labor and Working Conditions.
EBSS opened its doors in May 2009 and has experienced fast growth in the face of extremely challenging circumstances. The project is expected to help EGHL expand its operations to support local consumers and companies and increase financial penetration in one of the world’s poorest countries, thus contributing to private sector development, job creation, and the economic growth. It is also expected to play an important role in encouraging further foreign direct investment in the financial sector of South Sudan.
The project is fully aligned with MIGA’s top priorities to support investments into IDA-eligible countries and fragile and conflict-affected situations. The project will also complement the efforts of the World Bank Group to develop the financial sector.
This would be the first guarantee in support of a project in South Sudan since it became a MIGA member country in 2013.