Project Description
This summary describes equity investments by FirstRand EMA Holdings (Pty) Ltd (FREMA), a wholly owned subsidiary of FirstRand Limited (FirstRand or the group), in its subsidiary First National Bank of Eswatini Limited (FNB Eswatini or FNBE). The Guarantee Holder or investor is FREMA. The investor has applied for MIGA guarantees of up to USD[63.88] million covering mandatory and voluntary reserves for a period of up to 3 years.
FirstRand is one of the largest financial services groups in Africa by market capitalization. The group is based in South Africa and also has subsidiaries in eight countries in Sub-Saharan Africa. Its subsidiary banks outside of South Africa are required to maintain reserves at the central banks in their respective jurisdictions, based on the volume of customer deposits that these subsidiaries have. Mandatory and voluntary reserves contribute to FirstRand’s overall risk-weighted assets (RWA) at the consolidated level, consuming a level of capital that could have otherwise been deployed in productive assets.
The proposed MIGA guarantee builds on a previous 2020 transaction in which MIGA issued guarantees covering FirstRand’s subsidiaries in in Botswana, Eswatini, Ghana, Lesotho, Mozambique, Nigeria, and Zambia.
Environmental Categorization
FNB Eswatini provides financial products and services to individuals, small and medium enterprises (SMEs), and corporate clients across Eswatini. The MIGA guarantee will support FNB Eswatini’s lending operations to SMEs. SME activities are considered to be mostly medium risk, with potentially limited adverse E&S risks and impacts that are site-specific, reversible, and can be addressed through mitigation measures. This project is thus 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 FNB Eswatini’s ability to identify, assess, and manage the E&S risks and impacts associated with its SME lending activities, and the management of labor matters by the bank. The applicable E&S requirements for the MIGA project portfolio are: (i) MIGA’s Exclusion List; and (ii) applicable national environmental and social laws and regulations in Eswatini.
MIGA analyzed FNB Eswatini’s portfolio for types of transactions, industry sectors, and exposure to MIGA’s Exclusion List. As of June 2025, FNB Eswatini’s portfolio included the following business segments: retail loans (consumer loans and mortgages), commercial and corporate finance, and SME finance. The main sectors supported include services, commerce and finance, pharmaceuticals, oil and gas, and manufacturing. FNB Eswatini has limited exposure to activities on the MIGA Exclusion List and midstream/downstream oil and gas activities; the bank has no exposure to coal. MIGA’s guarantee will support SME loans, and upstream oil and gas and coal-related activities will be excluded.
MIGA also analyzed FNB Eswatini’s E&S risk management procedures and emergency preparedness procedures in line with the requirements of Performance Standard 1: Assessment and Management of Environmental and Social Risks and Impacts (PS1), and FNB Eswatini’s labor practices in line with the requirements of Performance Standard 2: Labor and Working Conditions (PS2). FNB Eswatini is an existing client and the bank’s E&S procedures and labor practices are in line with PS1 and PS2 respectively.
In relation to E&S risk management, FirstRand has been an Equator Principles financial intermediary since 2009 and has developed an internal guideline which describes the environmental and social risk assessment (ESRA) process and is applicable to all subsidiaries. Each subsidiary also has an ESRA policy that includes a detailed procedure for identifying, assessing, and managing the E&S risks and impacts associated with clients’ activities. FirstRand has policy statements on the financing of thermal coal and sensitive sectors. The group also has an exclusion list, which is in line with the MIGA Exclusion List. Transactions are screened against the applicable E&S requirements as part of FNB Eswatini’s credit approval process, and E&S mitigation measures are identified to address any gaps. E&S covenants, as well as specific monitoring covenants where applicable, are also included in facility agreements, and transactions are monitored to ensure compliance with agreed conditions. The procedures also include the application of the Performance Standards, where applicable. The process is adequate for the management of E&S risks and impacts of SME transactions in line with MIGA’s requirements. FNB Eswatini also has an external communication mechanism for receiving and addressing E&S concerns raised by third parties regarding projects financed by the bank.
FNB Eswatini’s emergency response procedures remain in line with PS1, and the bank’s labor policies and procedures remain in line with PS2. The bank’s policies and procedures cover among other aspects, terms of employment, occupational health and safety, non-discrimination, harassment, freedom of association, and a grievance mechanism.
For the proposed guarantee, FNB Eswatini will report annually to MIGA regarding the implementation of the E&S procedures for the project portfolio, as well as its labor practices.
Development Impact
The aim of MIGA’s proposed guarantees is to help FirstRand reduce the risk of some of its assets in the relevant subsidiaries, which would lead to a reduction in the group’s RWA on a consolidated basis. FirstRand plans to deploy additional capacity related to the RWA reduction in Eswatini, thus increasing the potential reach, development impact, and financial returns of the foreign investment. In particular, the freed-up capital is expected to support increased lending to SMEs, a segment with significant unmet financing needs in Eswatini.
MIGA’s proposed coverage to FirstRand (through FREMA) is aligned with the most recent World Bank Group’s Country Partnership Framework for Eswatini as it seeks to promote private-sector-led growth via increased access to finance in the country and to promote sustainable investments.
