Project description
This summary covers an application by Standard Chartered Bank (“SCB”) for up to EUR 301.5 million in guarantee coverage for a short-term loan facility, focused on supporting trade, to the Government of Republic of Senegal (“GoS”, through the Ministry of Finance and Budget), for a tenor of up to one year, with the option to be rolled over at the approval of SCB and MIGA.
The MIGA-covered facility would be used to provide short term loans for trade-related payments, aimed at mainly supporting the agriculture sector.
Environmental Categorization
The MIGA-covered facility will support short-term trade transactions. These transactions pose minimal environmental and social (E&S) risks and impacts and as such, the project has been categorized as ‘FI-3’ in accordance with MIGA’s Policy on Environmental and Social Sustainability (2013). The applicable E&S requirements for this project are the MIGA Exclusion List and applicable E&S laws in Senegal. SCB will be required to implement a mechanism through which underlying transactions are screened against the MIGA Exclusion List, and compliance with E&S laws is included in underlying facility agreements. SCB will also be required to comply with the requirements of MIGA Performance Standard 2: Labor and Working Conditions.
Development Impact
The Project will help the GoS unlock trade finance liquidity support for the local agriculture sector, at a time when there are significant liquidity constraints in the trade finance market due to current economic conditions. Therefore, the Project will provide increased access to trade finance for the agriculture sector which is a key priority under the GoS’s national strategy (Plan Senegal Emergent, PSE). The Project is also expected to support the overall market financial stability by reducing the liquidity constraints of the local intermediaries for the agriculture sector.
The Project fully aligns with the World Bank Group (WBG) Country Partnership Framework (CPF) for Senegal (FY20-FY24) and with the GoS’s Emerging Senegal Plan 2035 (PSE) that aims to promote sustainable and productive agriculture.
