eBusiness Weekly
Enacy Mapakame
Ecobank Group has secured an historic $200 million sustainability – linked loan from European Development Finance Institutions.
In a groundbreaking move, a syndicate of European Development Finance Institutions (EDFIs) led by Proparco, and featuring Norfund, DEG, FMO and EFP, has announced a historic $200 million sustainability-linked loan to bolster Ecobank Group’s Sustainability and Climate strategy.
This marks a significant milestone as the first-ever sustainability-linked loan to a sub-Saharan African financial institution, underlining Ecobank’s commitment to sustainable practices.
Ecobank Transnational Incorporated (ETI), the parent company based in Lomé overseeing 33 banking subsidiaries across Africa, is a key player in sub-Saharan Africa’s banking sector.
The loan facility is intricately tied to two major climate commitments — Climate Disclosures and the formulation of a comprehensive climate strategy.
This comes as the prevalence of climate related disasters is now rampant in the region, characterised by flash flooding and prolonged dry spells, resulting in destruction of infrastructure and poor agricultural output.
Most countries within the region rely on agriculture as the backbone of their economies. But the increases in climate-related calamities has become problematic and has stirred global debates as leaders deliberate on climate resilience and climate action.
Zimbabwe, together with other countries within the region are projected to experience the El Nino weather phenomenon during the 2023/2024 farming season, which is likely to affect the agriculture sector and across value chains.
Now, SLL initiative also encompasses a robust Climate Action Plan, with Proparco collaborating with the German consulting firm IPC to provide sustained advisory support to Ecobank Transnational Incorporated’s teams.
This support aims to assist the bank in achieving its ambitious climate targets, solidifying its position as a frontrunner in sustainable finance within the African banking landscape.
Proparco, the lead arranger and lender in this historic transaction, has a longstanding partnership with the Ecobank Group, evident through various loans, bond subscriptions and risk-sharing facilities.
These initiatives have been directed towards providing crucial financial access to underserved segments, particularly in SMEs and fragile economies.
“Proparco is proud to support a long-standing partner in integrating the climate agenda as a cornerstone of its strategy and operations. ETI is paving the way for the entire African financial industry.
“This first ever Sustainability-linked loan to a banking group in sub-Saharan Africa is a flagship” said Françoise Lombard, Proparco chief executive officer.
As part of its evolving commitment to integrate sustainability into its operations and financing strategy, ETI is set to develop a comprehensive Climate Disclosure Report.
This report will communicate the institution’s green lending practices, exposure to carbon-intensive sectors, and mitigation strategies for physical climate risks.
Additionally, a detailed Climate Strategy will be crafted, outlining sustainable finance objectives, greenhouse gas (GHG) emissions reduction targets, and decarbonisation strategies for high-emission sectors. The strategy will also include an exclusion policy covering thermal coal mines and coal-fired power plants.
The financing support from European DFIs underscores the confidence of ETI’s banking partners in the pan-African banking group. Proparco’s leadership in arranging the loan was followed by contributions from Norfund, DEG, FMO, and European Financing Partners.
This collective effort not only showcases the quality of ETI’s leadership in the African banking sector but also paves the way for other financial institutions to embrace sustainable practices.
“Sustainability is integral to Ecobank’s mandate and pan-African purpose,” said Jeremy Awori, chief executive officer of the Ecobank Group,
“The signature of this sustainability-linked loan agreement is another confirmation of the seriousness which the Ecobank Group accords to sustainability, which for us is both a responsibility as well as an opportunity,” added Awori.
This historic loan stands as a testament to Ecobank’s commitment to driving positive environmental change in the financial industry and serves as an inspiring model for future collaborations between African financial institutions and international development partners.
