Societe Generale S.A.

Enabler: Providing a risk-sharing arrangement to target smaller and/or less recognised financial institutions in countries that have limited access to larger more reputable confirming banks or directly to international markets. Corresponding banks can extend higher trade credit to businesses, enabling greater trade flows to harder to reach geographies. This will allow businesses to import greater volumes of commodities such as gasoline, rice, sugar and wheat from outside Africa, and support business growth in these countries by contributing to an increase in production and output.

Pan-Africa. Impact will be variable based on demand. SocGen’s current exposure is over 50 per cent to ‘A’ & ‘B’ countries, which includes countries such as Nigeria, Cameroon, Mauritania, Ivory Coast, Burkina Faso, and Guinea.

Given the variance of industries in which the businesses operate, for characteristics of people who ultimately benefit from the enabled trades, we assume mass market characteristics and demographics of the respective geographies.

$120 million trade credit facility which we estimate to enable $400 million in additional trades. While it is difficult to model the number of stakeholders affected, we expect scale to be large because of the need for imports in the countries proposed in the pipeline.

Depth is expected to be high, although visibility on the impact on underlying borrowers depends on the financial institution’s capacity to provide data on underlying borrowers. The countries in the trade book are dependent on commodity imports. For a sample of countries, energy products as a percentage of total merchandise imports range from 14 per cent to 30 per cent, with more developed countries such as Morocco (17 per cent) displaying a similar reliance on energy products imports as less developed countries such as Mauritania (18 per cent) and Cameroon (14 per cent). This indicates comparable economic dependence on energy products across, despite the developmental stage of a country.

• Financial additionality: SocGen is currently inhibited in expanding trade programme due to internal and external controls on risk particularly to non-subsidiary banks. Our investment will allow the bank to increase and diversify portfolio into more riskier geographies and financial institutions because of the flexibility offered by the MRPA.

2.6

(exposure will be adjusted on a rolling basis with use of facility)

Execution Risk

• Obligor banks may be concentrated around the wealthier African countries such as Nigeria and Morocco. SocGen may not diversify into less-developed / harder-to-reach geographies. Analysis on transactions on a select sample of countries reveal increasing demand from less developed countries such as Mauritania, Ivory Coast, Guinea and Burkina Faso. CDC is also incentivising SocGen for trades to category ‘A’ & ‘B’ countries. Mitigation: CDC will annually review banks; exposure/utilisation reports.

Unexpected Impact Risk

• SocGen’s trade book has exposure to oil and gas products. Mitigation: We have ensured that our programme is aligned with CDC’s Climate Change Policy with no exposure to crude oil. SocGen is currently in the process of aligning its portfolio in accordance with the Paris Agreement, which includes increasing its commitment to finance renewables.

Execution Risk

• CDC’s MRPA will stay static in terms of the number of obligors or the risk ratio, posing a risk to both scale and long-term sustainability of the MRPA. The pipeline currently identified by SocGen is demand-driven, which gives us comfort on the expansion of the list. Mitigation: CDC will annually review banks, exposure/utilisation reports and potentially require adjusting of credit limits based on flows; quarterly calls with SocGen and reporting of letters of credit confirmed through the facility. Over the past year, SocGen has added new obligors in category ‘A’ countries such as Mauritania, Guinea and Burkina Faso.