Equipa-T

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Project Number: 
ME4116A-01
Expected Consideration Date by the Board: 
07/25/2016
Date Posted: 
06/21/2016
Company: 
Sociedad Financiera Equipate, S.A. de C.V., SOFOM ENR
Sponsoring Entity: 
N/A
Financing Requested: 
MX$30,000,000 (approximately US$1,700,000)
Sector: 
Financial Services
Country: 
Scope Objective: 

The objective of this operation is to provide an A Loan of up to MX$30 million (approximately US$1.7 million) to support Equipa-T in scaling up a new financial product to finance home improvements for low-income families; as well as to increase the existing portfolio of group micro loans to women entrepreneurs. Equipa-T is a Mexican non-regulated microfinance institution, created in 2006, and headquartered in Mexico City, with branches across 12 states in Mexico. Its core credit products aim to promote the growth of microenterprises through individual and group lending methods, and recently also through a specialized product financing home improvements, which it aims to scale through partnerships with construction companies focused on the social housing market.

At the end of 2015, Equipa-T had a loan portfolio of MX$300 million (approximately US$17 million) and had more than 40,000 borrowers in Mexico, which it serves through a network of 49 branches. Currently, approximately 57% of Equipa-T’s microfinance portfolio consists of individual microloans and 43% of group lending. Equipa-T expects to provide home improvement loans to approximately 8,000 additional families, and group micro-loans to approximately 25,000 additional women entrepreneurs over the next three years.

Environmental Review: 

1. Project Description: The objective of this operation is to provide an A Loan of up to MX$30 million to support Equipa T in scaling up a new financial product to finance home improvements for low-income families; as well as to increase the existing portfolio of group micro-loans to women entrepreneurs.
2. Environmental and Social Categorization and Rationale: This is a category FI-3 project according to the IIC’s Environmental and Social Sustainability Policy because of the low risk of the subprojects in the financial intermediary’s current or future portfolio.
3. Environmental and Social Risks and Impacts: The ESHS risks and impacts associated with home improvements are mainly related to the location of the property, the use of hazardous materials such as (lead-based paint, asbestos, polychlorinated biphenyl, etc.) and the potential discrimination and barriers for an equitable process of providing the credit.
Equipa-T does not currently have a procedure to assess the environmental and social impacts and risks of its clients; however, it is committed to develop an environmental and social management system (ESMS) following IIC Sustainability Policy. Equipa-T has already adopted a Code of Ethics, a Human Resources Policy and Procedures for Training and Staff Competence, Evaluation and Recruitment for internal use.
4. Mitigation Measures/E&S Action Plan: Equipa-T will be required to develop an ESMS with a component to ensure that activities financed with IIC funds are not found on the IIC’s list of excluded activities and that they comply with domestic environmental and occupational safety standards. In addition, Equipa-T will be required to submit annual environmental reports to the IIC indicating the progress made and problems encountered in the implementation of its ESMS. To enable the borrower to better understand the IIC’s requirements, Equipa-T will be required to attend the IIC’s environmental training workshop for financial intermediaries.

Activity

Responsible

Date

Attend the IIC’s environmental training workshop for financial intermediaries or any other similar training accepted by the IIC.

Person responsible for the ESMS in Equipa-T.

2016 (IIC training is likely to be offered in October).

Develop and implement the ESMS.

Equipa-T.

6 months after attending the training.

Train internal users of the ESMS.

Person responsible for the ESMS in Equipa-T.

Before implementation.

Provide an E&S report to IIC.

Equipa-T.

Annually.