BHD León: Financing for Women Led SMEs in Dominican Republic
The proposed Loan to Banco Múltiple BHD León, S.A. (“BHDL”) will be for up to US$50 million or its equivalent in Dominican Pesos (“DOP”) to support the growth of small and medium sized businesses (“SMEs”) in the Dominican Republic (“DR”). In particular, the Project seeks to promote access to finance for women-owned SMEs in the DR through BHDL’s Mujer Mujer Program, which provides a comprehensive approach to serving the female market, including specialized loan and non financial services for women-owned SMEs.
BHDL has embraced the market opportunity to support the growth of women-led businesses and taken a leadership role in developing a value proposition of products and services to better provide access to finance and growth opportunities for women in the DR. BHDL’s Mujer Mujer Program, launched in 2014, provides a wide range of adapted products, including tailored working capital and investment loans. In recognition of the fact that women-owned businesses seek additional non-financial products and benefit from access to mentoring and business advisory services, BHDL’s comprehensive offering—developed in part through the Global Alliance for Banking on Women (“GBA”)—includes health and business insurance, credit cards with embedded benefits deemed most attractive to women clients, and networking events, to effectively support the overall growth and success of its SME clients.
The IIC Loan will be a senior unsecured financing of up to US$50 million comprised or its equivalent in DOP. The proposed IIC Financing to BHDL would specifically target women-owned SMEs and seek to a target client number representing a larger share of the BHDL SME portfolio. The tenor of the IIC Loan is expected to be for up to 5 years. The IIC Loan will be complemented by Advisory Services, which will support BHDL’s efforts to become a true market leader and emblematic role model for gender targeted lending, through the Swiss-based EDGE Certification. If obtained, the EDGE Certification would recognize BHDL’s efforts to implement ambitious gender equality measures as part of its corporate culture and adopt practices that mirror its equitable product offering for women clients.
1. Project Description: See above.
2. Environmental and Social Categorization and Rationale: This has been classified as an 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 and the low amount of the sub-loans (maximum amount of approx. US$30,500 on average).
3. Environmental and Social Risks and Impacts: the portfolio risk to be financed includes financial exposure to goods and services (30%), commerce (16%), housing (11%), manufacturing (8%), consumer loans (7%), construction (7%), hotels and restaurants (5%), and others (16%), which predominantly have low environmental and social impacts including, but not limited to: (i) environmental: water, soil and air pollution and waste management; (ii) occupational health and safety (“OHS”) risks such as: gas releases, chemical hazards and fire; and (iii) community and labor issues such as health, safety and stakeholder engagement.
BHDL has an Environmental and Social Management System (“ESMS”) that has been updated in 2014 and is in alignment with IIC Sustainability Policy. BHDL has knowledgeable E&S staff that conducts E&S assessments and who have attended the IIC’s training course on Environmental and Social Risk Management in previous years. Banco BHDL's labor policies are generally consistent with IFC's Performance Standard 2: Labor and Working Conditions (“PS2”).
The risk of the portfolio to be financed includes financial exposure to microfinance activities that generally have low environmental and social impacts: (i) water, soil, and air pollution, waste and agrochemical management; (ii) occupational safety and health, including risks such as: gas discharge, harmful chemical substances, and fires; and (iii) community issues such as health, safety, and stakeholder participation.
4. Mitigation Measures/E&S Action Plan: BHDL will be required to implement its ESMS ensuring 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, BHDL will be required to submit annual environmental reports to the IIC indicating the progress made and problems encountered in the implementation of its ESMS.