Ecobank Signs $200m Sustainability-Linked Loan With European Development Finance Institutions

A US$200 million Sustainability-Linked Loan has been launched by a syndicate of European Development Finance Institutions (EDFIs), chaired by Proparco and comprising Norfund, DEG, FMO, and EFP, to support the Sustainability and Climate strategy of Ecobank Group (www.Ecobank.com). Since this is the first sustainability-linked loan to a financial institution in sub-Saharan Africa, it represents a significant milestone. The establishment of a climate strategy and the release of Climate Disclosures are two significant climate commitments that are connected to the facility.

A Climate Action Plan is also included in the facility. The teams at Ecobank Transnational Incorporated will receive long-term advising support from Proparco in collaboration with the German consulting firm IPC to help them meet these challenging goals.

The parent organization of the Ecobank Group, which is in charge of 33 banking subsidiaries throughout Africa, is Ecobank Transnational Incorporated (ETI), with its headquarters located in Lomé. ETI is a major player in the banking industry in sub-Saharan Africa, providing market-leading financial services and a wide range of products for SMEs, even in unstable economic environments.

Proparco has consistently strengthened its relationship with the Ecobank Group over the years by offering a variety of loans, bond subscriptions, and risk-sharing programs, including trade finance to ETI and its affiliates, with the goal of granting underprivileged groups access to capital.

ETI is taking bold steps to address sustainability issues that the company faces and that are typical in the financial sector as part of its goal to progressively incorporate sustainability into its operations and finance strategy. As a result, ETI has committed to creating: a Climate Strategy that includes sustainable finance objectives, GHG emissions reduction targets for both operational and financed emissions, first sector decarbonization strategies for the most carbon intensive sectors, and an exclusion policy covering thermal coal mines and coal-fired power plants; and a Climate Disclosure Report that details its green lending, exposure to carbon intensive sectors, and exposure to physical climate risks.
Numerous European Development Funds (DFIs) have backed this finance, indicating how confident ETI’s banking partners are in the pan-African banking organization.

Leading arranger and lender Proparco was followed by European Financing Partners, DEG, FMO, and Norfund. This deal demonstrates the caliber of ETI’s leadership in the African banking industry and how it is opening doors for other players.

Through this partnership, Ecobank will be able to accomplish sustainable goals and make a big difference. The Ecobank Group’s Chief Executive Officer, Jeremy Awori, stated:

“The mission and pan-African goals of Ecobank are inextricably linked to sustainability. The Ecobank Group’s commitment to sustainability, which we view as both a duty and an opportunity, is further demonstrated by the signature of this loan agreement tied to sustainability. Our accomplishment as the first pan-African banking group to issue Tier 2 Sustainability Notes in 2021 is built upon with this sustainability-linked loan.

We are proud to have paved the way for the continent’s other financial institutions. We are appreciative of the cooperation with Norfund, DEG, FMO, and European Financing Partners, among other prestigious partners, under the direction of Proparco. Our shared goal is to positively influence and advance sustainable funding methods throughout the continent.

“Proparco is pleased to assist a dependable partner in making the climate agenda a key component of their business strategy and day-to-day operations. The whole African banking sector is benefiting from ETI’s pioneering work. “This is a flagship loan—the first of its kind to a banking group in sub-Saharan Africa—linked to sustainability,” stated Proparco CEO Françoise LOMBARD.

Tellef Thorleifsson, Chief Executive Officer of Norfund, stated, “Norfund is proud to support ETI – one of the leading pan-African financial institutions – in its important role of providing essential financial services across the Continent.”

“DEG is thrilled to maintain this significant alliance with ETI, a preeminent banking organization in Africa. Through this facility, which is also ideally linked with DEG’s Impact and Climate strategy, we look forward to ETI becoming a significant catalyst for climate action throughout the continent,” said Michael FISCHER, DEG’s Director of Financial Institutions Africa.

“ETI is regarded as a seasoned partner of FMO, having been a client for over ten years. We are delighted to accompany Proparco in this Friendship Facility, which is centered on the Group’s Climate Strategy and reflects ETI’s proactive goal in this area. According to Michael Jongeneel, CEO of FMO, “FMO’s funds will be directed towards Least Developed Countries, making a difference where it is most needed.”

“A shifting climate brings both opportunities and threats that no financial organization can afford to ignore. Proparco and ETI are pioneering innovative approaches to climate action in Africa today,” stated Dörte Weidig, Managing Partner of IPC.