OHADA Strengthening Credit Infrastructure Project

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The OHADA Strengthening Credit Infrastructure for MSME Growth Project is a follow-on IFC Advisory Services project to the OHADA UA I project (2007-2011) and OHADA UA II (2012-2017) that seeks to strengthen digital credit infrastructure to increase access to finance and minimize the impact of COVID19 on MSMEs, especially women owned firms. The project will also support activities that promote optimal usage of credit infrastructure, catalyze financing to MSMEs and crowd in additional private sector investment. This program aims to support and leverage the reach of regional central authorities such as BCEAO (West African States Central Bank), BEAC (Central African States Central Bank) and the OHADA Permanent Secretariat, as well as similar activities being implemented under different programs within OHADA. In line with the IFC SME Finance long-term business plan on leveraging technology and innovative models to deliver greater scale and impact, the project will leverage on partnerships with industry players to gain an understanding of the market characteristics to develop and pilot innovative products aimed at expanding access to credit by MSMEs. The project scope will cover four OHADA countries - Burkina Faso (BF), Cote d'Ivoire (CdI), DRC and Gabon - but certain reforms/activities will impact on the rest of the countries across common markets. Upon successful completion of this phase I project, a follow on program will be considered as appropriate. The choice of countries was made in agreement with the OHADA Secretariat, based on a combination of criteria including the need to have a regional balance between West and Central Africa, as well as client commitment/willingness to adopt reforms. Component I: Enhancing the Credit Reporting Environment The objective of this component is to enhance the credit reporting environment in the region through the review of legal frameworks, modernizing the credit information sharing systems and the development and deployment of value-added services. This component is aimed at promoting access to credit by MSMEs with thin or no credit files. This component will support policy and infrastructure development work in CEMAC and DRC, while the activities in UEMOA will support the implementation of value-added services. 1.1 Enhancing policy and regulatory framework 1.2 Support the establishment of credit reporting system 1.3 Expand information sharing through onboarding of non-bank financial institutions Component II: Enhancing Regulatory and Institutional Frameworks for Movable Asset Lending The objective is to promote movable asset-based lending by enhancing the effectiveness of the movable asset financing system established in CdI and Gabon under previous IC projects and support the establishment and sustained operation of a movable asset collateral registry in BF and DRC. It will also support market creation activities to boost access to credit by MSMEs that do not have real estate/immovable assets, often preferred by FIs as security for loans and create upstream investment opportunities for IFC. 2.1 Promote the Adoption of Regulatory and Supervisory Frameworks that will facilitate Asset-Based Lending 2.2 Operationalization and digitalization of the commercial and collateral registry (RCCM) Component III: NPL Management and COVID Response The objective of this component is to assist the region in dealing with a potential surge in NPLs due to the COVID pandemic. Although an effective NPL strategy involves several responses at a prudential, regulatory and legislative level, strengthening the insolvency framework and distressed asset market will assist the region in resolving potential NPLs in a manner that aims to maximize creditor recovery. 3.1 Support the implementation of NPL out-of-court workout arrangements 3.2 Support the development and deployment of “COVID 19 Business Rating/Index for firms” 3.3 Support the establishment and strengthening of SME Rating