African Community Fund

Member Loan Approval & Servicing Directive

Directive No.: ACF-DIR-008 | Effective Date: 04/05/2026 | Version: 1.0

PREAMBLE

WHEREAS the African Community Fund (the "Fund") operates as an international institution with full juridical personality under Article 2.1 of its Charter;

WHEREAS Article 3.3 guides the Fund by cooperative principles of mutuality, long-term value creation, and responsible stewardship;

WHEREAS Article 14.2(a) entrusts the Executive Committee with defining yearly Programs and approving loans to advance community, moral, cultural, and economic development;

WHEREAS Article 16 requires all Programs and lending criteria to be approved by the Voting Meeting and published for transparency;

WHEREAS Article 17 grants all Members, irrespective of class, equal rights to apply for loans for Program-aligned projects, subject to published criteria, creditworthiness, and sustainable, non-usurious terms;

WHEREAS Article 10.2 mandates the maintenance of a secure Digital Share Registry to record all shareholdings, transfers, and encumbrances;

WHEREAS Article 13.5 authorizes the Chair to adopt directives consistent with the Charter to implement the Fund's mission;

NOW THEREFORE, the Chair hereby issues this Member Loan Approval & Servicing Directive to establish standardized, transparent, and mission-aligned procedures for loan application, assessment, approval, disbursement, servicing, and recovery.

ARTICLE 1: PURPOSE AND SCOPE

1.1 Purpose: This Directive establishes a rigorous, equitable, and Program-aligned framework for Member lending, ensuring that capital deployment advances sustainable development while preserving Fund liquidity, asset integrity, and long-term financial sustainability.

1.2 Applicability: Applies to all Governance (Class A) and Non-Governance (Class B) Members applying for, receiving, or servicing loans from the Fund under approved Yearly Programs.

1.3 Equal Access: In accordance with Article 17.1, lending criteria, approval processes, and interest rate determinations shall apply uniformly across membership classes.

ARTICLE 2: ELIGIBILITY AND APPLICATION PROCESS

2.1 Eligibility Requirements:

(a) Member must be in good standing (all capital calls paid per Article 8.4);
(b) Proposed project must align with at least one current Yearly Program approved by the Voting Meeting;
(c) Applicant must submit complete financial documentation, project feasibility analysis, and impact assessment;
(d) Applicant must comply with KYC/AML protocols (ACF-DIR-005).

2.2 Application Submission:

(a) Applications shall be submitted via the secure Member Portal using the standardized Loan Application Form;
(b) Required documents include: organizational financials (3 years), cash flow projections, collateral inventory, Program alignment statement, and authorized signatory resolutions;
(c) Incomplete applications shall be returned within ten (10) business days with a deficiency notice.

ARTICLE 3: CREDIT ASSESSMENT AND APPROVAL WORKFLOW

3.1 Risk Grading: All applications shall undergo credit assessment using a standardized risk matrix evaluating:

(a) Debt service coverage ratio (DSCR) and liquidity position;
(b) Collateral adequacy and enforceability;
(c) Program alignment strength and measurable community impact;
(d) Governance and operational track record.

3.2 Approval Authority:

(a) Loans ≤ $2,000,000 USD: Approved by the delegated Credit Committee under CEO oversight;
(b) Loans > $2,000,000 USD: Require Executive Committee approval;
(c) All approvals must document risk rationale, interest rate determination, and Program alignment verification.

3.3 Decision Timeline: Standard review period shall not exceed forty-five (45) business days from receipt of a complete application. Expedited review pathways may apply per Founding Member incentives (ACF-DIR-003).

3.4 Notification: Applicants shall receive written notification of approval, conditional approval, or denial within five (5) business days of decision. Denied applications shall include a summary of deficiencies and reapplication guidance.

ARTICLE 4: LOAN TERMS AND CONDITIONS

4.1 Interest Rates: Rates shall be determined by the Executive Committee to ensure Fund sustainability while remaining equitable and avoiding usurious or extractive pricing, per Article 17.3. Rates shall be fixed or floating based on market benchmarks plus a cooperative margin aligned with risk grade.

4.2 Tenure and Grace Periods: Loan maturities shall align with project cash flow cycles (typically 3–15 years). Grace periods for principal repayment may be granted during construction or initial operational phases, subject to interest servicing.

4.3 Collateral and Encumbrances:

(a) Acceptable collateral includes tangible assets, receivables, guarantees, and Fund share pledges;
(b) Share pledges shall be recorded as encumbrances in the Digital Share Registry (Article 10.2) and shall not restrict voting or economic rights unless default proceedings are initiated;
(c) Loan-to-value (LTV) ratios shall not exceed 70% for tangible assets and 50% for share-backed facilities.

4.4 Covenants: Borrowers shall adhere to:

(a) Financial reporting (quarterly unaudited, annually audited);
(b) Impact metric tracking aligned with Program objectives;
(c) Maintenance of collateral value and insurance coverage;
(d) Prohibition on speculative use, asset diversion, or secondary lending of Fund capital.

ARTICLE 5: DISBURSEMENT AND FUND UTILIZATION

5.1 Tranche-Based Release: Funds shall be disbursed in tranches tied to verified project milestones. Each tranche requires submission of progress reports and invoice documentation.

5.2 Dedicated Accounts: Disbursements shall be directed to designated project accounts monitored for Program compliance. Cross-departmental reallocation requires prior Executive Committee approval.

5.3 Utilization Audits: The Fund reserves the right to conduct on-site or remote verification of fund utilization. Misappropriation or deviation from approved Program scope constitutes a material covenant breach.

ARTICLE 6: SERVICING, MONITORING AND IMPACT REPORTING

6.1 Repayment Schedule: Borrowers shall adhere to amortization schedules agreed at closing. Payments shall be processed via secure, authenticated channels integrated with the Digital Share Registry and Fund accounting systems.

6.2 Monitoring Framework:

(a) Quarterly financial and operational reviews by the Credit Committee;
(b) Biannual impact assessments measuring community, cultural, or economic outcomes per Program KPIs;
(c) Early warning indicators for cash flow stress, collateral depreciation, or governance changes.

6.3 Member Support: The Fund shall provide technical advisory support for Program implementation, financial management, and impact measurement upon borrower request.

ARTICLE 7: DEFAULT, RESTRUCTURING AND RECOVERY

7.1 Definition of Default: Occurs upon:

(a) Failure to pay principal or interest >30 days past due;
(b) Material breach of covenants not cured within thirty (30) days of notice;
(c) Misrepresentation, fraud, or unauthorized fund diversion;
(d) Insolvency proceedings initiated by or against the borrower.

7.2 Cure and Restructuring:

(a) Borrowers shall receive a formal Default Notice with a thirty (30) day cure period;
(b) The Credit Committee may approve loan restructuring (tenure extension, rate adjustment, covenant modification) if project viability and repayment capacity can be demonstrated;
(c) Restructuring terms must preserve Fund sustainability and shall be documented in an amended Facility Agreement.

7.3 Recovery and Collateral Realization:

(a) Upon uncured default, the Fund may accelerate repayment, enforce guarantees, or liquidate collateral per applicable agreements;
(b) Pledged shares shall be transferred to the Fund in the Digital Share Registry upon exhaustion of contractual remedies, subject to Article 10.5 protections;
(c) Forfeited shares may be reissued or cancelled per Executive Committee resolution, with proceeds applied to outstanding obligations.

7.4 Set-Off Rights: The Fund may offset outstanding loan balances against future economic distributions, redemption proceeds, or share dividends payable to the defaulting Member.

ARTICLE 8: TRANSPARENCY, AUDIT AND PORTFOLIO MANAGEMENT

8.1 Portfolio Reporting: The CEO shall provide the Executive Committee with monthly portfolio dashboards covering exposure by Program, risk grade, delinquency rates, provisioning levels, and impact metrics.

8.2 External Audit: Loan portfolio composition, provisioning methodology, collateral valuations, and default recovery rates shall be reviewed annually by external auditors per Article 23.2.

8.3 Open Data Publication: Aggregate, anonymized lending data shall be published quarterly via the Fund's Open Data portal, including:

(a) Total approved vs. disbursed volumes by Program;
(b) Portfolio quality indicators (PAR30, PAR90, provision coverage);
(c) Measured community impact outcomes aligned with Yearly Programs.

ARTICLE 9: GOVERNANCE, DELEGATION AND CONFLICTS OF INTEREST

9.1 Delegation of Authority: The Executive Committee may delegate day-to-day credit operations to the CEO and Credit Committee, retaining final approval for loans exceeding delegated thresholds or involving affiliated entities.

9.2 Conflict of Interest Management: Executive Committee members, Credit Committee staff, or auditors with direct financial or familial ties to an applicant shall recuse themselves from assessment, approval, and monitoring processes.

9.3 Waivers: Temporary deviations from lending criteria or collateral requirements require documented Executive Committee approval, risk mitigation justification, and quarterly reporting to the Voting Meeting.

ARTICLE 10: AMENDMENTS, REVIEW AND ENTRY INTO FORCE

10.1 Review Cycle: This Directive shall be reviewed biennially by the Executive Committee to incorporate portfolio performance data, risk modeling advancements, and member feedback.

10.2 Amendments: The Chair may amend this Directive upon Executive Committee recommendation, provided all changes remain consistent with the Charter.

10.3 Entry into Force: This Directive enters into force upon signature by the Chair and publication on the Fund's official website.

10.4 Languages: In accordance with Article 28.1, this Directive is authentic in English, French, Portuguese, and Arabic. In case of discrepancy, the English text shall prevail for financial and operational specifications.

SCHEDULE A: LOAN APPLICATION CHECKLIST

Document	Required For	Submission Format
Completed Loan Application Form	All Applicants	Digital Portal (PDF)
Audited Financial Statements (3 yrs)	All Applicants	PDF + XBRL/CSV
Project Feasibility & Cash Flow Model	All Applicants	Excel/Financial Software
Program Alignment Statement	All Applicants	Digital Form
Collateral Inventory & Valuation Reports	Secured Facilities	PDF + Assayer Certificates
Board/Partner Resolution Authorizing Borrowing	All Applicants	PDF (Digitally Signed)
KYC/AML Compliance Declaration	All Applicants	Secure Form

SCHEDULE B: STANDARD LOAN TERMS TEMPLATE

Parameter	Governance / Non-Governance Members
Minimum Loan Size	$100,000 USD
Maximum Loan Size	$50,000,000 USD (subject to Exec Committee approval)
Interest Rate	Fixed/Floating + Cooperative Margin (Risk-Graded)
Tenure	3–15 years (matched to project lifecycle)
Grace Period	6–24 months (principal only, interest accruing)
Collateral Requirement	≥ 70% coverage for tangible assets, ≥ 50% for share pledges
Reporting Frequency	Quarterly financials, biannual impact reports
Default Cure Period	30 days from written notice

SCHEDULE C: CONTACTS & SUPPORT

Function	Contact	Purpose
Loan Application Portal	[email protected]	Submission, tracking, deficiency notices
Credit Assessment & Risk	[email protected]	Underwriting, risk grading, covenant review
Disbursement & Treasury	[email protected]	Tranche release, account verification, payment routing
Servicing & Collections	[email protected]	Repayment scheduling, restructuring, default management
Impact & Program Alignment	[email protected]	KPI validation, outcome reporting, advisory support
Collateral & Registry Updates	[email protected]	Encumbrance recording, share pledge management, valuation coordination

Adopted by the Chair of the African Community Fund on 04/05/2026.
Shared Value, Shared Prosperity.

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