MIGA-Insured Sugar Project a Sweet Deal for Mozambique
WASHINGTON, DC, June 28, 2001 — A new project guaranteed by the Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group, will help rehabilitate and partially privatize Mozambique’s largest sugar estate, creating thousands of jobs and generating significant economic and social benefits in the country’s Marromeu region.
MIGA is extending $65 million in investment insurance to the “Sena group”—a consortium of four Mauritian companies—and to the Industrial Development Corporation of South Africa, covering their equity investments, management and technical assistance contracts, and non-shareholder loan for the project.
The project entails the 75 percent privatization, rehabilitation, and management of the former Sena Sugar Estate, which was severely damaged during Mozambique’s prolonged civil war. Combined with infrastructure improvements, the change should lead to the production of up to 100,000 tons of raw and refined sugar a year, helping the country raise its production capacity to about one-third of its pre-war levels. The investment, located on the Zambezi River, will also involve the development and farming of 11,000 hectares of cane fields.
“This project demonstrates how serious we are about helping Mozambique use investment to fight poverty and to restore the economic viability of its sugar sector,” says MIGA’s Vice President for Guarantees, Roger Pruneau. “We expect this undertaking to yield significant developmental benefits for one of the world’s poorest, most highly indebted countries.”
As the region’s main employer, the project will provide jobs for an estimated 5,000 workers. According to the landmark World Bank study, Voices of the Poor
(1999)—based on personal accounts from more than 60,000 men and women living in poverty—jobs are at the heart of achieving a better standard of living.
Other local benefits include the supply of electricity and other improvements to the Marromeu hospital, road construction, and housing and school upgrades. The project is also expected to supply potable water to the local community, reducing the incidence of water-borne illness for the town’s 90,000 residents.
On a broader level, the project aims to sell about 70 percent of its output in Mozambique, which will help offset, possibly entirely, the need to import sugar and will have a positive impact on foreign exchange revenue. At least 60 percent of goods will be procured in-country.
“We feel especially confident about this project’s developmental impact, given that the investors—all from developing countries—have an outstanding track record of corporate citizenship,” Pruneau says. Earlier this year, a prolonged rainy season led to extensive flooding of the Zambezi River, displacing tens of thousands of Mozambicans along the river’s edge. The investors took quick action by providing barges, normally to be used for sugar transport, to help the government move people to dry land and provide them with supplies and shelter.
Thomas Vis, firstname.lastname@example.org,
Angela Gentile, email@example.com,
t. 202.473.3509 (US)