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Projects

Project Information

Summaries of proposed guarantees are provided prior to Board consideration and final contract signing, and therefore are subject to change. Project briefs are disclosed after contract signing and do not reflect subsequent modifications (e.g., changes in guarantee amount).

Project Name

BRAC Afghanistan Bank

Guarantee Holder

ShoreCap International Ltd.

Investor Country

Cayman Islands

Host Country

Afghanistan

Sector

Financial Services

Gross Exposure ($million)

0.25

Fiscal Year

2008

Status

Proposed
 

Project Number 6983
Environmental Category C
Date SPG disclosed March 25, 2008
Projected Board date N/A

Project Description

This summary covers an investment by ShoreCap International (SCI) of the Cayman Islands in BRAC Afghanistan Bank (BAB) in Afghanistan. The investors have applied for a MIGA guarantee of up to $225,000 (90 percent of additional equity of $250,000) for a period of up to ten years against the risks of transfer restriction, expropriation, and war and civil disturbance. ShoreCap invested $1 million into BAB in 2006 which was also covered by a MIGA guarantee against the same risks.

SCI along with three foreign sponsors, including the International Finance Corporation (IFC), a World Bank Group member, will invest additional capital into BRAC Afghanistan Bank. The additional funds are required to meet the Afghanistan Bank’s $5 million minimum bank capital requirement; to fund infrastructure investments in additional branches, automated teller machines and point of sale devices; and toleverage a small business loan portfolio which is expected to grow to almost $50 million by the end of 2008. 

Environmental Categorization

The project is a Category C under MIGA’s environmental review procedures.

Development Impact

The project is expected to have a significant impact on the country’s economic development as it will be providing financing and savings instruments to micro-enterprises, which form the largest underserved, yet productive, segment of the local economy. Greater access to financial services will help reduce poverty and expand economic opportunity for low-income populations throughout Afghanistan.

MIGA’s support in establishing a for-profit, national, and fully regulated microfinance bank would help demonstrate the profitability and sustainability of large-scale financial services to new microfinance providers. This will help encourage new entrants and greater overall penetration to meet the vast need for financial services for Afghanistan’s poor. The project will be underwritten through MIGA’s Small Investment Program

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