This summary covers an investment by International Home Finance & Development, LLC of the United States of America in Afghanistan. The investor has applied for a MIGA guarantee of $1.7 million for a period of up to seven years against the risks of transfer restriction, expropriation, and war and civil disturbance.
International Home Finance & Development will invest $2 million in equity and shareholder loans to Geo Building Technologies to support the introduction of the “GreenMachine” and “TerraBricks” in Afghanistan. The GreenMachine is a portable, one-ton, rugged, self-powered system designed to manufacture structural, precision-engineered tongue and groove compressed-earth blocks called TerraBricks. The bricks can be stabilized with small quantities of cement for greater strength and weather-resistance. The business model will include stationary and mobile manufacturing plants across the country to manufacture TerraBricks and the provision of GreenMachine equipment for rental and sale.
After more than two decades of conflict, Afghanistan has begun an enormous political, economic, and social transformation. Reconstruction activities have been carried out at a fast pace, with the government, donor agencies, and the private sector investing billions of dollars in the construction of public buildings and other infrastructure in the country. As a result, the demand for primary construction material, such as bricks, has more than doubled in the last three years. Kiln-fired mud bricks are typically used for the construction of public, commercial, and private buildings. But excessive demand, high energy consumption, transport costs, and the low quality of bricks is frustrating the construction industry, and the integrity of construction work is often compromised.
The project is expected to provide builders in Afghanistan with a lower cost, higher quality, and more energy efficient building material. If the experience is successful, operations will be expanded into neighboring countries.
The project is a Category C under MIGA’s environmental review procedures. The GreenMachine is expected to contribute to environmental conservation by replacing the use of cement in the construction industry with soil-based TerraBricks. The manufacturing of cement normally results in the emission of about one ton of carbon dioxide for each ton of cement.
MIGA’s support for this investment is aligned with the World Bank Group’s Country Assistance Strategy in Afghanistan, particularly with regard to supporting the development of a competitive private sector. The country’s lack of infrastructure has been a key factor in hindering private sector activity. The introduction of TerraBricks will create significant employment opportunities and strengthen the sustainability and safety of buildings through the use of higher-quality basic building material. It is expected that more than 10,000 jobs will be created directly by International Home Finance & Development and its partners during the first five years of operation. By offsetting carbon emissions, the proposed project is expected to receive carbon credits for every TerraBrick manufactured by the GreenMachine.
MIGA’s participation in the project is also aligned with key agency priorities: encouraging investment in conflict-affected and IDA-eligible (the world’s poorest) nations. The project will be underwritten through MIGA’s Small Investment Program.