Summary of proposed guarantee
Summaries of proposed guarantees are provided prior to Board consideration and before final contract signing, and they are therefore subject to change. Project briefs are disclosed after Board consideration and contract signing and reflect the terms of the project at the time of contract signature. Environmental and Social Review Summaries are provided for projects assigned an Environmental Assessment Category of A or B.
- Project name
- Traitex Afghanistan
- Project ID
- Fiscal year
- Guarantee holder
Traitex International PLC
- Investor country
- Host country
- Environmental category
- Date SPG disclosed
- February 19, 2013
- Project Board date
- March 14, 2013
- Gross exposure
- $4.1 million
- Project type
- Strategic priority area
This summary covers an investment by Traitex International PLC of Belgium in Traitex Afghanistan. The investor has applied for a MIGA guarantee of $4.1 million for a period of up to 10 years against the risks of transfer restriction, expropriation, and war and civil disturbance.
The project consists of the set up and operation of a cashmere-scouring and disinfection facility in the Fibers and Textiles Industrial Park in Herat to process the fiber for export. Until now Afghanistan has exported almost all of its cashmere in its raw form, as no significant processing has taken place within the country.
The project is a category B under MIGA's Policy on Social and Environmental Sustainability. The project's potential environmental and social impacts are limited, few in number, site-specific, and readily addressed through mitigation measures and industry standards and practices. The key environmental and social issues are worker health and safety, wastewater treatment, solid waste management, chemical materials management, and environmental and social management systems. These will be addressed by Traitex's policies and procedures for environmental and social management.
The cashmere sector is currently underdeveloped in Afghanistan. This is due in part to the fact that the high percentage of waste material in raw cashmere increases its weight and therefore transport costs. Competition from other countries where the sector is more developed has meant that Afghan producers and traders have had to keep their prices low.
The establishment of Traitex Afghanistan's scouring and disinfection line in Herat will allow traders to command a higher net price for Afghan cashmere, which could stimulate greater harvesting of cashmere goats and increase income for local herders. The project will also create 35 permanent, local jobs in an area with limited employment opportunities, and will provide training to Afghan staff.
The proposed project is consistent with MIGA's strategic priorities of supporting investment into conflict-affected countries and in countries eligible for concessional lending from the International Development Association.
MIGA's support for this investment is aligned with the World Bank Group's strategy for Afghanistan, particularly with regard to providing domestic sources of growth and jobs.
The project would be underwritten through MIGA's Small Investment Program.