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Projects

Project Brief

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
11193
Fiscal year
2014
Status
Active
Guarantee holder
Sodintec Finances S.A.
Traitex International PLC
Investor country
Luxembourg
Belgium
Host country
Afghanistan
Environmental category
B
Sector
Agribusiness
Date SPG disclosed
February 19, 2013
Project Board date
March 21, 2013
Gross exposure
 $0.8 million
Project type
SIP
Strategic priority area
Conflict Affected
IDA

View Summary of Proposed Guarantee


Project Description

In August of 2013, MIGA issued guarantees totaling $0.8 million covering shareholder loans by Traitex International S.A. of Belgium and Sodintec Finances S.A. of Luxembourg to Traitex Industry in Afghanistan. The coverage is for a period of up to 10 years against the risks of transfer restriction, expropriation, and war and civil disturbance. MIGA’s issued its first contract of guarantee for this project on June 28, 2013.

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 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 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 is underwritten through MIGA’s Small Investment Program.

 

 
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