MIGA and ICIEC Partner to Support Agriculture in the Palestinian Territories
WASHINGTON, May 22, 2023 – The Multilateral Investment Guarantee Agency of the World Bank Group (MIGA), as administrator for the West Bank and Gaza Investment Trust Fund (WBGTF), is partnering with the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) to guarantee up to $16.61 million of investments into Nakheel Palestine for Agriculture Investment, a leading producer of dates in the West Bank.
The guarantees, enabled by the WBGTF, were issued to Palestine Development and Investment Company, Ltd. (PADICO) of the Republic of Liberia ($10.38 million), and to two subsidiaries of Massar International located in the Cayman Islands ($4.05 million), and the Palestinian territories ($2.18 million). ICIEC is providing risk participation (akin to reinsurance) for the guarantee to PADICO. In addition, another MIGA-administered trust fund, the Conflict-Affected and Fragile Economies Facility, will assume $1.45 million of coverage as the first-loss layer.
The guarantees will cover the investors’ equity investments in Nakheel against the risks of expropriation and war and civil disturbance, including temporary loss of income, for a period of up to 5.5 years.
Nakheel specializes in the production and sale of Medjool and Barhi dates. The project includes seven farms, a packaging facility for post-harvest handling of dates, a sorting and grading house, a cold storage facility, and a rooftop solar power plant – all located in the West Bank.
This is ICIEC’s first insured project in the Palestinian territories, a landmark achievement enabled by its risk-sharing agreement with MIGA as administrator for the WBGTF. It is also the first time MIGA has obtained reinsurance on a project funded by the WBGTF.
“MIGA is delighted to work with ICIEC to support a major agricultural firm and employer in the West Bank,” said Hiroshi Matano, Executive Vice President of MIGA. “Fortunately, the West Bank and Gaza Trust Fund allows MIGA to administer funds to cover local investments in these economies, which could be a model for future work in other regions.”
The Nakheel date project is a critical employer in an economy hard-hit by unemployment and poverty. In 2021 Nakheel employed 74 permanent and 741 temporary employees, of whom 30 percent were women and 60 percent came from low-income families. The project also indirectly contributes to the livelihoods of several hundred people throughout the operation’s value chain – including independent producers from which it buys part of its production as well as distributors of its products. The new MIGA guarantees are expected to increase the development impact of the Nakheel project in the West Bank in terms of employment, earnings, and taxes paid.
The project is also expected to have a positive impact on female employees. As part of the guarantee, Nakheel committed to working with the International Finance Corporation through its Diversity4Palestine Project to address the challenges in attracting, retaining, and promoting Palestinian women in the workforce.
In addition, the project is aligned with the Paris Agreement, delivering both climate mitigation and adaptation through nearly 1,300 solar panels that generate 20 percent of its total electricity needs.
“We are thrilled to partner with MIGA in this significant risk-sharing contract,” said Oussama Kaissi, CEO of ICIEC. “Through our collaboration, we aim to support this impactful Nakheel project, a first in our support to Palestine. The risk-sharing arrangement with MIGA exemplifies our commitment to promoting sustainable development through partnerships.”
Because the West Bank and Gaza is not a member of the World Bank or MIGA, the WBGTF was established in 1997 to encourage private sector investment and economic development in this economy, one that has long been affected by fragility, conflict, and violence. The fund allows MIGA to offer political risk insurance to both local and foreign investors, and MIGA administers the fund on behalf of its sponsors, the government of Japan and the Palestinian Liberation Organization
The trust fund has stimulated private business activity and attracted both foreign and local private investment to multiple sectors in both the West Bank and Gaza, including manufacturing, agribusiness, and infrastructure projects. Since 2013, projects supported by the trust fund have supported 813 local jobs, 151 of them for women, and have driven $8.27 million in domestic purchases and more than $700,000 in government payments.
The WBGTF has also been instrumental in enhancing the resilience of private sector projects operating in the Gaza Strip, where the trust fund paid several claims for war and civil disturbance coverage, allowing investors to replace damaged assets and continue operations.
A vibrant and resilient private sector is critical to development, increased prosperity, and poverty elimination even in fragile and conflict-affected situations, so risk mitigation tools like those provided by MIGA – which can enable private investment that otherwise would not occur – are vital in these difficult contexts.
MIGA was created in 1988 as a member of the World Bank Group to promote foreign direct investment in emerging economies by helping to mitigate the risks of restrictions on currency conversion and transfer, breach of contract by governments, expropriation, and war and civil disturbance; and offering credit enhancement to private investors and lenders.
Since its creation, MIGA has issued nearly $70 billion in guarantees across 122 developing countries in support of more than 1,000 projects.
About the Islamic Corporation for the Insurance of Investment and Export Credit
ICIEC commenced operations in 1994 to strengthen economic relations among the Organisation of Islamic Cooperation member states and promote intra-OIC trade and investments by providing risk mitigation tools and financial solutions. The corporation is the only Islamic multilateral insurer in the world. Cumulatively, ICIEC has insured more than $95 billion in trade and investment.
Elizabeth Howton, (202) 458-5922, email@example.com
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In Jeddah, Saudi Arabia:
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For more information, please visit: http://iciec.isdb.org