MIGA Backs First State-of-Art Office Tower in Djibouti
MIGA Backs First State-Of-Art Office Tower in Djibouti
Seventeen-story office tower reflects national aspiration to be regional financial center and logistics hub.
WASHINGTON DC, December 12, 2017— MIGA, a member of the World Bank Group, announced today guarantees of up to US$24.3m in support of Swiss company Horafia SA's plan to launch and maintain the Mezz Tower in Djibouti City, Djibouti. The 17-story office tower will offer high-end office facilities and will be in the City Center, near sea and fishing ports.
When opened later this year, revenue will be generated primarily from rental income earned through leasing space in the tower, and tenants will include diplomatic delegations, multilateral organizations, and international companies establishing themselves domestically, or expanding their operations in the country.
MIGA's guarantees will be for up to 15 years, and provide coverage against the risks of Expropriation, Transfer Restriction, and War and Civil Disturbance.
The building meets an EDGE 'green building' certification, and will house a desalination unit that produces drinking water, a wastewater treatment plant, and a solid waste storage unit. An anticipated 270 tons of CO2e is expected to be avoided each year once the building is fully operational.
The project enjoys the support of the Government of Djibouti, and is viewed as a flagship office building, reflecting the country's modernization efforts and setting a high bar for real estate developers. The success of the project is aligned with aspirations laid out in the government's Vision 2035 plan of developing the country as a regional financial center and logistics hub.
Djibouti is one of Africa's smallest countries, with a total population of 880,000 people. The country occupies a strategic geographic location which allows it to serve as an important shipment location for goods entering and leaving the entire East Africa region. Consequently, its economy relies heavily on ports and logistics services, and a banking sector that finances trade into neighboring Ethiopia, Somalia and Eritrea. Djibouti relies heavily on Ethiopia for transshipment trade (accounting for over 80 percent of port activities), water, and electricity (supplying 65 percent of electricity needs). Thanks to Djibouti's strategic location, rents from military bases also provide an important source of revenue. The ongoing conflict in Yemen, whose port city of Aden is Djibouti's main competitor, has also contributed to increasing traffic.
Located in a politically volatile region, the threat of terrorism within Djibouti through groups such as al-Shabaab continues to be a concern.
MIGA's involvement in this project is in line with a trend of focusing on low-income, and fragile and conflict-affected states. The project also coincides with MIGA's focus on helping tackle climate change.
"Djibouti is a small country with a strategic location," MIGA Executive Vice President and CEO Keiko Honda said. "Developing high-quality infrastructure will help attract foreign investment, and spur economic activity."
Djibouti has recently expanded its infrastructural platform with a new railway, a multipurpose port and other sea ports and is developing new infrastructure projects, including a new water pipeline. However, the country has a limited supply of office space, with many international companies currently working out of villas.
Mezz Afrique, owned completely by Horafia SA, conceived the undertaking and will implement the project. In 28 years of activities in Djibouti, the Mezz Group has contributed to the construction of over 100 infrastructure projects, working for the European Union, various development banks, the US Navy and Air Force, and also Japanese and French military bases.
MIGA was created in 1988 as a member of the World Bank Group to promote foreign direct investment in emerging economies by helping mitigate the risks of restrictions on currency conversion and transfer, breach of contract by governments, expropriation, and war & civil disturbance; and offering credit enhancement to private investors and lenders. For more information, visit www.miga.org
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