MIGA Increases Involvement in Africa: First Guarantees Issued in Four More African Countries

MIGA Increases Involvement in Africa: First Guarantees Issued in Four More African Countries

Washington, D.C., August 5, 1998 — In an expansion of its efforts to facilitate the flow of foreign investments into Africa, the Multilateral Investment Guarantee Agency (MIGA) of the World Bank Group issued its first investment guarantees in Angola, Cape Verde, Kenya, and Mozambique, the Agency announced today. MIGA guarantees (insurance) of US$49.4 million, issued in fiscal 1998, cover these investments against political risks such as expropriation, transfer restriction, and war and civil disturbance. Overall, MIGA has issued 51 guarantee contracts for almost US$340 million in coverage, facilitating about US$3.7 billion in foreign investments in 17 African countries.

ANGOLA -- In separate contracts, MIGA covered two investors, Mr. Jari Peltokangas (a Finnish national who resides in Portugal) and Vaasan Saippu Oy-Vasa Tval AB (Finland), for their equity investments in the construction of a soap manufacturing factory in Viana, near Luanda. The factory will diversify the product line of the existing project enterprise, which manufactures liquid detergents and scouring powder, to reduce the current dependence on imports of soap. The developmental impacts of the project include upstream and downstream benefits such as local procurement of plastic bottles, wrapping, cardboard boxes, and local services such as transport. The project is expected to receive financing from NORSAD, the Nordic/South African Development Community, and from the International Finance Corporation under its Africa Enterprise Fund. MIGA guarantees of US$2.3 million cover the investments against the risks of transfer restriction, expropriation, and war and civil disturbance.

CAPE VERDE -- MIGA's first project in Cape Verde was also its first with a Portuguese investor. The Agency issued guarantees totaling US$2.4 million in coverage to Secil-Companhia de Cal e Cimento, S.A. and Sociedade de Empreitadas Adriano, S.A. of Portugal, for their investments in the development of a basalt quarry. The project will install a crushing plant to produce sand and gravel aggregates. The plant, located near the new airport in the capital of Praia, will supply industrial grade aggregates to a nearby construction consortium. The project will alleviate the scarcity of construction materials in Santiago, the largest Cape Verdean island, and will benefit the local environment by reducing sand collection along Santiago's fragile beaches to meet the demand for the aggregates. MIGA guarantees cover the investments against the risk of transfer restriction.

KENYA -- MIGA covered the Mersey Docks and Harbour Company of the United Kingdom for its equity investment in a project to construct and operate a storage facility for imported grain and fertilizers in Mombasa, on the East African coast. The facility, one of Kenya's first modern bulk handling and storage plants, will use mechanized unloaders and conveyors to replace the slower mechanical grabs. The new system is more efficient and will reduce spillage and pilferage. The International Finance Corporation, Proparco (France) and the Commonwealth Development Corporation (U.K.) are expected to provide long-term financing to the project. MIGA's guarantee of US$4.7 million covers the investment against the risks of expropriation, transfer restriction, and war and civil disturbance.

MOZAMBIQUE -- MIGA issued coverage for a portion of the country's largest foreign investment (US$1.34 billion) to date. The project, located west of Maputo, involves the construction of a potline smelter to produce aluminum ingots for export. MIGA's guarantee covers the International Development Corporation of South Africa Limited, a shareholder in the project, for its guaranty of a US$40 million loan by the European Investment Bank to the project. The project will generate three times the level of total current exports of Mozambique and several hundreds of millions of dollars in foreign exchange revenues. The project will be supported by a consortium of export credit agencies and multilateral lenders, including the International Finance Corporation. MIGA coverage is issued against the risks of expropriation and war and civil disturbance.