MIGA Supports Tech-Driven Solution to Address Food Shortages
WASHINGTON, Sept. 13, 2023 —The Multilateral Investment Guarantee Agency of the World Bank (MIGA) has issued a guarantee of $3.89 million to Agricultural Corporation In Water Solution, Inc. of the Republic of Korea (IWS Korea) for its loan to solely owned subsidiary, In Water Solution Agro LLC (IWS Agro) of Kyrgyz Republic, for a period of up to seven years.
The MIGA guarantee against the risk of transfer restriction enables IWS Agro to construct and operate a 10-hectare smart farm, including hydroponic greenhouses, which will be operational round the clock, with an automated system that controls the growing environment for vegetables and flowers.
The construction of a 4-hectare smart farm was completed in February 2022 and the first batch of crops was harvested in April 2022. The internationally marketable and high-quality agriculture products, which were substantiated through a pilot program, will be sold both in domestic markets and neighboring countries.
The project is expected to increase the competitiveness of the produced crops in the face of competition from Uzbekistan and Kazakhstan. This is one of the first projects in the country to introduce advanced indoor farming technology for large-scale crop cultivation during the cold season, when the products from the smart farm are the most cost-competitive.
“MIGA is actively supporting agriculture projects that utilize innovative technology to solve pressing food shortages in emerging markets,” said Hiroshi Matano, MIGA Executive Vice President. “We believe in harnessing the power of technology to improve people’s lives.”
Climate change presents serious risks to the agricultural systems in the Kyrgyz Republic. The country is projected to experience temperature rises significantly above the global average, with increased drought incidence having major effects on agriculture. The smart farm utilizes an automated, high-productivity technology that increases yield while consuming lower amounts of water, energy, and raw materials compared to conventional greenhouses. Therefore, it is less prone to adverse impact from external shocks.
To enhance the projects’ sustainability, it has adopted a hydroponic waste recycling system, a rain recycling system, and an agricultural water treatment system that desalinates and maintains proper level of minerals and nutrients. This is the first MIGA project that provides a guarantee to bolster the smart farm industry, and it is classified as 100% climate finance.
Dohwa Engineering Co., Ltd.—a leading engineering company in Korea—acted as the key sponsor for the project by making an equity investment into IWS Korea, which was then invested as shareholder loans into IWS Agro to implement the project.
“Despite the importance of the agricultural sector in the Kyrgyz Republic, the sector is still largely dominated by traditional outdoor farming, leaving the country particularly vulnerable to the impacts of climate change” said Seong Won Hong, Executive Director of Dohwa. “In that the Kyrgyz Republic was an optimal location to maximize development impact as we provide a technology-driven solution with our leading engineering capabilities while engaging local community for skills transfer.
Over 63% of the population in the Kyrgyz Republic lives in rural areas, and its economy is heavily reliant on agriculture, which contributes 14 percent of its GDP. As a small, low-income economy, it depends on China and Russia for trade, capital inflows, and investment, rendering it highly vulnerable to external shocks. A shortage of food has led to fluctuations in food prices.
To address these challenges, the MIGA-guaranteed project, which integrates technology, automation, and indoor cultivation, aims to not only create new employment opportunities for the local people but also address the issue of food scarcity. A big component of the project involves community engagement, including skills transfer and comprehensive job training initiatives. The project is prioritizing hiring socially disadvantaged groups that typically have limited access to competitive employment opportunities.
MIGA was created in 1988 as a member of the World Bank 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 over $76 billion in guarantees across 123 developing countries, supporting more than 1,000 projects. Over the past decade, MIGA’s guarantees have generated more than 156,000 jobs in developing countries.
Dohwa Engineering Co., Ltd., is a multi-disciplinary engineering consulting firm in the Republic of Korea which offers a variety of technical services in all areas of engineering including water treatment, water resources management, and urban planning. Dohwa has been the largest civil engineering firm in Korea in terms of number of employees and annual revenue for 16 consecutive years. Dohwa is the largest shareholder of IWS Korea.
Elizabeth Howton, (202) 458-5922, email@example.com
For more information, please visit: https://www.miga.org