MIGA has issued a $14.7 million guarantee to Barloworld Equipment UK Limited, a subsidiary of Barloworld Limited of South Africa, covering its $16.34 million equity investment in and shareholder loan to Barloworld Equipamentos Angola Limitada of Angola. The coverage, for three years, protects against the risks of transfer restriction, expropriation and war and civil disturbance. This is a replacement for a guarantee on the investor’s equity investment in the project that was originally issued in 1999. An additional guarantee protecting the investor’s shareholder loan expired in June 2004 following repayment of the loan.
Barloworld Equipment is expanding its earthmoving equipment dealership in Angola, which includes the construction of a permanent facility just south of Luanda, the nation’s capital. The expansion involves the construction of a permanent facility to replace the pre-fabricated buildings on its current site in an industrial complex. The expansion also will allow Barloworld Equipment, the exclusive dealership for Caterpillar earthmoving and power generation equipment in Angola, to move into the rental market with the establishment of the Cat Rental Store. The company also sells forklift equipment, and has a customer base that includes the mining and construction industries.
The growth of Barloworld Equipment will help in the reconstruction and rebuilding efforts for a country only recently at peace. Angola’s civil war ended in 2002 following 27 years of violence and upheaval. Post-conflict challenges remain, including a limited foreign direct investment base to contribute tax revenues that could fund reconstruction. There remains a significant lack of basic infrastructure such as roads, and residential and commercial buildings—many of which were destroyed during the conflict. The increased availability of heavy construction equipment will help pick up the pace of the rebuilding effort, while encouraging new investment in the country’s natural resources. Barloworld Equipment’s expansion into the rental market will also give smaller local contractors, with limited access to capital, the ability to take advantage of growing demand for construction services.
MIGA’s participation in this project reflects several of the agency’s strategic goals, including investment in an IDA-only country, and rebuilding in a post-conflict nation.