On June 29, 2012, MIGA issued guarantees totaling $9.5 million covering an equity investment by Chayton Atlas Investments (CAI) of Mauritius in Chobe Agrivision Company Ltd. in Zambia. The coverage is for a period of up to 10 years against the risks of transfer restriction, expropriation, war and civil disturbance, and breach of contract.
The project involves the expansion of "Project Psi" supported by MIGA in fiscal year 2011. The original project involved the acquisition of two farms in the Mkushi farm block in Zambia’s Central Province, with a combined land area of 2,517 hectares; and a "contract farming" business. The farms cultivate maize, wheat, and soya for consumption in Zambia and eventually neighboring countries, while the contract farming operation provides machinery and equipment services to the two farms as well as third-party farms. CAI has now made a further investment in Chobe to install pivot irrigation systems on the undeveloped part of Project Psi
CAI has also acquired four adjacent farms in the same farm block as the existing Project Psi, with a combined land area of 1,589 hectares. Additional capital expenditure is planned for improvements to the four newly-acquired farms including installing irrigation systems and constructing a water storage dam (Project Beta). When fully operational, the Amasenga Farm will grow approximately 4,500 metric tons per annum (mta) of wheat and 2,500 mta of soya under winter and supplementary summer irrigation. Alternatively, some 4,500 mta of commercial or seed maize could be grown as part of a seasonal rotation in line with current market demand in Zambia and the region.
The agricultural sector has been identified by both the Zambian government (in its national development plan) and in the World Bank’s Country Partnership Strategy as a key area where there is potential to contribute to development and economic growth. In Zambia, CAI estimates that only 1.1 percent of the potential fertile Guinea Savannah agricultural area is cropped. Moreover, CAI believes that introducing highly efficient agricultural practices such as crop rotation and zero tillage, soil and water management, and certain technological improvements will result in increased productivity and sustainable crop yield enhancement. As well as improving productivity of the land, the introduction of new technologies and methods offers the chance for substantial demonstration effects. The project will also contribute to increased food security within Zambia and the broader Southern African Development Community – the target market for consumption.
The project is aligned with MIGA’s strategic priorities of supporting investments into countries eligible for assistance from the International Development Association and South-South investments.