MIGA has provided Econet Wireless Limited, a UK-registered company wholly-owned by Econet Group of South Africa, with a $10 million guarantee for its equity investment (of up to $19.3 million) and retained earnings in Econet Wireless Nigeria Limited (EWN) in Nigeria. MIGA has also provided Ericsson Credit AB, a wholly-owned subsidiary of LM Ericsson of Sweden, with a guarantee of up to $70 million, for its $70 million non-shareholder loan, plus interest, to EWN. The coverages are for five years, and are against the risks of transfer restriction, expropriation, and war and civil disturbance. Thirty million of this exposure has been syndicated through MIGA's Cooperative Underwriting Program.
The project--the first that MIGA has supported in Nigeria, and notable for being a South-South project exemplifying intra- African cooperation--involves the installation, operation and maintenance of a country-wide GSM mobile telephone network, under a 15-year license. By supporting this project, MIGA will assist the government of Nigeria in its ongoing efforts to deal with the acute shortage of reliable telephone services in the country. Nigeria, the most populous country in Africa, has a teledensity of less than 1 percent, one of the lowest levels in the world. This project will be helping to address the issue, which will have a positive impact on the economy in general. Furthermore, the project will contribute to establishing a minimum required telephony infrastructure, a vital pre-condition to attracting foreign direct investment into the country.
EWN will yield additional direct and indirect benefits to Nigeria, including numerous employment opportunities and benefits of technology transfer. The project itself is expected to generate jobs for more than 1,000 Nigerian staff, who will receive extensive technical operations and sales training, and is expected to create several thousands indirect jobs. The license fee provided the government with $285 million in revenues, and EWN will pay the government an additional annual license fee equal to 2.5 percent of net revenue. The project is expected to facilitate additional tax revenues by accelerating economic development and improving the efficiency of local business enterprises.
