MIGA has provided Fatoglu Gida Sanayi Ve Ticaret Anonim Sirketi (Fatoglu Food Industry and Trade Corporation or Fatoglu) of Turkey with a guarantee for $529,920 to cover its $588,800 equity investment in Fatoglu Istehsal Azerbaycan Ltd. Sirketi (Fatoglu Production Azerbaijan Co. Ltd. or Fatoglu-Azerbaijan), for a period of up to five years, against the risks of: Transfer Restriction, Expropriation, and War and Civil Disturbance. The investment is for the expansion and modernization of a flour mill, which produces flour that is distributed and sold in Azerbaijan and Georgia. Following the expansion, it is estimated that the mill’s increased production will account for approximately 10% of Azerbaijan’s flour supply.
Since its inception in 1999, the project has provided a steady source of local employment. It currently employs over 90 nationals and expects to generate more jobs during the next five years while providing onsite technical and managerial training. In addition, the mill’s activities indirectly support approximately 150 jobs through transportation and other related sectors. The project also has upstream benefits for local businesses in the packing and domestic and international shipping industries; approximately 15 percent of the goods and services needed by the project are purchased locally.
The project will not only develop the emerging agricultural sector, but will also diversify the Azerbaijan economy, which is concentrated in the oil and gas industry. Moreover, it will have a net impact of $1.6 million per year in new taxes and duties, while replacing $6.5 million in imports per year. This is expected to create a positive effect of $500,000 on foreign exchange per year. Fatoglu-Azerbaijan meets three of MIGA’s priority concerns: it provides support for SMEs, is a South-South investment and is located in an IDA eligible country.
