On June 30, 2011, MIGA issued a guarantee covering an equity investment by Schulze Global Investments (SGI) into the National Cement Share Company of Ethiopia. The project is being implemented by SGI Ethiopia Cement Limited, an intermediary company incorporated in the British Virgin Islands. MIGA’s guarantee of $4 million provides coverage for a period of up to 15 years against the risks of transfer restriction, expropriation, and war and civil disturbance. [1]
SGI has invested into National Cement Share Company (NCSC) for a minority equity stake in the company. NCSC currently operates a 500 ton-per-day (tpd) clinker plant in Dire Dawa. NCSC recently began construction of a new 3,000 tpd clinker plant. The new plant is also located in Dire Dawa, near the existing plant. In order to accelerate the construction of the new plant, NCSC engaged SGI for a round of equity financing.
The expansion of the plant is expected to result in additional significant tax revenue to the government and the creation of up to 600 new local jobs directly, and potentially an additional 2,500 indirect jobs. It will also pr ovide an increased supply of domestic cement to meet the growing demand in Ethiopia – reducing the country’s reliance on expensive imports and reducing the drain on foreign exchange reserves.
MIGA’s support for this investment is consistent with the first pillar of the World Bank Group’s Country Assistance Strategy for Ethiopia for 2008-2011 which focuses on fostering economic growth in order to sustain the emerging economic "take-off". The project is also aligned with MIGA’s commitment to supporting more investments in IDA-eligible (the world’s poorest) countries.
[1] The guarantee was cancelled on June 29, 2015.
