MIGA has issued two guarantees totaling $2.86 million to Société Malienne de Promotion Hôtelière of Mali to cover its equity investment in Société Burkinabé de Promotion Hôtelière of Burkina Faso, as well as its loan guarantee to IFC. The guarantees are for a period of eight years against the risks of transfer restriction, expropriation, and war and civil disturbance.
The project involves leasing the existing Hôtel Indépendance in the capital city of Ouagadougou from the government, as well as renovating, equipping and expanding it into a three-star international business hotel. In September 2004, the government called for a tender to lease the hotel for a 15-year term as part of a gradual process to transfer ownership of the building to the private sector. Société Malienne de Promotion Hôtelière won the bid jointly with local Burkinabé investors.
The project is expected to enhance the capital city’s hospitality infrastructure in support of Burkina Faso’s efforts to establish itself as a regional center for business tourism. The project will also generate local jobs, and support the growth of small and medium-size businesses such as shops, food and beverage suppliers, and bus operators. The project is also expected to transfer management expertise and training to local staff. The government should benefit from an increase in taxes and foreign exchange.
The project addresses three of MIGA’s priority areas: an investment in an IDA-eligible country, which is among the world’s poorest; an investment in an African country; and a South-South investment. This is a joint MIGA-IFC project. Through this joint intervention, the World Bank Group is supporting a South-South investment that promises to pave the way for additional investments from the same sponsor, as well as from other investors in the region. The project is also in line with the Bank Group’s country assistance strategy for Burkina Faso, which identifies the development of the private sector as one of its pillars. In particular, it supports the IDA-financed Competitiveness and Enterprise Development project. The project was underwritten through MIGA's Small Investment Program.