Société Cotonnière du Gourma
MIGA has issued $38.3 million in guarantees covering a €5.1 million equity investment and €12.3 million shareholder loan from Développement Agro-Industries Sud S.A. (Dagris) of France to Société Cotonnière du Gourma (SOCOMA) in Burkina Faso. The coverage also includes a €15.2 million loan guaranty from Dagris to Banque Internationale pour le Commerce, l’Industrie et l’Agriculture du Burkina for a loan of the same amount to SOCOMA. Coverage is against the risks of expropriation, war and civil disturbance, and breach of contract for a period of up to 15 years for the equity, and up to eight years for the shareholder loans and loan guaranty.
This project will help SOCOMA acquire, modernize, and expand the cotton ginning assets of former monopoly Société des Fibres Textiles (SOFITEX) in the eastern region of Burkina Faso. The national government liberalized the cotton sector by breaking up the former monopoly into two new geographical zones (center and eastern) and allowing commercial operators to buy and operate them. The World Bank advised on the liberalization program.
By decentralizing the cotton sector, the project will spread commercial risk among three entities and lead to more efficient operations—and thus higher revenues. New seeding techniques and training on pesticide and fertilizer use are expected to improve yields and quality. The project will foster entrepreneurship as local growers and investors purchase shares in SOCOMA. Crop diversification services for local farmers will help them attain food self-sufficiency so they are not totally dependent on cotton production. SOCOMA will retain all workers employed from SOFITEX in eastern Burkina and hire an estimated 130 additional workers.
This project supports MIGA’s priority of investing in IDA countries. It is MIGA’s first project in Burkina Faso, and directly supports the cotton sector, the government’s most important source of export revenue.