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World Bank building

MIGA’s goal is to promote foreign direct investment into developing countries to support economic growth and more.

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Hands husking peas into a basket full of peas

Learn about the progress MIGA is making in its mission to support economic growth, reduce poverty and improve people’s lives.

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Explore different types of political risk insurance guarantees provided to investors and lenders.

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Explore global projects that support economic growth, reduce poverty and improves people’s lives.

Story

Helping African Hotels Rebuild and Preserve Jobs amid the Pandemic

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Few industries have been hit harder by the COVID-19 pandemic than hospitality. Hotels in Sub-Saharan Africa suffered more than most as many nations closed borders, blocking the international visitors that sustain the industry there. MIGA guarantees are helping Kasada preserve jobs in hotels that are being remodeled to improve energy efficiency.

 

When a hotel closes for an extended period of time, management cannot simply open its doors and welcome guests back. Pipes must be cleared of lead and copper that accumulates in stagnant water; surfaces must be examined for mold; and showerheads, toilets, and hot tubs must be tested for Legionella, the bacterium that causes Legionnaire’s disease.

All of that costs money, and in developing economies, capital can be hard to come by. Hoteliers in Senegal learned that first-hand after the country closed its borders during the COVID-19 pandemic, halting the international travel that helps keep the country’s hotels afloat.

“We had to shut down our operations and stay home for over a year,” said Binetta Sylla Diop, a receptionist at the Ibis Dakar hotel. “COVID-19 has been a very big blow.”

Fortunately for the Ibis Dakar and nine other hotels in Sub-Saharan Africa, there was an investor willing—with help from the Multilateral Investment Guarantee Agency (MIGA)—to undertake the costly work needed to reopen. That investor was Kasada.

Kasada Story 16-9 IMG 2
Ibis Dakar Hotel, Senegal


LONG-TERM INVESTORS IN AFRICA

Kasada is an independent investment platform backed by the Qatar Investment Authority, the sovereign wealth fund of the State of Qatar, and Accor, a world-leading augmented hospitality group. In 2019, Kasada closed on its maiden fund, Kasada Hospitality Fund L.P., with equity commitments of over $500 million, to invest across sub-Saharan Africa.

Kasada’s strategy shifted when the pandemic hit, with existing hotels being forced to close in many countries and demand for rooms drying up in others. Instead of building new hotels, Kasada began buying existing ones and renovating them according to the highest international green standards. Kasada has purchased 10 hotels in the past 18 months.

“We launched our first fund in 2019, and 2020 was historic in terms of stress in the hospitality sector,” said David Damiba, Kasada’s Chief Investment Officer. “We adjusted our strategy a bit, but our goal is the same. We believe in the African hospitality market.”

David Damiba
David Damiba, Managing Partner and Chief Investment Officer, Kasada Capital Management

Kasada tapped MIGA for up to $260 million in guarantees to protect their hotel investments from restrictions of capital out of the countries, expropriation, and civil disturbance. The International Finance Corporation (IFC), MIGA’s sister organization, agreed to lend Kasada up to $160 million.

MIGA extended the guarantees because hotels are job-creation machines. Tourism is the main source of foreign exchange for the vast majority of the world’s least developed countries, according to IFC, and, as recently as 2011, tourism revenues accounted for more currency moving from developed countries to developing ones than all aid from foreign donors.

 

CONTINUED INVESTMENT IN HOSPITALITY

Kasada will add a significant amount to that currency flow. With its first fund, Kasada plans to invest in both existing hotels and in greenfield projects. Renovation programs have already been planned in Kasada’s hotels in Cameroon, Côte dIvoire, Namibia, and Senegal. The group plans to expand its footprint with investments in key African cities in Kenya, Nigeria, Rwanda, and South Africa.

Event Replay: Driving Foreign Direct Investment to Africa (Dec 2021)

 

“The tourism and hospitality sectors in Sub-Saharan Africa have faced unprecedented economic challenges as a result of the pandemic,” said Sarvesh Suri, MIGA’s Director for Climate, Energy, Extractives, Financial & Capital Markets. “Kasada’s investments will preserve jobs in hotels and create new ones in the tourism supply chain as it refurbishes its new properties.”

Kasada’s investment in Senegal demonstrates the impact that a mission-driven investor can have. The three hotels it has bought there employ 284 workers, including Diop, the receptionist. Kasada’s investment will keep them employed and will support an estimated 3,950 jobs associated with the hotel, in retail, transportation, cleaning services, and even agriculture.

“We really needed a lot of money to reopen the hotel,” said Thiare Ngomack, Room Division Manager at the ibis Dakar. “Kasada got involved to finance a large portion of the work.”

 

EDGE AT WORK

The refurbished hotels will employ more people with a smaller carbon footprint. All the hotels are being reconditioned according to IFC’s Excellence in Design for Greater Efficiencies, or EDGE, program, a set of standards and practices aimed at rapidly cutting emissions in buildings in a way that both improves efficiency and saves money.

Kasada’s greening process may include better ventilation, improved cooling, low flow showerheads, dual flush toilets, heat pumps, and energy-efficient lights. It aims to save at least 20% in terms of energy and water compared with other hotels in the market.

Kasada Green Building

“We are long-term investors in Africa and in this sector,” Kasada’s Damiba said.

For hotel workers in Sub-Saharan Africa, Damiba’s interest couldn’t come at a better time.

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