An x-ray of the World Bank Group’s investment guarantee agency which helps SMEs in emerging economies attract foreign private investment. This piece, sourced from Archives Siaka-Momoh, was first published in BusinessDay in September 2006. The first slot of the story was published last week Thursday.
The project involves the verification and inspection on the government’s behalf of goods imported into Nigeria. The project company will procure, install, and operate x-ray scanners; design, implement, and maintain a computerized risk management system; transfer all data into the Automated System for Customs Data approved by UNCTAD; and design cargo handling procedures in conjunction with Nigerian agencies. A seven-year build-own-operate-transfer agreement with the Nigerian government will allow the project company to provide these services in the Onne seaport, Port Harcourt seaport and airport, and Idiroko land border.
The project is expected to facilitate trade; contribute to the development of investments in the country; and increase port efficiency by reducing the number of containers that have to be inspected physically, resulting in a significant reduction of port congestion. A direct and positive impact is also expected on revenue collection, due to better assessment of duties and taxes, and fewer opportunities for graft and smuggling. In addition, more than 350 customs service officers and other local staff are expected to receive training during the project.
By supporting this project, MIGA will help the government of Nigeria to further reform and modernize customs in the country. The project is also expected to contribute towards greater transparency in Nigeria’s import goods valuation and screening processes.
The project addresses one of MIGA’s priority areas: it is an investment in an IDA country in Africa, where some of the world’s poorest live. The project is also consistent with the World Bank Group’s Country Partnership Strategy in Nigeria, the main thrust of which is to support the government’s reform efforts to remove obstacles to growth and development.
Project Name: Kyoga Ltd.
Guarantee Holder: MILLco Limited
Investor Country: St. Kitts and Nevis
Host Country: Uganda
Fiscal Year: 2006
MIGA has issued a $2.97 million guarantee to MILLco Limited covering its equity investment in Kyoga Ltd. The guarantee replaces a previous contract (issued in 2005) to Afriproduce of the British Virgin Islands for its investment in Ugandan subsidiary Ugacof. The new guarantee contract reflects the sale of Ugacof’s processing and warehousing facilities to Kyoga Ltd., which is owned by MILLco. The guarantee tenor remains unchanged (expiring in 2010).
The coverage protects against the risks of expropriation, transfer restriction, and war and civil disturbance. The project involves the operation of a coffee processing facility in Uganda.
Project Name: Meridian Development Limited
Guarantee Holder Name: Metro Ikram Sdn. Bhd.
Investor Country Name: Malaysia
Host Country Name: Ghana
Fiscal Year: 2006
MIGA has issued $6.3 million in guarantees to Metro Ikram Sdn. Bhd. of Malaysia covering its $2 million equity investment in and $4 million shareholder loans (plus $1 million in interest) to Meridian Development Limited in Ghana. The guarantees are for five years and cover against the risks of transfer restriction, expropriation, war and civil disturbance, and breach of contract.
With Metro’s investment, Meridian will develop and build the first phase of a large affordable housing project as a joint venture with Ghana’s Social Security National Insurance Trust (SSNIT). This first phase will result in the construction of approximately 1,000 homes in the crowded Accra-Temma metropolis. Once complete, the new neighborhood will feature a variety of housing styles offered at a wide range of prices, from two-bedroom low-cost houses to three-bedroom, medium-cost houses to four-bedroom premium single family homes. Later stages of the project include the construction of up to 100,000 homes throughout Ghana. The MIGA guarantees cover the first stage, which is considered a pilot for the future.
The project comes at a time when Ghana, like other sub-Saharan countries, is experiencing rapid urban population growth. The country’s housing sector has not been able to keep up with demand, particularly in affordable price ranges. Some estimates suggest that close to one million families in urban Ghana are looking to purchase homes, and this number could soar even higher as earning power increases. Meridian is a critical private investment that will help address the housing shortage, while demonstrating to other private investors that such projects can bring a strong rate of return when risks are properly mitigated…
Source: World Bank Group Multilateral Investment Guarantee Agency. Story is abridged.
