MIGA's coverage marks the first use of the Afghanistan Investment Guarantee Trust Fund (AIGF), a special fund designed to encourage foreign investment into the country.
Afghanistan became a member of MIGA in June 2003, following more than two decades of conflict. The country has begun an enormous political, economic, and social transformation. Progress to date has been encouraging, but tremendous challenges remain. Today, the majority of Afghans still live in dire poverty without access to safe drinking water or electricity—or opportunities to improve their lives.
Reconstruction needs are enormous and underscore the need for private sector help in meeting the challenge.
"The development of Afghanistan's private sector, particularly in agriculture, is critical for the country's recovery and for improving rural livelihoods in the formal, legal economy," says Alastair McKechnie, the World Bank's Country Director for Afghanistan. "The NAPCOD project is an excellent first example of how the AIGF can contribute to improving the prospects for foreign investment to modernize this vital sector."
"Perceptions of risk by investors and bankers can be a major obstacle to investment," says MIGA's Executive Vice President, Yukiko Omura. "The end of major conflict has led to an increase in private investment, but this has been limited compared to the country's potential. Our risk mitigation services can help allay investor concerns, which is critical tothe reconstruction efforts and sustainable long-term economic growth of Afghanistan."
Bernard Esteulle, CEO of NAPCOD, adds: "We are working in a very challenging environment. But it is important for the people of northern Afghanistan to have the opportunity to rebuild their livelihoods and improve their prospects for the future."
NAPCOD was underwritten through MIGA's new Small Investment Program (SIP), which makes it quicker and easier for smaller firms to apply for a standardized package of risk coverages. This is the fourth investment covered under the program. Click here for more on the SIP.
MIGA addresses these concerns by providing three key services: political risk insurance for foreign investments in developing countries, technical assistance to improve investment climates and promote investment opportunities in developing countries, and dispute mediation services, to remove possible obstacles to future investment.
Multilateral Investment Guarantee Agency
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