January 2007

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The Afghanistan Investment Guarantee Facility (US$5 million Credit):

The Afghanistan Investment Guarantee Facility (US$5 million Credit), together with the Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group, has provided US$1.07 million in investment insurance (guarantees) for a cotton project in northern Afghanistan. The guarantees will protect the investment against the noncommercial risks of currency transfer restriction, expropriation, and war and civil disturbance, including terrorism. The project, the first investment in Afghanistan to be guaranteed by MIGA, will provide technical and financial assistance to cotton growers in northern Afghanistan to increase cotton production and yield, as well as upgrade, the region’s capacity for ginning cotton and producing cottonseed oil. The Facility is in the process of processing two definitive applications in the financial sector and one in the telecoms sector.

Facility applicants seeking coverage submit a confidential preliminary application before the investment is irrevocably committed. There is no fee charged. Once the investment and financing plans are established, applicants submit a definitive application along with any relevant project documentation. A fee is charged for the definitive application. The total investment for the three projects is US$98 million. The Facility has also received 17 preliminary applications with investments totaling US$234m in various sectors including manufacturing, financial services, and cement production. The Facility is presently following up each of the preliminary application to determine their investment status and potential for guarantee issuance.