Good Business---June 2001
Ludi Joseph, (202) 473-7700, ljoseph@ifc.org
Africa, South Asia, East Asia & Pacific
Afshin Molavi, (202) 458-5674, amolavi@ifc.org
Middle East-North Africa, Southern Europe-Central Asia
Adriana Gomez, (202) 458-5204, agomez@ifc.org
Latin America-Caribbean, Central-Eastern Europe
Sujani Eli, (202) 458-0933, seli@ifc.org
General Press Information
Richard Romm, (202) 458-4698, rromm@ifc.org
General Press Information
Washington, D.C., June 29, 2001—The
International Finance Corporation announces eight new investments in textiles,
tourism, information technology, leasing, and small and medium enterprises—in
Sub-Saharan Africa, the Middle East, and Eastern Europe—to support sustainable
private sector businesses in the developing world. IFC also provided
a restructuring package to a cement company in Vietnam to help it recover
from financial difficulties; organized a seminar in Hanoi, Vietnam, on
the development of China's private sector, and a workshop in Beijing, China,
on corporate governance in Chinese enterprise reform.
The mission of IFC, part of the World Bank Group, is to promote sustainable
private sector investment in developing countries as a way to reduce poverty
and improve people’s lives. IFC finances private sector investments
in the developing world, mobilizes capital in the international financial
markets, and provides technical assistance and advice to governments and
businesses.
MADAGASCAR—INVESTMENT IN GARMENTS
IFC will provide a loan of up to $2.75 million to Columbia Clothing Company,
a newly established trouser manufacturing plant in Madagascar. The
loan will enable Columbia Clothing Company to export over four million
pairs of trousers and create over 2,000 jobs.
The project is a joint venture between members of the Ismail family, a
prominent local business group with interests in manufacturing and agro-industry
in Madagascar and Mauritius, and Phoenix Ventures Ltd, a Sri Lankan-based
group involved in various manufacturing activities.
IFC’s participation will complete integration by the sponsors of textile
operations in Madagascar and Mauritius and provide a “one-stop shop”
for major international retailers.
MADAGASCAR—TEXTILE SECTOR
IFC will provide a loan of up to $8.5 million equivalent to Cotona, a fully
integrated textile operation in Madagascar and a leader in the region’s
textile sector.
Over the past 50 years, the sponsors—Groupe Socota Industries—have
built a solid industrial base in Madagascar and Mauritius and are among
the largest employers in the region.
IFC’s investment will help Cotona achieve global competitiveness in the
international textile market with the aim of developing the “made in
Madagascar” label. Responding to demands from its international
client base, the company will modernize and replace its obsolete equipment.
NIGERIA—HOTEL FOR BUSINESS TRAVELERS
IFC will provide a $2.5 million loan and quasi-equity investment of up
to $1.5 million in the form of preferred shares to construct a new hotel
in Port Harcourt, Rivers State, Nigeria. The new $13.1 million 124-room
4-star Novotel will provide reasonably priced hotel rooms for workers,
investors, and other business travelers.
The new hotel will alleviate mid-week room shortages in a market where
demand is expected to grow as new investments flow into the region. It
will also diversify business tourism facilities, contribute to Port Harcourt’s
emergence as a business center for the oil industry, and lead to more hotel
investment as existing hotel accommodation improves to meet competition
and generate demand for services and supplies. The hotel will create
approximately 140 direct jobs.
The sponsor is JDI Investment Company Limited, a Nigerian company owned
by Messrs. Koye Edu and Gbolahan Balogun through Moorhouse Properties Ltd.
The hotel will be managed by the Accor Group, one of the largest
hotel networks in the world, which operates approximately 3,200 hotels
in over 140 countries under a variety of brand names, including Sofitel,
Novotel, Ibis, Thalassa, Motel 6, etc.
RWANDA—INVESTMENT IN APARTMENT HOTEL
IFC will provide a loan of $800,000 to establish Dreamland Towers, a 34-unit
apartment hotel in Kigali, Rwanda. The investment represents an important
step in the reconstruction of Kigali following years of civil strife and
will address the significant shortage of good quality hotel accommodation
in Rwanda.
Dreamland Towers will cater to the growing regional and international business
community in Rwanda and provide important conference facilities and business
services.
The $3.2 million project will be cofinanced with a local development bank
and is sponsored by Rwandan businessman Mr. Faustin Harelimana and his
family.
SOUTH AFRICA–BRIDGING THE “DIGITAL DIVIDE”
IFC will invest $375,000 in South African company, Freecom (Pty) Ltd, to
provide Information Technology (IT) solutions to buyers of personal computers
(PCs). Freecom will make affordable IT accessible to lower-and middle-income
consumers who make up a large part of the market but are currently excluded
on the basis of price or difficulty of use or because their present PCs
become rapidly outdated. As technology advances, this sector is a
cause of global concern with the widening of the “digital divide,”
the gap between technologically enabled countries and developing country
“have nots.”
Freecom will provide PC solutions based on refurbished used computers,
which are discarded by businesses because of incompatibility with the latest
software. These refurbished PCs will be loaded with user-friendly
“smart” software packages that require fewer resources—such as memory
and processor speed—than the existing software on the PCs. The
packages provide reasonably priced and practical solutions and will be
backed by after-sales support and training, not normally available to buyers
of used equipment. The target market includes schools, home users,
and small businesses.
The project will help to reduce the “digital divide” by making suitable
and affordable technology available to large parts of the population that
presently lack access to PCs.
VIETNAM—RESTRUCTURING PACKAGE TO CEMENT COMPANY
IFC, Nissho Iwai Corporation, and the Export-Import Bank of Thailand will
provide a restructuring package to Morning Star Cement Limited (MSC), Vietnam,
to help the company better withstand financial difficulties and other problems
in the cement industry. The ability to undertake the restructuring
of such a major joint venture enterprise is a credit to the cooperation
of the government of Vietnam and will have an important demonstration effect
for other private sector projects, many of which have strong business prospects
but are constrained by high leverage and liquidity problems.
The restructuring package involves a rescheduling of $142 million outstanding
of the senior loans provided to the company to construct a cement project
in 1995. This is Vietnam’s largest private sector restructuring
and includes the conversion of $67 million of shareholder loans to equity,
expansion of MSC’s cement capacity to 1.9 million tons per year, and
improvements to its distribution system to make it more competitive.
MSC’s two joint venture partners are Holcim Ltd (formerly Holderbank
Financière Glaris Ltd) of Switzerland, one of the largest and most experienced
cement manufacturers in the world; and Ha Tien I Cement Company, a wholly
owned subsidiary of the Vietnam National Cement Corporation. MSC
was the largest private sector project undertaken in Vietnam in 1995 involving
limited-recourse financing and no government guarantees. Its successful
restructuring in 2001 is evidence of the confidence that the lenders and
joint venture partners have in its long-term viability.
ALBANIA—SUPPORT TO SMES
IFC will extend a partial guarantee facility to the American Bank of Albania
(ABA) to expand its portfolio of small and medium enterprises (SMEs). This
is the first financial product of its kind in Albania and will pave the
way for other new and innovative financial interventions. The project supports
the dynamic SME sector in a challenging environment and at a difficult
moment in the region. It is in line with IFC’s strategy to strengthen
the SME sector through strong financial intermediaries and will encourage
further investment in both the country and the region as a whole.
Under the facility, IFC will guarantee 50 percent of each loan approved
by ABA to finance eligible subprojects within IFC’s maximum aggregate
exposure of up to $2.5 million. The subprojects will be identified
by ABA in close collaboration with the Southeast Europe Enterprise Development
Facility, a development facility established by the World Bank Group and
international donors to operate in Albania, Bosnia and Herzegovina, FYR
Macedonia, and Kosovo.
ABA was founded in 1998 by the Albanian-American Enterprise Fund, a non-profit
organization that provides medium-term financing to Albanian legal entities.
ABA introduced the first Internet banking service in Albania and
has an agreement with Unioni Financiar Tirane (UFT), representative of
Western Union, to distribute ABA's Certificate of Deposit through UFT’s
branch network of 107 money transfer agencies in Albania and Kosovo.
FYR MACEDONIA—SUPPORT TO SMES
IFC will extend a Euro 5 million credit line to Komercijalna Banka A.D.,
one of the leading banks in FYR Macedonia, which will help finance its
dynamic SME sector. The project will support the country’s efforts
to promote a positive economic environment, attract more foreign investment,
create employment, strengthen the private sector, and expand economic opportunities
for SMEs.
Komercijalna Banka, one of FYR Macedonia's leading banks, was founded in
1955 as the first commercial bank in the country and has operated as a
joint stock company since January 1990. The bank successfully provides
commercial as well as retail banking services in Macedonia through its
extensive branch network.
IFC has been playing an active role in FYR Macedonia since the country
became a member in 1993 and has approved financing of approximately $65
million for nine projects with a total cost of $213 million.
EGYPT—LEASING COMPANY
IFC will lend $6 million to ORIX Leasing Egypt, SAE (OLE), a Cairo-based
leasing company that specializes in providing medium-term finance to SMEs.
OLE will use IFC’s investment to expand its lending to SMEs, thereby
supporting their growth and boosting job creation. The investment
is in line with IFC's global strategy of strengthening domestic financial
institutions and increasing the access to medium and long-term finance
by local SMEs.
OLE is an unlisted joint stock company established in 1997 by the National
Bank of Egypt, Commercial International Investment Company, ORIX Corporation-Japan,
ORIX Leasing Pakistan, Ltd., and IFC.
JOINT WB/IFC WORKSHOP IN CHINA ON CORPORATE GOVERNANCE IN REFORM OF STATE-OWNED
ENTERPRISES
The joint IFC─World Bank Department for East Asia and the Pacific organized
a workshop in Beijing on corporate governance in Chinese enterprise reform.
The workshop focused on a World Bank Group study on corporate governance
issues in China, mainly in the context of ownership transformation of state-owned
enterprises. The workshop is part of a broader WB/IFC initiative
to provide technical assistance in the area of corporate governance including
training for directors of independent companies.
The study is based on a survey of corporate governance practices in more
than 250 Chinese companies listed on the Shanghai Stock Exchange as well
as a smaller sample of nonlisted companies. Experience in China and
elsewhere indicates that ownership transformation does not automatically
translate into tangible efficiency gains unless a sound institutional framework
and effective corporate governance are in place. For this reason,
the Chinese leadership has identified corporate governance as a core
issue in the current stage of economic reform.
The workshop was attended by representatives of the Chinese Securities
and Regulatory Commission, Shanghai Stock Exchange, the State Council Office
for Restructuring the Economic System, the State Economic and Trade Commission,
the Chinese Center for Corporate Governance, the Development Research Center
of the Chinese Government, the Australian Institute of Company Directors,
private consulting firms and financial institutions, and Chinese experts
on corporate governance.
IFC SEMINAR IN VIETNAM ON DEVELOPMENT OF
CHINA’S PRIVATE SECTOR
IFC and the Central Institute for Economic Management (CIEM) of the government
of Vietnam held a seminar in Hanoi on the development of the private sector
in China. The seminar was organized in response to strong Vietnamese
interest in China’s experience with market-oriented reforms and presented
the results of IFC’s recent study, China’s Emerging Private Enterprises.
The seminar was attended by representatives of the Central Economic Committee
of Vietnam, the State Bank of Vietnam, the Vietnam Chamber of Commerce
and Industry, CIEM, the Japanese government, the United Nations Industrial
Development Organization, the Asian Development Bank, and several news
agencies. Discussions centered on issues relating todevelopment of the
private sector including investor confidence, judicial and legal systems,
public perception of the private sector, and guarantee funds for small
and medium enterprises.
The study China’s Emerging Private Enterprises (see www.IFC.org/publications),
which was supported by trust fund financing from the government of Australia,
was recently translated into Vietnamese.
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