The Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group, said today that it is providing political risk insurance to support the expansion of MTN Afghanistan’s (MTNA) operations. MTNA is a leading provider of telecommunication services in the country, operating a GSM network and providing wireless communications and internet services. This expansion will continue the important work of increasing connectivity in a conflict-affected country.
In 2007, MIGA provided $74.5 million in coverage for the start-up of MTNA’s operations. The additional coverage of $82.1 million, issued this month by MIGA to parent company MTN Dubai (MTND), will protect MTND’s equity investment and shareholder loan against the risks of transfer restriction and expropriation for a period of 10 years. MTNA’s investment will focus on improving its mobile telecommunications infrastructure, increasing geographical coverage, and enhancing the quality of its mobile services in Afghanistan.
MTN’s initial investment in Areeba Afghanistan LLC (now known as MTNA) is one of the largest and most successful foreign investments in Afghanistan to date. After decades of conflict, Afghanistan’s communications network was barely operational, hindering even the government’s ability to function. The World Bank has provided support at the policy and regulatory level to create an enabling environment for this sector which is fundamental to private sector growth and public service delivery. With four operators in the country, the country’s mobile network has increased by seven-fold in the past five years, with a penetration rate of 47 per 100 inhabitants. The total number of mobile subscribers in Afghanistan is expected to grow to over 18 million by 2014. MTNA has played a particularly significant role in expanding coverage in remote areas of the country, and provides mobile telecommunication services to 31 of the country’s 34 provinces.
MIGA has backed six investments into Afghanistan since 2006 and is active in many other countries experiencing conflict, a priority area for the agency. “Foreign direct investment plays a critical role in rebuilding war-torn economies, but perceptions of political risk can understandably deter potential investors,” says MIGA’s Executive Vice President Izumi Kobayashi. “This investment has already delivered on many fronts. It provides a strong pillar for economic growth and performs well financially, which demonstrates that business can thrive in challenging environments with appropriate risk mitigation. We are pleased to continue to support this important investment for the people of Afghanistan.”