Cotecna's assurance confirmed in Nigeria
In a significant move to bolster foreign investment in Nigeria, the Multilateral Investment Guarantee Agency (MIGA) has issued guarantees worth US$54.9 million to Cotecna, a Swiss-based company. The guarantees are designed to protect Cotecna against non-commercial risks, such as political instability, expropriation, and breach of contract, as it establishes container x-ray scanning centres in various transportation points across the country.
The project, which will be set up in two airports, two sea ports, and two land borders, aims to enhance security measures in Nigeria. Cotecna Destination Inspection Ltd Nigeria, a company involved in destination inspection services, will be at the heart of this initiative, ensuring the quality and customs compliance of imports.
MIGA guarantees serve a dual purpose. They not only protect investors against losses arising from political risks but also encourage foreign investment in developing countries. By providing these guarantees, MIGA gives investors confidence in the safety of their investments in regions that might otherwise be perceived as too risky.
The guarantees also facilitate long-term investments that can contribute to economic growth and development in host countries. In the case of Cotecna, the guarantees will help alleviate concerns about political and economic risks in Nigeria, making it easier for the company to invest in the country's infrastructure.
The guarantees cover risks such as expropriation, war and civil disturbance, and issues related to the transfer of funds. The MIGA guarantee for Cotecna's project covers a period of seven years.
It's worth noting that the financial structure for the project has undergone changes. Under the new structure, Cotecna will fund the project through equity contributions only, without the need for shareholder loans or loans from financial institutions. This change is reflected in the new guarantee contracts, which replace a previous contract issued in 2003.
Meanwhile, the African Development Bank (AfDB) has criticized Nigeria's food import policy, raising concerns about the impact on local farmers and food security. On the other hand, Access Bank has made strides in expanding its global presence, with the opening of a branch in Hong Kong and the acquisition of a majority stake in AfrAsia.
As the world grapples with a development finance gap of US$4 trillion, as agreed upon by the United Nations, initiatives like Cotecna's project, backed by MIGA guarantees, are crucial in driving economic growth and development in developing countries.
The MIGA guarantees, valuable at US$54.9 million, are designed to protect Cotecna against non-commercial risks and encourage foreign investment in finance sectors, especially in developing countries like Nigeria. By alleviating concerns about political and economic risks, these guarantees facilitate long-term investments that can contribute significantly to the economic growth and development in host countries, such as Cotecna's infrastructure project.
