Afghan telecommunication provider MTN Afghanistan (MTNA) is expanding its operations business to increase connectivity in the conflict-affected country.
In aiding this expansion, the World Bank’s political risk guarantee agency Miga is providing the firm with political risk insurance to protect MTN’s investments in expanding its geographical coverage and infrastructure, and enhancing the quality of its mobile services in Afghanistan.
“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,” Kobayashi adds.
In 2007, Miga provided US$74.5mn in coverage for the start-up of MTNA’s operations. The additional coverage of US$82.1mn issued this month by Miga to parent company MTN Dubai, will protect its equity investment and shareholder loan against the risks of transfer restriction and expropriation for a period of 10 years.
MTN initially entered the Afghan market by investing in Areeba Afghanistan − now known as MTNA. With four operators in Afghanistan, the 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.
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