The Multilateral Investment Guarantee Agency (MIGA), a World Bank Group member, said today it has provided its first-ever guarantee for Shariah-compliant project financing. The $427million guarantee will support investments into a new container terminal in Djibouti, which is expected to significantly improve port facilities and help the country become a major business hub in East Africa.
The nation of Djibouti is strategically located on one of the fastest-growing East-West international shipping routes at the crossroads of Asia, Europe, the Gulf region, and East Africa. Development of the port and transport sector is at the heart of Djibouti’s poverty reduction strategy.
The terminal is being developed jointly by Dubai Port World, one of the largest marine terminal operators in the world and a state-owned port company. When construction is completed, the port will have an annual capacity of 1.5 million TEU (twenty-foot equivalent container units).
“Djibouti’s port is the economic backbone for growth and employment in the country,” says Elena Palei, Acting Head of Infrastructure at MIGA. “We are pleased to be able to work in partnership with Dubai Port World and its financiers to help Djibouti meet the full potential of its location.
MIGA’s guarantees are protecting the investments of Dubai Port World as well as those of the financing banks, Dubai Islamic BankPJSC, Standard Chartered Bank and West LB, against the risks of transfer restriction, war and civil disturbance, expropriation, and breach of contract.
By improving container facilities in Djibouti, the project is expected to increase port traffic and open up new opportunities for investment and growth, including attracting other African countries to use the port as a gateway too. Currently more than 85 percent of total traffic in the port is destined for, or originates from, landlocked Ethiopia.