WASHINGTON, D.C., July 15, 1998 --- The International Finance Corporation has signed an agreement to invest US$2.21 million in Akova Impex-Akmeat Plant, a cold storage facility and a meat processing plant near Sarajevo. The investment will help the development of food production, distribution, wholesale, and retail networks throughout Bosnia-Herzegovina.
IFC’s investment provides capital to repair and purchase equipment for the company’s current operations. It will redress the shortage of modern, reliable cold storage facilities in the Sarajevo area and supply the Federation Entity of Bosnia-Herzegovina with processed meat products, most of which are currently imported.
IFC’s investment is part of a US$8.9 million project that is being implemented in two phases. Phase I, which totaled US$4.3 million and was completed in February, substantially refurbished facilities damaged during the war and installed much needed fixtures and equipment for a fruit and vegetable ripening and cold storage warehouse. Phase II, which IFC has been asked to finance, involves substantial refurbishment of damaged facilities, procurement of equipment, and provision of working capital to establish a meat processing plant with an annual capacity of 2,500 tons. This phase will require US$4.6 million in financing and is expected to take eight months to complete.
Akova Impex is a privately owned company established in 1991. In 1996, the company entered into a joint venture agreement with Sipad-Komerc, known as Frigosa and Akmeat, which is a subsidiary of Sipad Holding, a state owned conglomerate in the former Yugoslav Republic of BiH that managed the majority of the wood sector operations there.
Harold Rosen, Director of IFC’s Central and Southern Europe Department noted that the project represents the first long-term loan from an international financial institution for a joint venture between private investors and a state owned company. Because long-term debt financing is not easily accessible in Bosnia-Herzegovina, external private sector sources of financing have been limited to trade finance and suppliers' credits. IFC will provide long-term financing for the project that would not otherwise be available on reasonable terms.
IFC, part of the World Bank Group, fosters economic growth in the developing world by financing private sector investments, mobilizing capital in the international financial markets and providing technical assistance and advice to governments and businesses.
