Announcement of a Consortium of International Lenders to Help Finance a Major Commercial Farming Project in Zambia March 15, 1989

March 15, 1989 Monique Amaudry Press release No. 89/38 202/473-9331 A CONSORTIUM OF INTERNATIONAL LENDERS HELPS FINANCE MAJOR COMMERCIAL FARMING PROJECT IN ZAMBIA The International Finance Corporation (IFC) and the Overseas Private Development Corporation (OPIC) are helping to finance a $40 million large-scale, export-oriented commercial farming project at Chiawa, near Chirundu on the Zambian-Zimbabwean border, near good transportation facilities. The 7,680-acre irrigated farm will grow cotton for export and wheat for domestic consumption. IFC, a multilateral institution affiliated with the World Bank, is the leading source of direct financing for private enterprises in developing countries. OPIC is a self-sustaining U.S. Government Agency which promotes economic growth in developing countries where it encourages U.S. private investment. The project's main sponsor and manager is Masstock International, which is providing $6.27 million of the equity finance. Two U.S. com- panies, J.I. Case and Valmont Industries, will provide farm machinery and invest in the project along with another U.S. company, Pfizer. The Commonwealth Development Corporation (CDC), the U.K. development agency, is taking a $1 million equity participation; local investors are expected to provide $1.65 million. IFC and CDC are providing income participation loans equivalent respectively to $1.50 million and $1.20 million. - 2 - Loan financing includes $6.5 million from IFC, $6 million from the Overseas Private Investment Corporation, and $3 million from the U.S Agency for International Development. A local currency loan and two subordinated loans will complete the financial plan. Masstock's development will be spread over two phases. The first phase will involve the irrigation of 2,256 acres and will use centre-pivot irrigation booms on 40 circles of 187 acres. The second phase is expected to begin in October, 1990, after the first phase achieves its target and crop contributions. At full development, by 1992, the project should produce about 12,000 tons of wheat and 5,000 tons of cotton lint each year. The cotton, which is a traditonal export crop in Zambia, will be exported to Europe. The wheat will be sold to Zambian milling companies for local consumption. At present, Zambia has a shortage of wheat and has to import over two-thirds of its wheat requirements. 3832P