CASA – not just the Spanish word for “house”, but also an acronym for Conflict Affected States in Africa, a two-year old International Finance Corporation (IFC) programme looking to promote economic recovery in four African countries, namely Central African Republic, the Democratic Republic of Congo, Liberia and Sierra Leone.
It would not be easy to find an African country which has NOT been affected by conflict in one way or another. Even South Africa, the leading economy on the continent, had its racial conflict under apartheid, whilst the former Rhodesia, and Ethiopia, each split into two separate nations following severe conflict. Sudan and Somalia still suffer from civil war. The DRC, one of the IFC’s target countries, is not totally “post conflict”, with the eastern region still occupied by several warring factions but is, all the same, in need of considerable assistance to develop both immediate and long-term solutions to help speed private sector growth and stability.
Hotels are an essential part of the infrastructure of any town and city. The damage to hotels in conflict-affected countries brings two problems – a shortage of accommodation for visitors essential to the social, political and commercial recovery of the country, such as aid workers and consultants, and a perception from the outside that the destination is not yet suitable for foreign investors.
The focus by the IFC to provide special assistance to these four countries is to be especially welcomed given the organisation’s work in the tourism industry, with investments in over 80 countries. And another World Bank member, the Multilateral Investment Guarantee Agency (MIGA), is providing political (i.e. non-commercial) risk insurance to investors and lenders, for projects and in locations where private sector insurers are not willing to provide cover. Rebuilding a country’s economy presents huge opportunities for the local and international private sector, and MIGA cover makes it more likely that a foreign investor will take up the challenge.
MIGA is also working with various national investment promotion agencies to promote projects to foreign investors and to develop national investment strategies.
Alongside the CASA programme and the support provided by MIGA, the IFC is active in the promotion of tourism investment in post-conflict states in other ways. In Sierra Leone, the IFC’s investment climate team has been working with the government and with the National Social Security and Insurance Trust, the owner of the Cape Sierra hotel in the Aberdeen district of Freetown, providing advisory services for the privatisation of the hotel. The process is ongoing, with various technical reports undertaken (including a market and financial analysis conducted by W Hospitality Group) and a tendering exercise to attract an investor and management company.
In Mozambique, the IFC has been managing the Anchor Investment Programme, effectively acting as project promoters for a number of resorts there, with the dual aim of attracting foreign investors, whilst at the same time building capacity within government.
The additional support provided to these and other conflict-affected states means, hopefully, that recovery will be that much quicker than without such intervention. Of course, the risk still remains, and any hotel development in such locations must have a sustainable and proven commercial rationale before proceeding, not a crutch to make it artificially viable in the short-term. The development or renovation of a hotel creates employment, not just in the hotel itself, but also in the rest of the economy, through indirect and induced multiplier effects in the supply chain and through increased spending in shops and elsewhere by newly-waged and self-employed individuals.
W Hospitality Group, Lagos