MIGA and European Union Co-Insure Coca-Cola Project in Bosnia and Herzegovina

MIGA and European Union Co-Insure Coca-Cola Project in Bosnia and Herzegovina

Sarajevo, Bosnia and Herzegovina, October 19, 2000—The Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group, and the European Union have provided a $23.3 million guarantee (insurance) for an investment by Coca-Cola Beverages of the Netherlands.

The guarantee is the first of its kind through the Investment Guarantee Trust Fund for Bosnia and Herzegovina, a European Union-MIGA partnership established in 1997 to promote foreign investment into the post-war economy. The five-year guarantee covers the investor against the risks of currency transfer restriction, expropriation, and war and civil disturbance.

The project is ground-breaking for Bosnia and Herzegovina in several ways:

This large-scale investment has encouraged other foreign firms to follow suit. Investors from Germany and Austria have stated that without the presence of a large multi-national like Coca-Cola, they would not consider investing in Bosnia and Herzegovina.

Coca-Cola Beverages is the first multinational company to register its operations in both entities of Bosnia and Herzegovina (the Federation and the Serb Republic), and the first to invest in a privatization project. Political divisions within the country had made this type of registration impossible in the past.

The project supports rehabilitation and technological modernization of a pre-war industry.

The investment will create new jobs, both in the production and distribution of Coca-Cola beverages, and is expected to have an impact on employment in related areas such as construction, supply and transport, and sales and marketing.

"This project supports not only job creation, but also training and production and quality assurance," says Roger Pruneau, MIGA’s vice president for guarantees. "This goes hand-in-hand with the World Bank Group’s commitment to help in the economic recovery of Bosnia and Herzegovina and the surrounding region."

"Coca-Cola’s investment was selected for a trust fund guarantee because it will not only stimulate much–needed foreign investment into Bosnia and Herzegovina, but also will contribute to inter-entity trade within the country," says Mark Priestley, task manager for Economic Regeneration, European Commission Delegation to Bosnia and Herzegovina.

"As the region moves from post-war reconstruction to developing a sustainable economy, foreign direct investment will play an increasingly important role as a way of bringing in capital, technology, and know-how," says Priestley. "The EU-MIGA Investment Guarantee Trust Fund can play an instrumental role in facilitating strategic investment into the region, particularly in the tender privatization process. Coca-Cola’s investment, and the use of this fund, will be a useful demonstration to other potential investors."

Coca-Cola Beverages has expressed a long-term commitment to Bosnia and Herzegovina, to bring, among other things, quality production techniques to the country and to serve as a model for high standards of professionalism in all aspects of operation.

The EU Investment Guarantee Trust Fund for Bosnia and Herzegovina has also recently provided, in cooperation with the Austrian government, a 2.3 million euro guarantee for Oesterreichische Volksbanken-AG’s new subsidiary in Sarajevo.

For information:
Emily Harwit, Country Representative, Bosnia and Herzegovina
eharwit@worldbank.org, t. 387-33-440-293

Mark Priestley, European Commission Delegation to Bosnia and Herzegovina
mark.priestley@delbih.cec.eu.int, t. 387-33-666-044