In a move to bolster foreign direct investment in Afghanistan, the Multilateral Investment Guarantee Agency (MIGA), the political risk insurance arm of the World Bank Group, has initiated a cashmere scouring and disinfection facility in Herat. Cashmere refers to Cashmere wool, a fiber obtained from various types of goats. The project will create direct and indirect employment in the country.
MIGA is insuring the project for up to 10 years against the risks of transfer restriction, expropriation and war and civil disturbance. The cashmere sector is currently underdeveloped in Afghanistan. Its growth was mainly hindered by the high percentage of waste material in raw cashmere that increases its weight and, consequently, its transportation cost.
The newly built facility in Herat’s Fibers and Textiles Industrial Park will process fiber for export. Traders will be able to command a higher net price for processed Afghan cashmere. This will stimulate greater harvesting of cashmere goats, thus increasing the income of local herders. In addition to indirect employment of herders, the project will also create 35 permanent jobs in an area with limited opportunities and will provide training to Afghan workers. In the absence of a proper processing unit, Afghanistan has exported almost all of its cashmere wool in its raw form until now. There are great chances that this industry will go forward as MIGA’s insurance will help reduce the risk profile of the project.