Pro­tect­ing Cash­mere

Southasia - - BRIEFING -

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.

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