The World Bank Group’s International Financial Corporation (IFC) is considering an investment of 19 million dollars for the completion of an international standard hotel in Lideta District. The total cost could add up to as much as 37 million dollars.
If the investment materialises, it will be concluded with Tsemex Global Enterprise Plc and its subsidiary, Tsemex Hotels and Business Plc, both owned by Rezene Ayalew, a local business man, and his children. The request for investment was made by Tsemex’s owners, who have already erected the structure of the 11-storey building in Lideta at the site of the old Etfruit facility, a source close to the business said.
The IFC says that the purpose of its “investment is to help to address the shortage of hotel rooms of an international standard in the capital city, Addis Abeba”. The two sides are working on the deal with the understanding that the hotel will be managed by the International Hotels Group (IHG) and be branded Crown Plaza Addis.
If it works out, Crown Plaza could be the fourth international brand hotel in Ethiopia, after the Hilton, Sheraton and Radison Blu. Sunshine Construction also has a deal with Marriott, which is yet to bring to service the hotel that goes by that name.
The IFC’s experts have travelled from Washington five times, the source said, to determine if the loan should be granted. If the IFC decides to make the loan, Tsemex Hotels and IHG simply need to sign a deal to finalise the full management contract, the source said. This could happen sometime in March. The IFC could make its final decision known on March 17, 2014, according to its website.
The IFC says that the expected development impact of the investment includes providing a modern business infrastructure, migrating best practice, creating employment (for 315 people) and offering business opportunities for local suppliers – “particularly in the areas of food & beverage supply and the provision of services (for example, transportation, security services)”.
As part of the deal, the IFC will not only offer long term financing, but will also “help to raise additional debt financing for the Project; advise the Company on sustainable business and E&S (environmental and social) practices specific to the property development and hospitality business and avail to the Project its experience in financing hotel projects, particularly in Sub-Saharan Africa”.
The IFC had a deal in 2009 with the Ethiopian Commodity Exchange (ECX) to increase loans to Ethiopia’s agricultural producers. That agreement created access for the warehouse collateral mode of financing.
The following year, it signed a risk sharing agreement with the Nib International Bank (NIB) to enhance the bank’s lending capacity to Ethiopian coffee farmer cooperatives. That agreement enabled the Bank to increase the scale of its lending to 70 farmer cooperatives during the 2010/11 fiscal year, extending 200 million Br in loans on the strength of a 10 million dollars guarantee from the IFC for the risk the programme involved.
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