Shopping mall Shangri-La: IFC’s lending for luxury
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Article summary
- IFC boosts investments in deluxe and 5-star hotels in Burma, Tanzania, Ethiopia and Zambia
- Support to luxury shopping malls in Kenya and Nigeria supposed to boost “food security”
In December 2013, the Bretton Woods Project highlighted how long-shelf-life vanilla-crème-filled croissants and an online TV guide had been added to the IFC’s lengthy track record of investments that have weak or indirect development outcomes (see Bulletin Dec 2013, Update 86, 84). We again bring a list of recent IFC investments that seem of somewhat dubious merit if the focus is truly on the bottom 40 per cent of the population.
Recent IFC hotel investments
$80 million loan for the construction and refurbishment of the existing 485-room Traders Hotel in downtown Yangon; and development of a 240-room Shangri-La branded service apartments complex
- Construction of critical business infrastructure
- Improvement of hotel service standards
- Employment creation and knowledge transfer
- Benefits to the local economy and local linkages
- Increase in tax revenues and foreign exchange
- Private sector development by sending a positive signal about Burma, particularly to other foreign investors
Peacock Lounge, Traders’ Hotel Yangon
$11 million loan for a 32-storey twin tower complex which will comprise a 250 room five-star hotel, an office and retail building, and a car park
- Filling the large gap between demand and supply for quality commercial space in Dar es Salaam
- Job creation
- Increased government revenues
- Contribution to the enhancement of Dar es Salaam business infrastructure
The Mwalimu Nyerere Foundation Building Project
$19 million loan for a 210-room, 11-storey business hotel
- Provision of modern business infrastructure
- Migration of best practice in global hotel management
- Employment creation
- Benefits to local suppliers
- Increased tax revenues
$4.5 million loan for an 80-room 3-star Protea branded hotel in the Copperbelt town
- Business infrastructure development
- Employment generation
- Linkages to the local economy
Recent IFC shopping mall investments
$37 million loan and $8.2 million equity investment in the largest shopping mall in East Africa combined with 421 residential units
- Urban development: the expansion of the city of Nairobi
- Provision of modern retail infrastructure for “reputable international retailers”
- Access to property for citizens
- Job creation
- Benefits to local suppliers
- Increased tax revenues
- Development of the private sector: the project will stimulate two key sectors of the economy, retail and property, with multiplier effects
Garden City Nairobi
$10 million equity investment in a shopping mall of “international standard”
- Provision of critical business infrastructure
- Provision of a growth platform for local small and medium enterprises (manufacturers and wholesalers) in the retail value chain (owners of stores within mall)
- “Improvement of food security” as a result of increased distribution outlets for local farmers leading to increased demand for local products (fresh produce in particular, but also locally processed foods)
- Improvement in hygiene, health and safety standards in the food retail sector
- Serve as a catalyst for urban development: “development of better aesthetic environments”
- Creation of employment
- Generation of tax revenues
- Transfer of operational and environmental & social best practices
Jabi Lake development
* AR2 and ARE2 both refer to the Actis Africa Real Estate Fund 2. The IFC separately took a stake in the $278 million fund with a $25 million investment in June 2011.