I’ve considered whether MIGA guarantees are, in effect, governance products. Readers might rightly ask how I’ve come to this conclusion. Consider what a governance product is: something that supports good governance (and by this we mean, first and foremost, eliminating corruption and its incentives). Thus, could not a MIGA guarantee be recognized as a governance product from two perspectives—that of the company that is our guarantee holder and that of the country host to a MIGA-insured investment?
I’ve been reading the set of papers Oxfam recently published on local governance and community action (see previous blog) and was struck by how central the issue of ‘implementation gaps’ is in our work.
An implementation gap is where a set of institutions (often created via decentralization), policies or budgets (or all three) exist on paper, but are absent on the ground. Such a situation provides a particularly good entry point for an INGO like Oxfam because it reduces political risk (you are supporting the implementation of what the state has already agreed) and the benefits are likely to be easier to achieve and can have a galvanizing effect – plucking low-hanging fruit is great for morale and motivation. In terms of power analysis, this is about making the most of ‘invited spaces’ rather than creating new ones.
The World Economic Forum launched its seventh Global Risks report before this year’s annual meeting in Davos. The top risk this year, among the 50 most pressing risks based on a survey of 400 top business leaders, is income inequality and its associated economic and political risks. The report aptly summarized this risk as the “risk of dystopia.”
In June 2010 I posted a blog on political risks for investors in the Arab world. The blog (and associated Perspectives note) argued that it was probably a mistake to lump all Arab countries together, and that risks were idiosyncratic among nations. Overall, the note reflected the view at the time that most investors were fairly sanguine about the risks in the Arab world.
In retrospect of course, we have all been found out following the events that started in Tunisia in January and spread across the region. This week MIGA hosted a panel discussion on ‘Investment Opportunities in the Wake of the Arab Spring’ to try and take stock of these events and consider their implications for investors.
As I return from a week-long mission to Lebanon and Jordan, where I took part in a workshop to teach government agencies about MIGA's mission and products and met potential clients to discuss prospective collaboration, I am struck at how much unchartered territory there is for us in this ever-changing and turbulent region.
During the 18 days of the Egyptian revolution that began on January 25, I was glued to the news media -- and to Facebook, which proved to be a vital source of information quicker than any news agency -- to try to get news of what was happening and ensure that my family and friends back in Egypt stayed safe.
One of the four themes in Davos this year is risk management. The World Economic Forum (WEF) issued a report titled Global Risks 2011 earlier this month. It provides a high-level overview of 37 selected global risks as seen by members of the WEF’s Global Agenda Councils and supported by a survey of 580 top leaders and decision-makers around the world.
Issues related to macroeconomic imbalances top the list. These are a group of economic risks including currency volatility, fiscal crises and asset price collapse, which arise from the tension between the increasing wealth and influence of emerging economies and high levels of debt in advanced economies.
In addition, a number of risks are related to geopolitics. They include: corruption, geopolitical conflicts, global governance failures, illicit trade, organized crime, space security, terrorism, and weapons of mass destruction.
MIGA recently sponsored its seventh symposium on political risk issues, in tandem with Georgetown University’s School of Foreign Service. We happily note that the symposium has established itself as the world's leading forum for cutting-edge assessments of the international political risk management industry, and this year it did not disappoint. A summary of the event is here.
I’ll concentrate on one trend that was noted clearly from the political risk insurance (PRI) providers, like MIGA, that were in attendance. All agreed that, since the international financial crisis, new business has mostly taken the form of obligor default products. For the PRI industry, an obligor is a country; this product is used when there is some sort of an agreement by which a government has financial payment obligations or guarantees with an investor. The product is suitable for certain types of transactions, for example public-private partnerships or power purchase agreements.
On Wednesday, May 5, 2010, MIGA convened a panel discussion on the state of political risk in the world economy, which proposed to answer the pregnant question: “Are we moving into a riskier world?”
MIGA Chief Operating Officer, James Bond, moderated a panel that included:
Recently, my colleague Cara Santos Pianesi flagged an op-ed she thought might interest me. The aptly-titled op-ed, Resource wealth need no longer be a curse was written by Mats Berdal and Nader Mousavizadeh and published in the FT on March 25th.
Lebanon is a country of expatriates. Nine million of its 11 million inhabitants live abroad, in places as diverse as Terra del Fuego, Côte d’Ivoire, and Columbus, Ohio. The Lebanese Diaspora remains profoundly committed to its mother country, remitting money to family back home, investing, and visiting as tourists.
Breaking news! The OrPower4 Project has been awarded:
African Renewables Deal of the Year 2009 from Project Finance Magazine.
After a long journey to Nairobi, in the midst of a much-needed shower, the room went black. Fortunately the lights came on a few seconds later. My good fortune was only due to the fact that the hotel’s generator kicked in – with its attendant high cost and environmental and safety hazards.
I’m no stranger to the power outages that present themselves nearly every evening in this part of the world, but it’s one thing to experience a minor inconvenience, quite another for the business that is losing money due to power outages, the student who is losing out on opportunities because she can’t study at night, or the doctor trying to treat a victim of a late-night road accident. And these are the lucky ones. Only 15 percent of all Kenyans have any access to electricity.
I'm in a unique position in MIGA, responsible for fielding initial investor inquiries about MIGA’s political risk guarantees. Over the last few years I have noticed a jump among investors considering MIGA cover in several countries. One of those countries is Sierra Leone.
One joy of working within the World Bank Group is the access to great lectures from brilliant and creative thinkers on issues of relevance to the global economy and international development. Today, I had the opportunity to listen to Robert Skidelsky, acclaimed author of a three-volume biography of John Maynard Keynes, and, most recently, of Keynes: Return of the Master. He provided an interesting picture of how Keynes – one of the primary forces behind the creation of the Wor
I recently spoke at the World e-Parliament 2009 Conference held in Washington at the US House of Representatives. The conference attracted representatives from all Parliaments and was attended by more than 300 Members of Parliament, Clerks or Secretary -Generals of Parliaments, their deputies and other people working on e-Parliaments. With a global centre in Rome partially funded by the UN Department of Social and Economic Affairs, the group tries to coordinate and develop ICT systems for Parliaments. They strongly believe that ICT can be a tool for greater transparency and accountability of Parliaments and a larger platform for public consultation and interaction with citizens. They are looking at ways to harness new technologies for this purpose.