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It's Africa's Turn

Rebecca Post's picture

In Washington last Friday, I boarded a flight to Addis Ababa at 11:00 am. By the time I arrived in Johannesburg, Egypt’s president of 30 plus years was no longer in power. The pace of change in the Middle East and North Africa is mind boggling. Anyone doing business in the region is trying to grasp the implications, and the risk profile of doing business in some of the countries has suddenly changed.

In the meantime, sub-Saharan Africa is looking more and more attractive to investors. At least that was the consensus at today’s MIGA-sponsored seminar on managing political risk for cross-border investment. For too long, Western media has portrayed the region as a place of war and famine.

What to Expect in Davos: Global Risk Landscape

Kevin Lu's picture

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.

Parsing Asia: What New World Bank Reports Say about Investment in the Region

Paul Barbour's picture

In the immediate aftermath of the global financial crisis, one obvious truth is that locus of growth has shifted east. While the world frets over the stuttering recoveries in the USA and EU, most Asian economies have rebounded well, including a pick-up of FDI into and from these markets. The latest IMF World Economic Outlook expects growth in developing Asia to be 9.4% in 2010 and 8.4% in 2011. Contrast this with estimates for the USA of 2.6% in 2010 and 2.3% in 2011, and for the EU 1.7% in 2010 and 1.5% in 2011. A similar story will be found in the Global Economic Prospectsreport from the World Bank Development Economics Group to be launched on January 12. 

 

A central question remains, however: Are these high growth rates and the high returns to investment, risk-neutral vis-à-vis investing in developed markets? Or other emerging-market regions? This question is pertinent for both commercial and political risk – but it is the latter to which I now turn.

 

Risk’s Rewards Are Many

Mallory Saleson's picture

Attending MIGA’s seminar today in London on cross-border investment in conflict affected and fragile economies prompted me to think back on my days in the field—not only during my experience with the World Bank in southern Africa, but to two decades as a journalist in the same region.

I traveled in a number of African countries where I reported  on fragile economies, on war and political violence, and on post-conflict rebuilding efforts. Some countries, to be sure, were more successful than others. Mozambique has always been singled out as among the miracles and it’s understandable. I went to Mozambique for the first time in 1984 to report on the civil war, which had already taken a heavy toll after seven years of intense conflict, and returned a number of times up until 1990. 

 

Chasing the Wind

Cara Santos Pianesi's picture

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.

  

Les modifications de la Convention de MIGA, une nouvelle ère pour notre Institution?

Michael Strauss's picture

Les modifications de la Convention de MIGA, une nouvelle ère pour notre Institution ?

MIGA vient d’amender sa Convention. Et les clients s’en réjouissent. Objectivement, les changements qui ont été introduits dans notre Convention sont significatifs et devraient avoir un impact important.

En tant que Juriste et développeur d’affaires chez MIGA, nous voulons mettre l’accent sur les principaux changements :

More Precious than Gold?

Cara Santos Pianesi's picture

World Bank President Robert Zoellick will discuss topics other than gold while in Asia this week, in case you’re wondering.

One of those topics is infrastructure, which—to denizens in the developing world who struggle to move goods and people, drink clean water, and keep the lights on—may be more precious than any metal.

 

On Wednesday Zoellick was in Singapore for a prominent infrastructure conference, where he underlined that a focus on infrastructure is a key part of the solid growth agenda the G-20 is trying to tackle. He also noted some important facts. First, infrastructure investment represents two-thirds of growth increase in East Asia and about half of the growth increase in Africa. Second, the World Bank estimates the need for infrastructure investment and maintenance in developing countries will amount to about $900 billion a year.

Political Risk Insurance at the Forefront of Carbon Finance

Hoda Atia Moustafa's picture

Reduce. Reuse. Recycle. Green is the new black. With all of us more aware of global warming and the need to save our environment, the big question we at MIGA are asking is: what can we as an institution do to contribute?

Political Risk Insurance at the Forefront of Carbon Finance

One answer is that we can continue to do what MIGA has always done: supporting private investors. Specifically, however, MIGA can support those investors in the now well-established market of certified emission reductions (CERs) that are freely tradable on the European market, but depend heavily upon activities undertaken in developing countries. Investors relying on CERs as returns on their investments (in lieu of dividends) want assurance that governments that have signed up to the Kyoto Protocol will not renege on their commitments. This is very much a political risk, and with the right structuring is potentially a powerful political risk insurance product line.

May the Force of Broad-Based Economic Growth Be with You

Cara Santos Pianesi's picture

 If the world has a stage, the annual September gathering of the UN’s General Assembly is it. There, world leaders have an opportunity to address their colleagues (and, by media extension, global constituents) in a somewhat long-format speech. At the General Assembly, Premier Khrushchev banged his shoe. And, with understandably less attention, President Obama had this to say about development at this year’s High-Level Plenary Meeting (a.k.a. the Review Summit on the Millennium Development Goals):

“…To unleash transformational change, we’re putting a new emphasis on the most powerful force the world has ever known for eradicating poverty and creating opportunity. It’s the force that turned South Korea from a recipient of aid to a donor of aid. It’s the force that has raised living standards from Brazil to India… 

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