A few weeks ago, I attended the launch ceremony of the new Palestine Capital Growth Fund, a subsidiary of the multibillion-dollar, Dubai-based private equity fund Abraaj. I found that many people questioned why Abraaj would operate in the Palestinian Territories. Some would even describe such a move as a pure act of social responsibility. But it is not.
Last week, MIGA hosted a panel discussion on the role of the private sector in sustainable growth as part of the World Bank Group’s Sustainable Development Network Forum 2012. Taking the initiative as an agency of the World Bank Group that encourages investment by the private sector, MIGA brought this angle to the more general sustainable growth discussion.
Keynote speaker Jeffrey Leonard from the Global Environment Fund opened citing the World Bank President’s remarks on sustainable development that were right on the money – outlining an urgent need for attention to the matter, noting that resources must be made available – yes, good, onward! The catch? They were attributed to a president who left office 25 years ago (Tom Clausen).
- The World Region
- Private Sector Development
- Sustainable Development
- public-private partnerships
- Multilateral Investment Guarantee Agency
- Mary Boomgard
- Marsh USA
- Mahlette Betre
- Julie Martin
- Jeffrey Leonard
- Global Environment Fund
- Equator Principles
- Deniz Baharoglu
- David Vidal
- Conservation International
- Conference Board
- Carbon Finance
- Benoit Bosquet
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.”
It’s been almost a year since Tunisian street vendor Mohamed Bouazizi set himself on fire, sparking a wave of protests in his country and ensuing events that led to what we now refer to as the “Arab Spring”. Today, these events were remembered, and the future of the region debated, during a seminar MIGA co-hosted with the Financial Times in London on Managing Global Political Risk: Old Risks, New Moment.
Tunisia’s Minister of Finance Jalloul Ayed spoke passionately, eloquently, and with tremendous insight about the challenges and opportunities facing his country, noting many look to Tunisia as setting the pace and showing the way. “So far so good”, he noted, adding “democracy is now hopefully part of our political tradition.” But there is a daunting road ahead, dealing with the priorities, creating jobs for the hundreds of thousands of unemployed youth, encouraging much-needed investment. His biggest concern? “We cannot lose focus; we have to reform and get the job done.”
It all started with a visit to the UN Office in Geneva during my vacation in 2006. Like any other tourist, I squeezed a silly smile in front of the camera at the entrance to get a visitor pass, which I am still keeping to this day as a travel souvenir. And then I followed a guided tour. Of course I had always known about UN – in textbooks and on TV. But there’s apparently something magic about actually sitting in the rooms where international conflicts were played out and listening to the stories that had made history. Having not completely emerged from my quarter-life crisis even after I got my MBA in the US and set on a seemingly promising career path at a big American financial institution, I had been searching for a mission.
MIGA recently closed its second transaction supporting a project with an Islamic financing structure—the first was for a port project in Djibouti back in 2007. For this new project, MIGA provided political risk insurance to two financial institutions, Deutsche Bank Luxembourg and Saudi British Bank, for their $450 million financing to the Indonesia telecoms company PT Natrindon Telepon Selular, or NTS.
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.
In December 2010 and again in April 2011, MIGA issued contracts representing many "firsts" for the agency -- our first two non-honoring of sovereign financial obligations contracts, our first coverage for stand-alone debt, and first coverage for sub-sovereign credit risk. I was fortunate enough to have worked on both projects, which support public transport in Istanbul,
The UN Conference on Trade and Development (UNCTAD) has just issued its Global Investment Trends Monitor that looks at outward-bound foreign direct investment (FDI). Here’s the lead: The share of developing and transition-country FDI in global outflows increased to 28 percent in 2010, up from 15 percent in 2007, the year prior to the global financial crisis. These are historic levels, both in absolute terms and as a share of the global total of outbound FDI.
Another important snippet from UNCTAD is that a full 70 percent of developing and transition-country outward investment is destined toward other developing and transition countries—this is also known as “South-South” investment. The Monitor attributes this trend to the stronger recovery and economic condition is those destinations.
I recently returned from Ethiopia where I visited a project that is being covered by MIGA’s political risk insurance. The project involves the privatization and expansion of an existing farm to cultivate and process passion fruit, mango, and papaya for juice exports. The newly formed company, africaJUICE Tibila Share Company, has taken what was essentially an abandoned farm and transformed it into a thriving enterprise.
The project introduced passion fruit to the community which is harvested and processed into juice in a new state-of-the art factory. The juice is then exported to markets in Europe and the Middle East. In addition to creating significant direct employment for a poor rural area (2400 employees), the project is developing a cadre of contract farmers who can earn a significantly higher income for this “in demand” product.