Just back from London where MIGA launched its new report, World Investment and Political Risk, and partnered with the Financial Times to host a symposium on Managing Global Political Risk. The event was standing-room only, packed with experts from the political risk insurance industry. Debate was lively on the future for investing in emerging markets, managing global political risk in uncertain times, and whether investors are moving into a riskier world.
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 returned from a visit to seven countries throughout Asia. Although I had visited some of them before, this was my first visit representing MIGA. During my trip, I recognized the value and potential of MIGA’s focus on south/south investment to investors in this region. Of course providing guarantees to support inward investment to Asia is very important to MIGA, especially guarantees for complex infrastructure projects. MIGA can add a lot of value to these types of projects – particularly when it comes to helping manage the environmental and social aspects of projects.
However, even through this global economic crisis, many private sector companies in Asian middle income countries have become “investors” in other parts of the world. Investments from Asia reach many of the poorest and post-conflict countries. At the same time, risk-mitigation instruments such as political risk insurance are not well known. We see a role for MIGA in sharing experience and working with Asian export credit agencies and Eximbanks to bring Asian investors the risk mitigation tools they need to help continue expanding their investments.
Representatives of chambers of commerce and private sector promotion agencies from developing countries expressed their concerns about where the new sources of growth would come from in future years, at a meeting of the World Bank Group's Private Sector Liaison Officers held in Istanbul on October 5.
A lively discussion between the PSLOs and MIGA management covered subjects relating to foreign direct investment into emerging economies, as well as investments by emerging economies into other emerging economies ("South-South" investment).
There is a real concern about how the infrastructure gap in developing countries will be filled following the crisis, given the new scarcity of private funds for public-private partnerships.
From now on, there will be need to be a more nuanced relationship between public and private sectors to sustain growth, and regional sources of growth will become more diversified. These are two of the conclusions of MIGA's discussion panel on the post crisis outlook held on October 4 in Istanbul.
A panel of international experts, including the Colombian Minister of Finance Mr. Oscar Ivan Zuluage, MIGA's Executive Vice-President Izumi Kobayashi, and Nick Rouse, Managing Director of Frontier Markets Fund Managers, agreed on some aspects of the vision going forward, but had differing views on others.
Taking on a more proactive, energetic role, public authorities worldwide have played a large role in limiting the downside of last year's financial crisis, they agreed. In Eastern Europe and Central Asia, the International Financial Institutions Initiative (in which MIGA participated) to support recapitalization of these countries' banks drew mention as one example of this type of successful multilateral intervention.
Global attention is mounting about this year's Annual Meetings of the Bank and the Fund in Turkey. From Egypt, where I am on MIGA business on my way to Turkey, the discussion is around whether the meetings will advance the G20 communiqué in terms of substance and specific implementation measures.
I spent two days earlier in the week with global private equity investors. Their anxiety mostly revolves around how financial sector regulation will evolve over the coming months. They feel the cold wind of oversight, and the discussion revolves around two competing plans for financial regulation, one emanating from Brussels and the other from Washington. But everyone accepts that an overhaul of financial sector regulation is the unfinished business from last year's financial crisis, even though views differ on the extent and content of the changes needed. My own concerns are whether the world's piecemeal international governance system will enable a coherent global regulatory structure to emerge from the wreckage of last year's financial meltdown.
In Istanbul I'm looking forward to taking the temperature of the financial world. I hope and expect the meetings to be more subdued than in past years, because we have some serious business to do; and many players who were around at the Singapore meetings are no longer with us (Lehman, Bear Stearns, Merrill, AIG...).
It's a new world.
This past Wednesday, leading development banks joined efforts to provide as much as US$90 billion during the next two years in a joint effort to spur economic growth in the Latin America and Caribbean region.
The Inter-American Development Bank and the Inter-American Investment Corporation, the World Bank Group (IBRD, IFC and MIGA), Corporacion Andina de Fomento, the Caribbean Development Bank and the Central American Bank for Economic Integration are all working together to explore new opportunities to protect the economic and social gains achieved in the region during the last five years.
World Bank President Robert Zoellick spoke about the importance of this joint effort:
"Latin America and the Caribbean have achieved substantial economic and social progress over the last five years and we must ensure that this is not lost because of the external shock of the global crisis. We need to avoid a social and human crisis."
For more information:
- Press Release: Development Banks Join Efforts to Provide US$90 Billion For Latin America & The Caribbean
- Upcoming Event: Latin America and the Global Crisis, Towards a Rapid Regional Recovery
- VOICES Video Interview: Augusto de la Torre, Chief Economist for Latin America and the Caribbean at the World Bank