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Political Risk Insurance

On Optimism and Caution: Connecting East Asia

Kevin Lu's picture

It was all about connectivity in the just-concluded World Economic Forum for East Asia that took place in Bangkok last week. Participants pondered many questions related to how we could make this region more connected, in terms of trade, tourism, investments, and even value.

In a session on infrastructure financing, IFC Vice President Karin Finkelston spoke eloquently about the need to mobilize financing for many developing countries in Asia and what IFC has been doing in terms of both investing and advising governments to prepare bankable projects. When Professor Joe Stiglitz on the same panel raised his proposal to establish an ASEAN development bank, it received mixed feedback from the fellow panelists.

Managing Risk and Keeping Focused in Turbulent Times

Mallory Saleson's picture

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.”

The Nitty Gritty of Supporting Islamic Finance, from MIGA

Hoda Atia Moustafa's picture

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.

How Risky, Really, Is the Arab World for Investors? Take Two.

Paul Barbour's picture

In June 2010 I posted a blog on political risks for investors in the Arab worldThe 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. 

Honor Thy Sovereign Financial Obligations

Hoda Atia Moustafa's picture

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,

Let's Have More of These

Rebecca Post's picture

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.

The Arab Spring, History, and Political Economy

James Bond's picture

People in Maghreb and Mashreq countries, long used to being muzzled by their authoritarian regimes, are rising up to make their voices heard. This movement — if one can call it that — started first in Tunisia with the self-immolation of an unemployed street vendor. This desperate act by Mohamed Bouazizi, a poor 26 year-old university graduate without a steady job to support his family, brought out into the open the seething resentment of ordinary Tunisians at the 23 year rule of President Ben Ali.

You Say You Want a Revolution...

Hoda Atia Moustafa's picture

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.

Ethiopia: Uptick in Investor Interest

Michael Durr's picture

Here at MIGA, I’m responsible for fielding initial investor inquiries about our political risk guarantees, which is an interesting vantage point from which to note trends. Last year I blogged about the rising interest of foreign investors in Sierra Leone. Talking with investors around the world interested in emerging markets and examining MIGA’s Preliminary Application (PA) data, I see a similar trend emerging in Ethiopia. Investor interest has grown dramatically.

MIGA was created to promote foreign direct investment into developing countries by mitigating political risk. The agency offers insurance to private investors against

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. 

 


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