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Multilateral Investment Guarantee Agency

Let the lights shine, hopefully for 24 hours a day (as needed)

Antoine Jaoude's picture

Growing up in war-torn Beirut, I experienced the Lebanese Civil War from a childlike perspective. I was in middle school at the time when a power outage lingered for months on end. Reviewing textbooks and doing homework at night was no easy task. The flickers of candlelight reflecting on the glossy pages of my textbook made reading very laborious—not to mention how it compromised my safety and shrank my attention span. I was 12 years old at the time. Today, I am 34. It has been 23 years since the war ended and power shortage in Lebanon remains.  
 
In the aftermath of the civil war, there was a national consensus to privatize and decentralize the power sector in Lebanon. Decentralization would shift control from the ministerial level to distinct municipalities across the country. Privatization in particular would help the power grid expand to meet the growing demands of population increase. Both moves would involve inflows of foreign direct investment, and open up competition, and create more jobs. However, political disagreements erupted around the intricacies of privatization policies and decrees and any further attempt to privatize or decentralize has floundered.
 
Today, Electricite du Liban (EDL), a state-owned enterprise run by the Ministry of Energy and Water controls 90 percent of power generators, transmission, and distribution services in the country. A surge of demand after the civil war has pushed EDL to further expand the power grid.
 

“When the Tide Goes Out, You See Who’s Naked”

Cara Santos Pianesi's picture

Said Martin Sandbu, the FT economics writer that moderated the FT-MIGA Summit, Managing Global Political Risk, last week in London.   
 
This is the fifth year that MIGA, the political risk insurance and credit enhancement arm of the World Bank, co-hosted the event to launch its World Investment and Political Risk report.  Undoubtedly, these have been heady years and most participants agreed that, while it is still strong, political risk has waned since the global financial crisis and the Arab Spring. This sentiment dovetails with the findings of the report, which show that macroeconomic stability won by just a hair over political risk as the factor that international investors fear most.
 
Also in line with these findings, the World Bank’s Andrew Burns cautioned that the world will soon be grappling with the next group of challenges brought about by the tide. What tide? Here, Sandbu meant the significant investment that has flowed to developing countries in search of yield over the past few years, quantitative easing that has kept economies afloat, and high commodity prices. All of these factors are now in flux.
 “When the Tide Goes Out, You See Who’s Naked
And now, the (potential) nudity. That is, as investment to emerging markets tapers, macreconomic tools are used less bluntly, and commodity prices normalize, will countries have laid enough strong economic foundations to weather the inevitable changes that will occur? And as this MIGA-sponsored conference deals with political risk, how will economic changes affect the destiny of leaders and, resultantly, citizens?
 
Tina Fordham of Citi Research emphasized that the structural determinants of political risk are still very present. She noted little improvement in unemployment and an increase in vox populi risk. By this she meant shifting and more volatile public opinion around the world—amplified by social media—has recently resulted in a proliferation of mass protests.  Panelists discussed several other risk factors, including increasing polarization in politics, pressure on central banks to keep the economic show on the road, reduced investment in infrastructure, and a reversal in living standards in some hard-hit countries.
 

Iberoamérica: Contribuyendo a la prosperidad a largo plazo de un continente

Jose Carlos Villena Perez's picture

Durante mi reciente viaje a España para representar MIGA en un foro sobre el futuro de las infraestructuras portuarias en Iberoamerica organizado por Tecniberia, tuve la oportunidad de comprobar y apreciar los grandes logros alcanzados por muchas naciones iberoamericanas en los últimos lustros.

La “década de prosperidad sostenida” de Iberoamérica es uno de los hechos más notables en la corta historia económica del SXXI por la novedad que esta circunstancia representa. La región goza en estos momentos del periodo más prolongado de crecimiento de su historia contemporánea, y tan sólo el empuje de China y las nuevas potencias asiáticas, pueden comprometer esa primera posición en este podio imaginario de hitos económicos del S XXI.

Tras algunos intentos fallidos en el pasado, parece que Iberoamérica ha conseguido romper definitivamente su particular trampa maltusiana (a periodos cortos de crecimiento boyante le seguían ineludiblemente profundas crisis) en la que se ha visto envuelta una y otra vez durante todo el SXX y se ha afianzado, de una vez por todas, en la senda del progreso.

No obstante, no existe espacio para la complacencia y la contemplación pasiva de lo conseguido en esta década prodigiosa. Los líderes y gobiernos iberoamericanos tienen que continuar luchando por la consolidación definitiva de sus economías, por erradicar las malas praxis pasadas y adquirir nuevos recursos humanos y la infraestructura técnica para introducir a sus naciones entre las más avanzadas del mundo, superando los riesgos de una posible ralentización del crecimiento mundial.

La región sigue afrontando claros desafíos como son: el fortalecimiento de las clases medias, la reducción de las gran desigualdad de ingreso, la explotación de los vastos recursos naturales y la participación de los grupos minoritarios, o incluso en algunos casos mayoritarios, de indígenas en la vida política y social. Enrique Iglesias, titular de la Secretaría General Iberoamericana (Segib) y expresidente del BID señaló recientemente que "a Iberoamérica no le va a seguir siendo tan fácil como hasta hace poco, el viento a favor se terminó y ahora hay que navegar con motor propio y, a veces, con vientos en contra…Hay que ponerse a pensar en esos nuevos términos."

Iberoamerica: Contributing to the long-term prosperity of a continent

Jose Carlos Villena Perez's picture

During my recent business development trip to Spain to represent MIGA at a forum on Latin American port infrastructure organized by Tecniberia, I had an opportunity to see with my own eyes and appreciate the great achievements made by many Iberoamerican nations.

One remarkable point in the still-young economic history of the 21st century is the “decade of sustainable prosperity” in Latin America. The region benefits from one of the longest growth periods in its modern history, with only Chinese and other emerging Asian powers jeopardizing its first position at the imaginary podium of the 21st-century economic empires.

It seems that Iberoamerica has finally managed to break its peculiar Malthusian trap (short periods of booming growth followed by deep recession) in which it fell again and again throughout the 20th century, and has seriously taken a sustained path of progress.

However, there are no grounds for complacency and passive contemplation of what has been achieved in this prodigious decade. Iberoamerican leaders and governments have to continue consolidating their economies, eradicate any poor past practices, and acquire new human resources and technical infrastructure. This will help them position their countries among the most advanced nations of the world and diminish the immediate risks of a slowdown in global growth.

The region is still facing evident challenges: the strengthening of the middle class, reduction of income inequality, exploitation of vast natural resources, and the engagement of minority groups or aboriginal majority in political and social life. Enrique Iglesias, head of the Iberoamerican General Secretariat (SEGIB) and former president of the Inter-American Development Bank, recently pointed out that "Iberoamerica is not going to have it easy going forward.  We are no longer sailing with a favorable wind and we will have to use our own engines—sometimes the wind will even be against us...We have to start thinking in these new terms."

Nuevos desafíos, nuevas alianzas

Jose Carlos Villena Perez's picture

Los Organismos Multilaterales y los países del Sur de Europa deben cooperar más intensamente para restablecer la competitividad global de sus economías.

Una de las lecciones aprendidas en los últimos años es que los procesos de desarrollo económico son reversibles. Las otrora economías estrellas del Sur de Europa languidecen hoy en día envueltas en un lento y doloroso proceso de reajuste encaminado a la restructuración de sus sectores productivos y a su defintiva entrada en el SXXI, en lo que a términos económicos se refiere.

Cada vez es más evidente que la recuperación de estos países no se logrará simplemente con la reforma de sus estructuras administrativas y normativas debido a la complejidad de los problemas que afrontan. Tal vez, uno de los más complejos sea la interrupción del flujo del crédito a la economía real, el cuál está afectando gravemente los países del sur de Europa. Esta escasez está dañando seriamente la competitividad de los mismos a nivel internacional y comprometiendo cualquier posible atisbo de mejoría, poniendo, en definitiva, en riesgo la recuperación de la economía mundial.

New challenges, new alliances

Jose Carlos Villena Perez's picture

Multilateral organizations and Southern Europe can do more to cooperate to restore these countries’ global competitiveness

One of the lessons learned from the past few years is that economic development processes are reversible. The once-bright southern Europe economies are languishing today, wrapped in a slow and painful process of adjustment aimed at restructuring their productive sectors and enter once and for all into the 21st century economy.

It’s clear that these countries’ recovery will not be achieved simply with reforming their administrative and regulatory frameworks. Perhaps one of the most complex issues that Italy, Portugal, and Spain are currently dealing with is the interruption of credit flows to the real economy. This interruption is doing considerable harm to the countries of southern Europe; the credit shortage is affecting their competitiveness and jeopardizing any possible hint of improvement, putting the overall global economic recovery at risk.

Partnership in Political Risk: Singapore Goes Global!

Paul Barbour's picture

On February 22, MIGA partnered with the Singapore Management University (SMU) and International Enterprise Singapore (IE Singapore), to launch the most recent World Investment and Political Risk Report in Asia. The event, at SMU’s downtown campus, focused on the key issues of sovereign and political risk and how foreign investors can mitigate them.

The latest World Investment and Political Risk report is the fourth in a series that we’ve recently launched in London and Washington, DC as well. There are some important nuggets on FDI trends and perceptions this year. The report notes that foreign investors, attracted by stronger economic growth in developing countries while mindful of risks, still remain optimistic about these destinations.

The Palestinian Private Sector: Resilience in the Face of Harsh Conditions

Layali H. Abdeen's picture

I recall the first time I visited Nakheel Palestine for Agricultural Investments Company fields at Jericho two years ago, when MIGA was still at the early stages of underwriting the project constituting planting date trees. packing dates for Nakheel Palestine for Agriculture Development The land was empty and, at the first glance, the first thought that came to mind was “how can this be developed into arable land?” When MIGA’s Executive Vice President Izumi Kobayashi visited the site for the first time a couple of weeks ago, we found ourselves in fields filled with baby date trees that have beautified the land with their green leaves. And in a tour in the packing facility of the project, we saw how young female workers were sorting and packing the dates, realizing that each of these workers is supporting a household of minimum five members in a very impoverished area.

Investing in Infrastructure in Africa: Conundrum and Opportunity

Esohe Denise Odaro's picture

Last week, the U.N. Conference on Trade and Development (UNCTAD) released its semi-annual report on FDI flows, which reflected generally dismal results: global FDI declined by 8 percent, with a 5 percent decrease for the developing world in particular. Investing in Infrastructure in AfricaI found it interesting that South Africa’s significant decline in FDI seemed to catch a good deal of media interest. Yes, the continent’s darling and the usually one of the highest recipients of FDI saw a drastic drop (by 43%); admittedly this deserves more than a glance. But I wonder why Finland and Ireland’s numbers, at 96.2 and 42.8 percent respectively, didn’t make much news. South Asia’s inflows also fell by 40 percent as a result of declines across nearly all countries in the subcontinent. In India, inward FDI fell from US$18 billion to US$10 billion. Why South Africa? In my opinion, the flow of investment to sub-Saharan Africa is often reported as a sign that the doors of the last frontiers are being approached.

MIGA in Libya: Boldly Going Where No Political Risk Insurer Has Gone Before

Hoda Atia Moustafa's picture

The New Libyan FlagLast month, MIGA signed its very first contract of guarantee for a project in Libya. The guarantee covers an investment by Jafara Company to expand a beverage and harissa plant outside of Tripoli. (Harissa, if you have never had it, is sometimes known as the "ketchup of North Africa" — a hot chili sauce used to spice up North African foods.) The €7 million contract, underwritten through MIGA's Small Investment Program, provides cover against losses due to expropriation, war and civil disturbance, and transfer restriction. The project came to MIGA through a private equity fund out of Tunisia, AfricInvest, which is indirectly investing in Jafara through a partial acquisition from its previous owner, the MIMS Group of Bosnia-Herzegovina. 

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