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Political Risk Insurance

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. 

 

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.

  

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… 

Launch update: World Investment and Political Risk

Mallory Saleson's picture

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.

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