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.
Like a child on Christmas eve, I could hardly wait to hear my fate after my final interview with the Director of Operations at MIGA. The MIGA Professionals Program (MPP) was exactly what I wanted, a perfect fit of my technical skills and interests, but I was aware that it was a highly competitive process in which hundreds of applicants are whittled down to one offer per department in the end. Thus I cannot exaggerate just how thrilled I was to receive the call offering me the position of Underwriter after a series of interviews. And so began my voyage to the US to start my new job rather enthusiastically.
It was a close and muggy Washington morning as about 100 people gathered early this past Saturday for the yearly MIGA client breakfast, taking place during the 2011 World Bank Group/International Monetary Fund Annual Meetings. It was gratifying to see people from many fields in the audience, ranging from investors and fund managers to bankers and project lawyers as well as a not a few economists and development specialists. The rather overheated feeling in the air was probably only partly due to the warm weather outside, and as much to do with the prevailing sense of deep concern about where the world’s economic fortunes are headed. All in all, it promised to be a lively session.
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.
As part of the launch of the World Bank’s World Development Report, a distinguished panel (including MIGA’s own Edith Quintrell) convened at IFC to discuss the topic of Private Sector Growth and Job Creation. Jyrki Koskelo chaired the panel and asked for a lively and frank discussion. He got more than he bargained for.
In addition to Ms. Quintrell and Mr. Koskelo, the panel included:
- Arnold Ekpe, CEO of Eco
- Rosalind Kainyah, Vice President, External Affairs, Tullow Oil
- Justin Lin, senior Vice President and Chief Economist, World Bank
- Jay Naidoo, World Development Report Advisory Council Member, and, most provocatively
- Mohamed Ibrahim, Chairman of the Mo Ibrahim Foundation.
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.
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.