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Mobilizing the Private Sector for Public Education: The Role MIGA Can Play Frank J. Lysy Chief Economist, MIGA June 8,

Mobilizing the Private Sector for Public Education: The Role MIGA Can Play Frank J. Lysy Chief Economist, MIGA June 8, 2007. What MIGA Does. Member of World Bank Group MIGA has its own balance sheet Small: Only 100 staff now Sells Political Risk Insurance to Private Foreign Investors .

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Mobilizing the Private Sector for Public Education: The Role MIGA Can Play Frank J. Lysy Chief Economist, MIGA June 8,

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  1. Mobilizing the Private Sector for Public Education: The Role MIGA Can Play Frank J. Lysy Chief Economist, MIGA June 8, 2007

  2. What MIGA Does • Member of World Bank Group • MIGA has its own balance sheet • Small: Only 100 staff now • Sells Political Risk Insurance to Private Foreign Investors

  3. MIGA’s PRI Covers • Transfer and Convertibility • Expropriation • Breach of Contract • War & Civil Disturbance Investor can choose any one, or up to all four Pays premium based on risk (to MIGA)

  4. Why We Need Better Schools

  5. Traditional Private Projects • Sale in a competitive market, by competing suppliers • Hence: • Price as measure of value at margin • Private cost at margin generally approximates social cost (other than for externalities and subsidies) • PPP’s very different • Must confirm to be of social value

  6. PPP’s: Must Meet Four Tests • Does the PPP structure make sense? • Was the PPP contract or concession awarded appropriately? • Is there a positive social return (ERR)? • Is there adequate fiscal space?

  7. Gabon Vocational Education • Private firm would design curriculum, rehab buildings, install computers, and manage for six years • Some student fees, but also govt support • Negotiated contract, with alternative suppliers considered • Reasonable ERR likely • Structure reasonable, although not ideal

  8. Gabon: Vocational Education Banks Project Manager Management Contract $4.6m Over 6 yrs Principal & Interest on 10 year loan $56.3m Performance Bond $0.7m After 3 yrs Gabon National Agency for Vocational Education Counter-Guarantee of Ministry of Finance

  9. Thank you! Frank Lysy FLysy@worldbank.org For more information visit www.miga.org

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