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Risk Mitigation for Investments in MOZAMBIQUE

Risk Mitigation for Investments in MOZAMBIQUE. Christophe Bellinger Director, Europe October 3, 2003. History and Membership. Mission: Facilitate FDI into developing member countries Founded April 1988 Field offices in Africa, Asia and Europe

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Risk Mitigation for Investments in MOZAMBIQUE

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  1. Risk Mitigation for Investments in MOZAMBIQUE Christophe Bellinger Director, Europe October 3, 2003

  2. History and Membership • Mission: Facilitate FDI into developing member countries • Founded April 1988 • Field offices in Africa, Asia and Europe • Total FDI Facilitated (est.): $50 billion; total coverage: US$12.4 billion • 163 Members • 22 Category One countries • 141 Category Two countries

  3. MIGA Products Insurance Against Non-Commercial Risks • protect investors and financial institutions from non-commercial risks • War and civil disturbance • Transfer restriction and inconvertibility • Expropriation • Breach of contract • coverage for medium to long-term investments (3 to 15/20 years) • complement public and private political risk insurers Investment Promotion and Mediation Services • advice to investment intermediaries • on-line investment promotion services • mediation services and dispute resolution between investors and host countries • Training to public and private political risk insurers

  4. MIGA’S GUARANTEE PROGRAMHost Country Approval • All MIGA-guaranteed projects must be approved by the host country • Purpose: • Inform host country about project and MIGA coverage • Ensure that MIGA coverage is consistent with host country development priorities • Approval is not a government counter-guarantee, nor does it imply a contingent liability

  5. MIGA’S GUARANTEE PROGRAMWhat Does MIGA Cover? • equity and quasi-equity • shareholder loans and loan guaranties • commercial loans • other forms of investments • capital markets transactions • technical assistance • management contracts • operating leases • franchising and licensing agreements • performance bonds • movable property • turnkey contracts

  6. Guarantees Portfoliogross Exposure, by region* and sector, in percent (as of 06/30/03) Latin American and Caribbean Europe and Central Asia Sub-Saharan Africa Asia and the Pacific Middle East and North Africa 43 26 19 12 3 $5.1 B Infrastructure Financial Manufacturing Mining Oil and Gas Tourism Services Agribusiness 41 29 10 6 6 4 3 1 * Figures exceed 100% due to master contract with one client

  7. MIGA Priority Areas • IDA-eligible countries • Africa • South-South investments • SMEs • Complex infrastructure projects --------------------- • Conflict-affected countries • Under-represented regions (MENA, Africa, Asia)

  8. FDI Trends for Sub-Saharan Africa 13,814 FDI ($ million) • Less than 1% of global FDI flows • Less than 5% of FDI flows into developing countries • Majority of FDI into only 3 countries: South Africa, Angola, Nigeria 8,092 7,000 6,506 6,076 2002* 1998 1999 2000 2001 *estimate

  9. MIGA Guarantees Portfolio in Africa 893 Gross exposure ($ million) 788 • Total issuance: Over $1.1 billion in 23 countries • FDI facilitated: $5.3 billion (est.) • FY99: 8% of portfolio – FY03: 18% • FY99-03: 58 projects covered 621 524 294 FY03* FY99 FY00 FY01 FY02 *estimate

  10. MIGA in Mozambique • Mozambique is MIGA’s 4th largest host country, overall and MIGA’s largest host country in Africa • MIGA’s Guarantees have facilitated $2.8 billion in FDI into the country • MIGA’s outstanding portfolio in Mozambique consists of 18 contracts of guarantee Exposure: 5.2% of the Agency’s gross exposure Total of $262 million in gross exposure and $192 million in net exposure

  11. Guarantees in Mozambique • MIGA currently underwriting 4 projects in Mozambique (total coverage: $100 million) • In the second half of FY03, MIGA supported 3 important projects (issuing $107 million in coverage) • Sasol (Oil & Gas) • Moma (mining) • Maputo Port (infrastructure)

  12. CASE STUDY: Sasol/Mozambique Development Impact: • Over $2 billion in payments, taxes, etc. to Mozambique • Local purchases: over $1 million/year • Job creation • Improved infrastructure • Landmine removal Investors • Sasol Gas Holdings; Sasol Petroleum International (South Africa) • gas field and pipeline • equity coverage • $72 million in guarantees for 15 years against: • transfer restriction • expropriation • war and civil disturbance • breach of contract • South-South, IDA, post-conflict investment • Joint project with WB, IFC

  13. Investment Marketing Services in Mozambique • MIGA works with the Mozambique Investment Promotion Center (CPI) to support its efforts to attract FDI and strengthen linkages with the local business community • In FY03, MIGA focused on the completion of a baseline evaluation of Mozambique as a beneficiary under MIGA-Swiss Partnership (MSP) • MIGA completed the investigations required to define a targeted technical assistance program under the MSP • Under MSP, MIGA carried out an assessment of country’s apparel sector: an apparel industry outreach program for Mozambique to Honk Kong in September 2003

  14. Thank you www.miga.org Christophe Bellinger Director, Europe 66 Avenue d’Iena 75116 Paris Tel: (33) 1 40 69 32 75 Justin Kouakou Senior Underwriter 66 Avenue d’Iena 75116 Paris Tel: (33) 1 40 69 32 81

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