Risk%20Mitigation%20for%20Investments%20in%20MOZAMBIQUE

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Risk Mitigation for Investments in MOZAMBIQUE
Christophe Bellinger Director, Europe October 3,
2003
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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 US12.4 billion
• 163 Members
• 22 Category One countries
• 141 Category Two countries

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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

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MIGAS 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

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MIGAS 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

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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
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MIGA Priority Areas

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

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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
1998
1999
2000
2002
2001
estimate
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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
FY99
FY00
FY01
FY03
FY02
estimate
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MIGA in Mozambique

• Mozambique is MIGAs 4th largest host country,
  overall and MIGAs largest host country in Africa
• MIGAs Guarantees have facilitated 2.8 billion
  in FDI into the country
• MIGAs outstanding portfolio in Mozambique
  consists of 18 contracts of guarantee
• Exposure 5.2 of the Agencys gross exposure
• Total of 262 million in gross exposure and 192
  million in net exposure

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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)

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CASE STUDY Sasol/Mozambique

• 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

• Development Impact
• Over 2 billion in payments, taxes, etc. to
  Mozambique
• Local purchases over 1 million/year
• Job creation
• Improved infrastructure
• Landmine removal

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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
  countrys apparel sector an apparel industry
  outreach program for Mozambique to Honk Kong in
  September 2003

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Thank you
www.miga.org
Christophe Bellinger Director, Europe 66 Avenue
dIena 75116 Paris Tel [phone]
Justin Kouakou Senior Underwriter 66 Avenue
dIena 75116 Paris Tel [phone]