Executive Vice President Izumi Kobayashi Addresses Mining Conference
March 9, 2009 - The yearly four-day Mining Indaba In February in Cape Town brought together 4000 representatives of companies, investors and governments from all over the world, especially Africa. MIGA Executive Vice President Izumi Kobayashi led the World Bank Group delegation and delivered an address outlining the current economic crisis and its impact on developing economies as well as MIGA’s response to assist investors.
She noted MIGA has issued over $1.4 billion of guarantees in the mining sector in the agency’s 20-year existence, and $20 billion in all sectors underscoring MIGA’s significant experience working with global companies. “We have developed political risk insurance specially designed to target mining-related investor concerns. These include revocation of leases or concessions, tariffs, regulatory risk, and risks arising from a government’s breach of a contract, and disputes.”
Kobayashi also noted the mining picture has dramatically changed in the last six months, following a boom in Africa when investors were less risk-conscious, and that the sector has faced challenges. However, she also noted potential opportunities. “The current crisis will eliminate many marginal projects. However, MIGA believes there many good projects still out there, with good longer term results if they are structured correctly.”
She noted the current global economic crisis is hitting Africa hard, threatening progress achieved during decades of reforms. She encouraged investors to continue to do business. “Investments in infrastructure, in mining and other activities, can yield huge benefits and lead to real economic growth and development in longer term. Our experience is that foreign direct investment creates fiscal space. Governments can use this benefit to meet the critical social needs, such as better education and health care. And it brings global knowledge and best practices.”
Kobayashi told the investors MIGA is looking at better ways to serve them and project sponsors. She said MIGA is taking steps to improve its overall flexibility and effectiveness. She noted MIGA is considering providing coverage for temporary business interruption, as well as enhancing its Breach of Contract coverage in order to provide greater protection for clients.
“We are looking at new ways to deliver creative solutions to meet risk financing needs, especially in this financial crisis. As part of the World Bank Group we remain committed to strengthening our role of providing support to emerging and transition economies battered by the global financial crisis.”
Finally, Kobayashi noted the financial crisis has escalated within the globalized economy. Therefore it can only be solved by global action. “It is critical to maintain FDI which provides long term development. But we know we are just one player. It takes all of us collectively working together. We believe the need for intellectual exchange, thinking outside the box, innovation and cooperation, has never been greater, among governments and countries, among public and private sectors, among ourselves.”