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MIGA Survey Shows Strong Uptick in Investment Plans into Sub-Saharan Africa

JOHANNESBURG, SOUTH AFRICA, February 15, 2011—A report launched in Johannesburg today by the Multilateral Investment Guarantee Agency (MIGA) confirms that sub-Saharan Africa is becoming an increasingly popular investment destination. A survey conducted for the report, World Investment and Political Risk, indicates that two-thirds of the multinational executives responding to the survey expect to increase foreign direct investment (FDI) in the region over the next three years.

"This expected upsurge in FDI into Sub-Saharan Africa is very welcome news, especially given the region’s investment needs," said MIGA Executive Vice President Izumi Kobayashi. "We know that FDI flows directed to productive assets can spur substantial economic growth and reduce poverty."

The MIGA report also focuses on FDI into conflict-affected and fragile economies. This issue is of particular importance to sub-Saharan Africa, which, according to the World Bank, accounts for 23 out of the world’s 43 conflict-affected and fragile economies. The region also accounts for most of the world’s 18 resource-rich conflict-affected economies.

World Investment and Political Risk shows that while investors are optimistic about tapping into new markets in sub-Saharan Africa, they are concerned about adverse government intervention (for example changes in regulations, breach of contract, non-honoring of sovereign guarantees, currency restrictions, and expropriation). These concerns outweigh the fear of overt political violence. In fact, adverse changes in regulations not only rank high among investors’ concerns in conflict-affected and fragile economies, but also are most often responsible for losses in these destinations.

MIGA’s report underlines the important role of FDI in conflict-affected and fragile economies. By providing much-needed financial resources, technology transfer, managerial expertise, and connections to the global economy, FDI can help generate and sustain economic growth and promote development, both essential to stability. The report also notes that multilateral political risk insurance providers are well positioned to cover FDI in these countries because their development mandate allows them to look beyond the bottom line.

Kobayashi notes, "Economic growth is critical for all of us around the globe—but it is even more so for underserved markets—especially those economies that have been struggling under the very heavy burden of conflict and instability."

For more information on the report, visit www.miga.org/wipr

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MULTILATERAL INVESTMENT GUARANTEE AGENCY
A Member of the World Bank Group
1818 H Street, NW, Washington, DC 20433

MIGA Contact:
Mallory Saleson, MIGA
Tel: +1 202 473-0844
E-mail: msaleson@worldbank.org

Rebecca Post, MIGA
Tel: +1 202-473-1964
E-mail: rpost@worldbank.org

Cara Santos Pianesi
Tel: +1.202.458.2097
E-mail: csantospianesi@worldbank.org     

Release no. 2011/157
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