Guarantee Results: Mid-Fiscal Year 2000
Guarantee Results: Mid-Fiscal Year 2000
Washington, D.C., March 21, 2000 — The Multilateral Investment Guarantee Agency (MIGA) today reported the best mid-year guarantees performance in its history. Mid-FY00 guarantee results more than tripled over performance recorded in the same period in FY99 – 26 guarantee (insurance) contracts totaling US$802 million in coverage were issued; this compares with 15 guarantee contracts for US$261.2 million of coverage issued in mid-FY99. Guarantees issued in FY00 cover projects in 14 developing member countries, and include first-time coverage of investments in Croatia, Lesotho and Turkmenistan. These projects created about 1,600 jobs and facilitated approximately US$2.2 billion in foreign direct investment. In its history, MIGA guarantees have facilitated an estimated US$33 billion in foreign direct investment in 69 developing and transition member countries.
Mr. Motomichi Ikawa, MIGA’s Executive Vice President, said that: "MIGA’s objective is to complement and supplement the role played by national and private insurers, and not to compete with them. I primarily attribute this surge of our activities to growing unmet demand for political risk insurance. This is also a result of our representation overseas, links with foreign investment agencies and web-based information services, which have helped us to better serve our clients and meet our developmental objectives." Mr. Roger Pruneau, Vice President of MIGA Guarantees, added that: "In order to be more client responsive and handle the increased demand, we have hired new staff and streamlined internal processes, which will ensure a more cost effective and efficient underwriting process."
Closer Links with Clients in Africa
In response to investors’ demands for MIGA to extend its field presence, the Agency organized a special visit to West Africa in November 1999 to meet with prospective clients and hold seminars on the Agency’s guarantee program and investment marketing services. Mr. Motomichi Ikawa, who led the delegation, noted that: "Developing business in Africa is one of our major priorities, and I am pleased that we were able to meet with the private sector, especially small- and medium-sized enterprises, and strengthen our ties with investment promotion agencies and the African Development Bank. Through our special marketing efforts in Africa we look forward to extending our services to a broader range of clients."
A similar program of visits is envisioned for countries in Eastern and Southern Africa. MIGA staff will be in Mauritius, Kenya, Madagascar, Tanzania and South Africa between March 27 and April 7, 2000 to conduct seminars and meet with prospective clients. For further information, please contact Ms. Marjorie Melbourne at Tel: 202-473-7021, or visit MIGA’s web-site.
MIGA has also sent a special representative to COMESA, the Common Market for Eastern and Southern Africa Clearing House, in Harare, Zimbabwe. Mr. Ivan Rossignol, a senior underwriter for MIGA, will be setting up a regional agency to provide political risk insurance for trade flows between countries in Africa. He can be reached at: COMESA Clearing House, 101 Union Avenue, PO Box 2960, Harare, Zimbabwe Tel: 263-4-726-246; Fax: 263-4-730-819.
At A Glance: Guarantees Issued in FY00:
Lesotho: MIGA guarantees of US$23.7 million covered investments in one of Lesotho’s first privatization deals. The project involves the partial privatization of the government-owned Plant and Vehicle Pool Service. The investor, Imperial Group (Proprietary) Limited of South Africa, has a buy-lease-back and maintenance agreements with the Lesotho government for about 60 percent of the motor vehicle fleet. MIGA guarantees cover the risks of expropriation, transfer restriction, war and civil disturbance, and breach of contract.
Croatia: MIGA’s guarantee covers a shareholder loan by Hypo Alpe Adria Bank A.G. in Croatia’s recently privatized Slavonska Banka d.d. The new financing will be used to develop the bank’s new lending portfolio in Eastern Slavonia. Slavonska Banka d.d. will on-lend its funds to small- and medium-sized enterprises, which have traditionally had little access to long-term finance. The targeted sectors are agriculture, tourism, agribusiness, the wood-processing industry and the building-materials industry. The bank will also expand its retail sector to provide a full range of personal and small business banking services. The project will help the country’s reconstruction efforts by strengthening the private banking sector. MIGA’s guarantee covers the investment against risks of expropriation of funds and transfer restriction. PRISMA Risikoservice GmbH brokered the transaction.
MIGA expanded its coverage of investments among developing and transition economies:
Azerbaijan: MIGA guarantees totaling US$56.7 million cover reinvested and future earnings by Azertel A.S. of Turkey, and two loans by Bank Kreiss AG of Germany and Pamukbank TAS of Turkey for their investments in the expansion of a digital cellular telecommunications network in Azerbaijan. The investments will be used for replacement of old equipment and capacity expansion. The project, Azercell, is a joint venture with the Azerbaijan government. It will contribute to the development of competitively priced modern digital telecommunication services in the country and support the infrastructure sector. MIGA guarantees cover the risks of expropriation, transfer restriction, and war and civil disturbance.
Promoting pioneer investment projects in the agriculture sector:
Russia: MIGA covered a loan by a privately-owned startup agribusiness company involved in increasing the agricultural productivity in the Voronezh region. The company will adopt sharecropping methods, utilize modern machinery, and provide technical assistance to local farmers. The project is a pioneer pilot project intended as a working model for similar projects to improve Russia’s agronomic yields. MIGA guarantees of US$5 million were issued against the risks of expropriation, transfer restriction, and war and civil disturbance.
Contact:
Ms. Moina Varkie, Marketing Manager;
Tel: (202) 473-6170; Fax: (202) 522-2630