Presented at the Annual Meeting of the MENA-OECD Working Group on Investment Policies and Promotion, March 2013

1. Investment Policies and Promotion
Annual Meeting of the MENA-OECD Working Group
OECD, March 20, 2013
maintaining FDI flows
in a risk-averse world
Olivier J. L. Lambert, MIGA Europe Office (Paris)

2. The International Finance
Corporation (IFC)
 Investment services for the
private sector
 Advisory Services for
companies and private
investors for questions
related to the private sector
 IFC Asset Management
Company
The World Bank Group
The Multilateral Investment
Guarantee Agency (MIGA)
 Guarantees against non-
commercial risks
 Dispute resolution services
for guaranteed investments
 The International Bank for
Reconstruction and
Development (IBRD)
 The International
Development Association
(IDA)
IBRD:
 Loans to middle-income
countries
 Advisory services
 Guarantees and risk
management
IDA:
 Donations and zero-interest
loans to least developed
countries
The International Center for
Settlement of Investment
Disputes
(ICSID)
 Specialized dispute
resolution institution
 Facilities for independent
conciliation and
arbitration of investor-
State disputes
 Enables individuals or
companies to bring up
claims against foreign
governments

3. MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 3
1. Currency Transfer Restriction & Inconvertibility Cover
 Protects against losses arising from inability to convert local currency into forex for transfer
outside the host country or transfer/excessive delays in acquiring forex
2. Expropriation Cover
 Protects against losses arising from nationalization and confiscation; Creeping expropriation (e.g.
gradual changes in tax regime); Expropriation of funds (e.g. "account freeze” )
3. War and Civil Disturbance Cover
 Protects against: Loss of Assets; Temporary or Permanent Loss of Use
 Loss has to be a direct and immediate result of acts of war, revolution, rebellion, insurrection,
coup d’état, civil war, civil commotion, riots ; acts of sabotage or terrorism can also be covered
4. Breach of Contract Cover
 Protects against losses arising from the government’s breach or repudiation of a contract with the
investor (e.g., a concession or a power purchase agreement)
 Coverage extends to sub-sovereign risks, interest rate hedging instruments and capital market
transactions
5. Non-Honoring of Sovereign Financial Obligations (NHSFO) Cover
 Protects against losses resulting from a government’s failure to make a payment when due under
an unconditional financial payment obligation or guarantee related to an eligible investment.
MIGA Political Risk Insurance cover non commercial risks

4. MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 4
Financial Instruments Covered / Clients
 Financial Instruments covered
 Equity
 Shareholder loans
 Loan guaranties
 Non-shareholder loans (i.e., stand-alone debt)
 Non-equity direct investment (contracts including management, leasing,
production-sharing, licensing, turnkey, and others)
 Capital market transactions
 Clients or Guarantee holders
 Investors
 Banks

5. MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 5
The need to adapt PRI solutions and MIGA of today
The current MIGA: Improved/ new instruments used in innovative ways
 Adapted Convention and Operational regulations
- No more equity requirement => stand-alone debt
- Existing investment, with higher threshold of justification
 Improved/ New products
- Short-term business interruption: Within WCD limit; Requires 30 days of cessation of
activity
- Enhanced Breach of Contract: With SOE (Government control, public service, credit
worthiness); Denial of justice
- Non Honoring of Sovereign Financial Obligations: Basel II compliant
 Innovation and responsiveness
- New application of products: from expropriation of funds to capital optimization
- Swap and portfolio coverage
- Coverage adapted to Islamic finance
- Master contracts for private equity funds.

6. MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 6
How MIGA relates to governments
 Before issuing a guarantee: Host Country Approval (HCA)
 In the case an issue arises between MIGA guaranteed investors
and the local government:
 Guaranteed investors notify MIGA of difficulties with the government
 MIGA analyzes the situation and areas of responsibility
 If MIGA determines that the guaranteed investor has the case, MIGA will reach out
the government to understand its position and help parties come to an agreement
If parties are unable to reach an agreement:
 MIGA reviews the facts and makes a formal determination or goes through arbitration
(breach of contract)
 If MIGA finds for the insured investor, compensation will be paid investor entitled
under the guarantee
 If warranted, MIGA pays according to the contract
After claim is paid:
 MIGA steps in the shoes of the insured party with no more, no less rights
(subrogation)
 Under the terms of MIGA’s Convention, we are permitted to seek reimbursement from
the government.

7. MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 7
The MENA region: current uncertainties
Consensus on optimism in the long run, but concerns prevail in the short and
medium term:
 A few new foreign investments in the region: wait and see attitude
 Investors also step back regarding existing investments
 Investors leave.
Concerns are related to:
 Political violence—especially civil disturbance
 Governments' ability to honor commitments and obligations
 Untested new frameworks
Political and economic stability are intertwined:
=> PRI tools are decisive to establish a bridge of confidence between today and
tomorrow to support investments which will generate the growth.

8. MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 8
MIGA’s commitment to the MENA region
The “MENA initiative” (end of FY 2011):
 Mobilization of $1bn in insurance capacity to encourage and retain FDI in the MENA region
 Organization of events to bring investors together to share knowledge and experience in
managing political risk: Dubai, Paris Washington in 2011 and 2012. Planned in Dubai in May
2013
The collaboration with the Deauville Partnership (FY 2012):
 An initiative among international financial institutions to help create macro-economic
stability, social cohesion and more equitable growth in the MENA region
=> Achievements:
 In 18 months approx. , MIGA has issued $592.7m worth of guarantees
 Guarantees for investors in Egypt, Jordan, Morocco and Tunisia.

9. MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 9
But more could be done together by joining forces
 We must recognize the high risk environment:
=> Risks may not be acceptable: EDFI or MIGA must remain sustainable
=> Guarantees may be too expensive
 Capital, including public capital, is limited:
=> We must all minimize total capital consumption, while making the
transactions happen.
 So each transaction require
 1) detailed risk analysis and
 2) enhanced structuring by combining all available instruments, such as:
 EDI: loan equity
 MIGA: guarantees
 European infrastructure funds providing risk layers
=> Our assessment: there are all necessary instruments or institutions to
mitigate risk in the MENA region.

10. MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 10
Why Investors Choose MIGA
KNOWLEDGE AND EXPERTISE
 Largest multilateral PRI provider
 25 years in emerging markets
 Expert staff
 Access to World Bank Group
resources
 Best practice environmental and
social standards
UNIQUE PRI SOLUTIONS
 Support investments in difficult
markets
 Longer tenors (up to 20 years)
 May result in lower borrowing costs
 Reduce risk weighting and capital
provisioning
CLAIM DETERRENCE
 World Bank Group’s umbrella
 177 member countries
 Claims track record
 Assistance in dispute resolution
FINANCIAL STRENGTH
 Recognized industry leader
 Strong balance sheet
 Diversified portfolio
 Implied AAA rating
 Reinsurance capacity

11. MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 11
MIGA’s Claims Track Record
 MIGA has supported more than 700 projects
 MIGA has assisted clients in resolving more than 90 disputes
 MIGA has successfully facilitated the settlement of disputes in all currency
transfer/inconvertibility issues
 MIGA has paid claims in six cases
 Afghanistan, Nepal, Kenya and Madagascar (war and civil disturbance)
 Indonesia and Argentina (expropriation)
 All other cases have been resolved or the claim withdrawn.
Deterrence effect & early involvement to resolve difficult / complex
situations will ensure the largest number of projects are successful.

12. MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 12
OPIC
Project Example: Supporting existing investments
- Apache Egypt
US
Egypt
Apache
subsidiaries
Guarantee
Apache
Guarantee
Multiple
investments
 MIGA issued a guarantee of
$150m providing reinsurance for
the OPIC coverage to Apache
Corporation of the United States,
for Apache’s investments into its
subsidiaries in Egypt.
 Reinsurance coverage is for a
period of up to 13 years against
the risks of expropriation and
breach of contract.
 The project involves existing and
future exploration and
development and production of
crude oil, natural gas, and
condensate.
Egyptian General
Petroleum
Corporation (SOE)
JV Oil and gas
exploration
activities

13. Project Example: Attracting new investments
- Bitaka S.A. in Tunisia
 MIGA issued guarantees of €3.8m ($5.1m
equivalent) to Fons Mediterrània Capital,
F.C.R. de Régimen Simplificado of Spain
(FMC) covering its equity investment and
shareholder loan in Bitaka S.A. (Bitaka) in
Tunisia.
 The coverage is for a period of up to 5 years
against the risks of transfer restriction,
expropriation, and war and civil
disturbance.
 Bitaka provides low-cost, innovative
solutions to mobile operators in Tunisia. The
mobile sector is mainly pre-paid and relies
on payment solutions to connect the
majority of the population.
 The project contributes to the continued
growth of the mobile sector in Tunisia
(impact on GDP growth).
FMC
Bitaka S.A.
Equity(€1.9m)
Shareholder
Loan(€2.1m)
Spain
Tunisia
Guarantee Guarantee

14. BNP Paribas
Société Générale
Daewoo
(Korea)Loan
Compagnie
Tunisienne de
Navigation
MoF
Tunisia
Payment
Obligation
Guarantee
Construction
Contract
 MIGA issued guarantees of $217.7m
covering an investment through financing
by BNP Paribas and Société Générale of
France in a passenger-car ferry to be
acquired by the Compagnie Tunisienne de
Navigation SA (CTN) in Tunisia.
 The coverage is for a period of up to 13
years against the risk of non-honoring of
sovereign financial obligations.
 The project will help secure Tunisia’s main
transportation link with Europe (key to
economic development).
 MIGA stepped in due to last-minute
withdrawal of ECA. No other political risk
insurance cover was available for the
project.
Project Example: Enabling key investments
- CTN Ferry, Tunisia
Guarantee
(NHSFO)
France
Tunisia

15. MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 15
MIGA Highlights
GROSS EXPOSURE ($ BILLION)
5.1
5.4 5.3
7.3
7.7
FY05 FY06 FY07 FY08 FY09 FY10
6.5
9.1
FY11 FY12
10.3
Key Figures
 Supported more than 700 projects for a total of
$27.2 billion during FY90-12
 Portfolio: $10.3 billion
 Issued record $2.7 billion guarantees in FY12
MIGA’s Strengths
 Total subscribed capital: $1.9 billion
 Strong capital base and ability to pay
compensation in the event of large-scale losses
 Implied AAA by major credit rating agencies

16. MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 16
Gross Exposure
By region and sector – as of June 30, 2012
By region By sector

17. MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 17
Guarantees Issued in Fiscal Year 2012
By region By sector

18. Thank You!
www.miga.org

19. MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 19
Contact Information
Europe Regional Office
Multilateral Investment Guarantee Agency
66 Avenue d'Iéna
75116 Paris France
Olivier Lambert, Manager
t. 33-1-4069-3158
olambert@worldbank.org

20. MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 20
I N S U R I N G I N V E S T M E N T S  E N S U R I N G O P P O R T U N I T I E S