REGIONAL ACTIVITIES...REGIONAL ACTIVITIES Asia and the Pacific 30 Europe and Central Asia 34 Latin America and the Caribbean 40 Middle East and North Africa 46 Sub-Saharan Africa 48

REGIONALACTIVITIES

Asia and the Pacific 30

Europe and Central Asia 34

Latin America and the Caribbean 40

Middle East and North Africa 46

Sub-Saharan Africa 48

30 MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP

During the course of fiscal 2002, MIGA supported three projects in

Asia through its guarantee program, and undertook 11 technical

assistance activities in the region. At year-end, MIGA’s total gross

guarantees exposure in the region stood at $533.5 million, some

10 percent of the Agency’s outstanding portfolio.

ASIA AND THE PACIFIC

Work in Asia focused on increasing awarenessof MIGA’s activities through two mobile offices,which visited India, Indonesia, Thailand, andSingapore, where meetings with potentialinvestors, investment intermediaries andinvestment promotion agencies produced goodresults. In addition, several missions to identifynew opportunities were conducted in Asia withthe help of MIGA’s local offices in Japan and Thailand. The missions visited China,Hong Kong, Japan, Singapore, the Philippines,Malaysia, Thailand and Vietnam, and includedconferences, meetings with clients andpartners, and workshops.

The Miyazawa Initiative, a special elementof the Japanese PHRD program to promoteeconomic recovery in the countries mostaffected by the 1998 Asian financial crisis, dueto conclude during fiscal 2002, was insteadextended into fiscal 2003. MIGA’s efforts underthis $1 million initiative focus on technicalassistance, as well as raising awareness of itsguarantees program. The technical assistancegoals include developing and implementing tar-geting strategies to mobilize and promoteinvestment opportunities; identifying and fos-tering sectors with solid potential forinvestment promotion; and devising targetedwork programs. Other key objectives involveassisting in the development and implemen-tation of information technology tools and pro-motional materials.

Activities under the Initiative took place inthe Republic of Korea, the Philippines, andThailand. In all three countries, capacity

MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 31

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building focused on developing a sectoralstrategy, leading to investor targeting inselected industries in each country. MIGAworked with these organizations to plan,implement and follow-up on highly focusedinvestment seminars, and also providedguidance on customizing investor trackingsystems, and on implementing the FDI Xchange initiative.

MIGA staff participated in a World Bank-sponsored workshop in Vietnam on “FinancingIssues and the Role of the Private Sector for theGreater Mekong Sub-region Countries,” with afocus on power and transmission. Thisworkshop was jointly sponsored by the WorldBank and the Asian Development Bank (ADB),and was the third of its kind. In Thailand, MIGAconducted a workshop for the Thai EXIM Bankto set up a Thai political risk insurance product,with a launch expected in the near future. Suchmissions allow investors and lenders toconsider additional options in their financingpackages as they look to develop new projects inthis region.

GUARANTEE ACTIVITIES

NEPAL

MIGA has provided a guarantee of $11 million toBergenshalvoens Kommunale Kraftselskap AS(BKK), of Norway, to cover its $12.2 millionacquisition of equity in Himal Power Limited(HPL), of Nepal. MIGA was involved in pro-viding guarantees to sponsors of this project in1996, including Statkraft SF, of Norway, and isnow supporting BKK’s purchase of part ofStatkraft’s equity. BKK required MIGA’scoverage as a condition of acquisition. Thecoverage period is 15 years, and is against therisks of transfer restriction, expropriation andwar and civil disturbance.

HPL is a 60 MW run-of-the-river projectlocated on a tributary of the Tama Khosi River,one of Nepal's major rivers, 100 kilometers eastof Kathmandu. The project was the first foreigndirect investment in Nepal’s energy sector and,at commissioning in 2000, it was projected thatit would account for 22 percent of the country’sinstalled capacity for electricity. Since becomingoperational in July 2000, the project has signifi-cantly improved the supply of electricity to thenational grid. In addition, the project’s com-munity outreach and development efforts have

had a notable impact, especially in the areas ofpublic health, education, and developmentinfrastructure (e.g., roads, bridges and irri-gation works). In particular, efforts to introduceand expand low-cost rural electrification to theproject area have had a significant local devel-opment impact. (For details on MIGA’s initialcoverage of the project, see MIGA’s 1996 Annual Report.)

PAKISTAN

MIGA provided a ¥40 million (approximately$340,000) guarantee to Komatsu Limited ofJapan for its ¥30 million (approximately$250,000) investment in, and future retainedearnings from, Komatsu Pakistan Soft (Pvt.)Limited in Pakistan. The guarantee is for up toten years, and provides coverage against therisks of transfer restriction and expropriation of funds.

The development of a domestic, export-oriented computer software industry is apriority area for the Pakistani government. Thisinvestment involves establishing a newcompany, based in Islamabad, which willdevelop computer software for commercial use.The project is expected to export 100 percent ofits products, and will therefore contribute to thecountry's balance of payments through foreigncurrency earnings. The company will recruit andtrain local computer programming andsoftware development staff.

MIGA has provided Orascom Telecom HoldingS.A.E. (Orascom) of Egypt a guarantee for $79 million to cover its $88 million equity investment in Pakistan MobileCommunications Limited (PMCL). MIGA hasalso provided $11.7 million in coverage to Orascom’s wholly-owned subsidiary,International Wireless CommunicationsPakistan Ltd., of Mauritius, to cover a portion ofits fifteen-year services agreement with theproject enterprise. The guarantees are for aninitial period of five years, renewable for amaximum period of 15 years, and providecoverage against the risks of transfer restriction,expropriation, and war and civil disturbance.

The government of Pakistan is focusing onthe development of a more efficient telecom-munications infrastructure, which would have apositive impact on general economic activity in

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the country. Expansion of reliable, state-of-the-art mobile phone networks is seen as key toimproving telecom infrastructure, and havingan important multiplier effect on the growth ofnumerous domestic industries. This project willallow PMCL, Pakistan’s largest mobile phoneoperator, to tap into the projected growth of themobile phone market in Pakistan by investingan additional $200 million over the next fiveyears. The investment will also increase usageof the Internet by integrating Internet accesswith cellular offerings, allowing streamlinedaccess to real-time information and moreefficient connectivity for businesses and indi-viduals alike. The company’s expansion isexpected to create 420 new jobs over the nextfive years, with above average compensationpackages, and on-going training for workers. Inaddition, the company will continue to providerevenues to the government through sales andincome tax, royalties, interconnectionagreements and license fees. These fees areexpected to continue to total between $2.5 million and $3.5 million per month.

TECHNICAL ASSISTANCEACTIVITIES

INDONESIA

Although included as a beneficiary under theMiyazawa Initiative, progress in legal and regu-latory reforms has been slow to develop inIndonesia, and MIGA has had very littleinvolvement in the country over the past twoyears. However, late in fiscal 2002, MIGA metwith the head of BKPM (Badan KoordinasiPenanaman Modal—the investment serviceagency of the Indonesian Government) on twooccasions to discuss a joint MIGA/FIAS workprogram that would provide strategic advisoryservices and address key issues, such as coordi-nation with regional investment promotionagencies, that may be implemented in thecoming months.

KOREA

MIGA’s role in support of the KoreanInvestment Services Center (KISC) came to anend at the close of fiscal 2002, and no furthertechnical assistance from MIGA is anticipated.During the last year of the capacity-building

program, MIGA delivered workshops onadvanced investment promotion skills and tar-geting techniques to staff of KISC and theregional investment promotion agency forKyonggi Province. MIGA traveled to Korea inJune 2002 to carry out a re-assessment of KISCto determine progress that had been madesince the onset of the Miyazawa program andidentify remaining needs. An oral briefing wasdelivered prior to the departure of the MIGAteam and the findings will be presented toagency management in a written report.

LAO PDR

In fiscal 2002, MIGA delivered a two-daycapacity building workshop in Vientiane, incooperation with the Private SectorDevelopment Team of the World Bank’sBangkok office, to the Foreign InvestmentManagement Committee (FIMC) of Lao PDR.Lao PDR is one of the newest members of theAssociation of Southeast Asian Nations(ASEAN) and is a focus of regional interest insupport of targeted assistance to attract privatesector development in general, and foreigndirect investment, in particular.

PHILIPPINES

While the investment climate is generallyfavorable, the Philippines is faced with thechallenge of coordinating the efforts of manydifferent agencies with roles in investment pro-motion, export development and economicdevelopment in the country. As part of theMiyazawa Initiative, MIGA continued its effortto support the development and diffusion ofinvestment promotion skills among the staff ofthe lead organization—the Philippine Board ofInvestment—during fiscal 2002. Capacity-building workshops were delivered to theBoard’s staff in the area of investor targetingand discussions were held with the new head ofthe Board wherein strategies for inter-agencycooperation to attract FDI to the Philippineswere addressed. MIGA also facilitated a stock-taking exercise of the agency that included aseries of interviews with the organization’ssenior management and a function-by-functionreview of operational capabilities and con-straints, as a means to assess progress underthe Miyazawa Initiative.

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THAILAND

MIGA has provided an integrated program oftraining and advisory services to the ThailandBoard of Investment under the MiyazawaInitiative, geared toward moving the agencyfrom processing investment requests to activelysoliciting investor interest. In fiscal 2002, MIGAdelivered a capacity-building workshop onindustry-specific targeting efforts and con-ducted preparatory work for training in investorservicing. Earlier in the year, MIGA organized aUS study tour for staff to learn about best-practice investment promotion agencies andtheir use of technology to support theiractivities. To evaluate effectiveness in helpingthe agency achieve its objectives, MIGA facil-

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itated an assessment, which included dis-cussions with senior management and a com-prehensive review of the organization’s oper-ations with staff. Several interviews were con-ducted with foreign investors and with the staffof Thai offices of international chambers ofcommerce. MIGA is currently preparing areport of the findings that will help in defining anear-term work program. MIGA also partic-ipated in a World Bank study on FDI strategy,commissioned by the government, to examinethe implications of trends in foreign directinvestment on prospects for attracting FDI inThailand.


Guarantees in the energy, agribusiness, manufacturing and finance

sectors, and strong capacity-building assistance highlighted MIGA’s

efforts in Europe and Central Asia this year. During the course of the

year, MIGA supported 15 projects in the Europe and Central Asia

region through its guarantee program. At fiscal year-end, MIGA’s total

gross exposure in the region stood at $1.1 billion, approximately


EUROPE ANDCENTRAL ASIA

The Agency also undertook four technicalassistance activities in the region during theyear. As well as building on work undertaken byother parts of The World Bank Group, MIGA'stechnical assistance program drew on fundingfrom the Swiss government. The FDI Xchangewas deployed in seven regional investment pro-motion and privatization agencies. In addition,several trade and outward investment initiativesfrom industrial countries are providinginvestment content to the FDI Xchange theregion. These include the U.S. CommerceDepartment’s Business Information Service forthe Newly Independent States, United StatesAgency for International Development’s(USAID) Global Technology Network, and theSwiss Organization for Facilitating Investment.Fiscal 2002 also saw the conclusion ofPrivatizationLink Russia, a project designed toincrease the transparency of the privatizationprocess in Russia by making in-depth infor-mation available online to potential investorsaround the world. While the technical assistanceprogram, which had been supported by theCanadian International Development Agency(CIDA) has been completed, MIGA continues tooperate the web service and is receiving regularelectronic updates from the Russian Ministry forProperty Relations on new shareholdings ofstate-owned enterprises being tendered.



BOSNIA AND HERZEGOVINA

MIGA has provided an additional e676,268($671,196) in coverage to Hypo Alpe-Adria-BankAG (Hypo) of Austria, which has increased itsinvestment in Hypo Alpe-Adria-Bank d.d. (HAABd.d.) in Bosnia and Herzegovina by e8,248,826($8,186,960). The coverage period remains atfifteen years, and coverage is against the risks ofexpropriation and war and civil disturbance.

MIGA, in conjunction with the EuropeanInvestment Trust Fund, had provided coverageto Hypo for its earlier investment in thisenterprise in fiscal 2001, when the projectenterprise was known as Auro Banka d.d. Theproject supports the financial sector reforms inthe country, which are among the main pri-orities of the government reform program.Hypo’s investment is enabling HAAB d.d. toincrease the volume of its lending activities, tar-geting the construction and agriculturalindustries. Details of the project appear inMIGA’s 2001 Annual Report.

MIGA has provided an additional e4.75 million($4.4 million) of coverage to RaiffeisenZentralbank Österreich AG (RZB) for the e5 million ($4.63 million) increase in its share-holder loan to Raiffeisenbank dd in Bosnia andHerzegovina. The coverage period remains atseven years, and coverage is against the risk oftransfer restriction and expropriation of funds.

RZB’s loan to Raiffeisenbank dd rep-resents a further commitment to its subsidiary.In fiscal 2001, MIGA provided $3.8 million incoverage to RZÖ for a shareholder loan to theproject entity. The loans are to finance thedevelopment of Raiffeisenbank's operationsthroughout Bosnia and Herzegovina, sup-porting the country's focus on accelerating theprivatization of banks and enterprises andreforming the financial sector to help thecountry continue on its path of post-warrecovery. More details of the project appearedin MIGA’s 2001 Annual Report.

MIGA has provided e1.2 million in reinsurance(about $1.1 million) to the Slovene ExportCorporation (SEC) for the insurance it hasprovided to Banka Domzale d.d. of Slovenia forits equity investment in Commercebank d.d. in

Bosnia and Herzegovina. The coverage is for aminimum of three years, and is against the risksof transfer restriction, expropriation and war andcivil disturbance.

This is MIGA’s first transaction supporting aSlovene investor, and its first supporting SEC.SEC requested MIGA’s participation in theproject for portfolio and capacity reasons, and itis hoped that the cooperation on this project willset the stage for the two organizations to domore joint projects in the future, especially insoutheast Europe, where Slovene investors arevery active. By supporting SEC, MIGA is fulfillingits mandate to cooperate with and complementthe operations of national entities of membercountries that are carrying out similar activities.

The main objective of the project is toexpand and strengthen Commercebank’s generalbanking activities in the country. In particular,lending activities will focus on increasing theavailability of financing to small- and medium-sized enterprises, and general banking services.

MIGA has provided e8.3 million in reinsurance($7.6 million) to the Slovene Export Corporation(SEC) for the political risk insurance it hasprovided to Poslovni Sistem Mercator d.d.(Mercator) of Slovenia for Mercator’s e2.83 million ($2.71 million) equity investmentin, and e12.44 million ($11.91 million) share-holder loan to Mercator Trzni Centar Sarajevod.o.o. (Mercator TC Sarajevo), in Bosnia andHerzegovina (Bosnia). Coverage is beingprovided against the risks of transfer restriction,expropriation, war and civil disturbance for up toten years for the equity investment and up to sixyears for the shareholder loan.

The project involves operating a hyper-market/shopping mall in the center of Sarajevo.Private sector-led growth and employment areconsidered by The World Bank Group to be a keyfactor in achieving sustainable growth in Bosnia,and the project addresses this need. Further,since smuggling is a widespread problem inBosnia, causing considerable lost customs andtax revenues, the center, with its wide selection ofgoods, convenience and competitive prices, isexpected to attract customers from the country’s“gray” market, thus channeling more consumerspending through the official sector. Slovenia andBosnia both benefit from the project as dis-tributors of goods from both countries, withapproximately 50 percent of goods sold comingfrom Slovenia, an estimated 30 percent to be

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locally produced. Mercator TC Sarajevo employs245 staff, and provides ongoing training. Theproject is expected to generate e8.6 million intaxes, royalties and duties to be paid to the gov-ernment over the first five years of profitableoperation. Finally, MIGA’s reinsurance of SEC inthis project will free SEC’s capacity in Bosnia to facilitate future Slovenian investments into the country.

BULGARIA

MIGA has provided AES Horizons, Ltd., of theUnited Kingdom, with a guarantee for $20million to cover part of a $223 million equityinvestment in the Maritza East 1 power project inBulgaria. The coverage is against expropriationand breach of contract risk, and extends forfifteen years.

The project, MIGA's first in Bulgaria'senergy sector, involves the construction of a new670 MW thermal facility near the country'slargest lignite mines, some 250 km southeast ofSofia. This plant is part of Bulgaria's strategy toreplace life expired Soviet-built power plants.The project is one of the first under a newnational strategy to make electricity supply moreefficient and cost-effective by using inexpensive,indigenous fuel. The strategy entails not only thebreak-up of the state's electricity monopoly, butalso the gradual replacement of old, costly, andenvironmentally unsafe plants. The investmentfollows an international tender carried out in1998 for a 15-year contract to build, own andoperate the plant with power sold to the state-owned electricity company. The constructionperiod is expected to be three years.

The project is expected to supply 6 percentof Bulgaria's energy needs by 2007, and to be oneof the lowest cost producers in the country, andprobably the lowest cost new capacity option.The plant will also be the cleanest coal fired plantin Bulgaria and will be among the cleanest inEurope. The plant will employ up to 2,500 peopleduring construction, and up to 200 duringoperation. Training will be an integral part of theproject. More than $150 million is expected to bespent locally on the procurement of goods.

CROATIA

MIGA has issued a guarantee in the amount of e22.5 million ($21.5 million) to Hypo Alpe-

Adria-Bank A.G. (HAAB), of Austria to cover itse25 million shareholder loan plus interest toSlavonska Banka d.d., Osijek (SBO) in Croatia.The coverage is for ten years, and is against therisks of transfer restriction and expropriation of funds.

MIGA’s guarantee replaces an existingguarantee provided to HAAB in 1999, when HAABconcluded a five-year loan agreement with SBO(see MIGA’s Annual Report 2000 for originalproject description). During fiscal 2002, HAABreplaced the five year loan agreement with a tenyear deposit agreement so that the funds wouldbe considered as part of SBO’s capital.Lengthening the loan maturity from five to tenyears will allow SBO to continue to expand itslending business and to provide longer termfacilities, thereby bolstering Croatia’s financialsector and allowing Croatian companies to grow.It will continue to have significant developmentalimpact as SBO focuses on lending to SMEs in theregion of Eastern Slavonia. Among the sectorsthat will continue to benefit from the loan aretourism, agriculture, agribusiness, the wood-processing industry and the building-materialsindustry.

KAZAKHSTAN

MIGA has provided $7.2 million in guarantees toEfes Breweries International B.V. (EBI) of theNetherlands two guarantees for its $4.5 millionequity investment in, and $3.5 million loanguaranty to, Efes Karaganda Brewery CJSC (EKB)in Kazakhstan. The guarantee period is for up toten years for the equity, and up to 3 years for theloan guaranty. The coverages are against therisks of transfer restriction, expropriation, andwar and civil disturbance.

This project involves the construction andoperation of a new brewery with an annualcapacity of 50 million liters, near Almaty, and isanticipated to have a strong positive develop-mental impact. This investment expects togenerate about 220 permanent jobs, and up toan additional 150 jobs during the project con-struction. The project enterprise will contributeto good and safe working conditions and willprovide a number of additional benefits to itsemployees, including free medical examinationsthrough a local hospital contracted by EKB. It isestimated that local suppliers of goods andservices and distributors of EKB’s products willemploy a further 2,000 people. Staff will be

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trained in all aspects of production and bottlingoperations, including modern manufacturingtechniques, sales, management, distributionand safety procedures. It is estimated that thecompany will generate incremental tax revenuesto the government, including value-added andexcise taxes, of almost $5 million annually.Moreover, the increased local production of ahigh-quality beer will replace a significantamount of imported beer. Local procurement isexpected to be $5.7 million per year, generatingadditional taxes from upstream businesses.

KYRGYZ REPUBLIC

MIGA has reissued its coverage to ItalianTechnology & Innovations S.r.l. (ITI) and MCCS.p.A. (MCC) (formerly Mediocredito CentraleS.p.A.), for their equity investment and loan,respectively, to the Manas ManagementCompany (MMC) in the Kyrgyz Republic. Theguarantee to ITI is for $885,000, to cover a$1,000,000 equity investment, and is for aperiod of 15 years. The guarantee to MCC is for$10,500,000 to cover their loan of $10,500,000,plus interest, to MMC, and extends for 15 years.Both the equity and the loan are protectedagainst the risks of transfer restriction, expro-priation, and war and civil disturbance.

The project is the construction andoperation of an air cargo complex and an aircatering center at the Manas InternationalAirport in Bishkek, the capital of the KyrgyzRepublic. MIGA originally issued contracts to ITIand MCC in 1998 and 1999, respectively, for thisproject. MIGA has reissued the contracts infiscal 2002 to accommodate changes in thecommercial arrangements of the respectiveparties. Further details of the project appeared inMIGA’s 1998 and 1999 Annual Reports.

ROMANIA

MIGA has provided Raiffeisen ZentralbankÖsterreich AG (RZB) of Austria two guar-antees for e10.6 million and $9.5 million tocover its shareholder loans of e11.2 millionand $10 million to Camionaval LeasingCompany Srl. (to be renamed S.C. RaiffeisenLeasing Srl) (RL) of Romania. The coverage is for six years and is against the risks oftransfer restriction and expropriation of funds.

Leasing companies can serve as importantmeans to help grow companies that requireinvestments in equipment to facilitateexpansion. Particularly for SMEs, with limitedaccess to capital and little credit history,equipment leasing can be a crucial mechanismto spur growth and enable acquisition of assets.Romania has identified leasing as an engine forgrowth and development; however, the country’sleasing operations have been hampered by alack of funds. This project will help RL provideleases for financing of new equipment toRomanian companies, including SMEs, whileincreasing the availability of funds in theRomanian financial sector. With two branchesand 41 selling points across the country, RLexpects to employ nine people initially, and addan additional 67 workers over the next five years.The company will specialize in transportationsector leasing—trucks, trailers, utility cars—andwill offer quick, efficient, high quality services atcompetitive prices. RL will benefit from the RZBnetwork for on- and off-site staff training, plususe of sophisticated leasing products and pro-prietary software systems.

RUSSIAN FEDERATION

MIGA has provided Raiffeisen ZentralbankÖsterreich AG (RZB) of Austria with a $57 millionguarantee to cover its $60 million shareholderloan to ZAO Raiffeisenbank Austria (RBRU). Theguarantee is for six years, and is against the risksof transfer restriction and expropriation of funds.

The project will finance the expansion ofRBRU's operations in Russia, and is expected tohave a strong developmental impact by providingshort- and medium-term financing to companiesin Russia, supporting the privatization of Russiancompanies and addressing the financing needsof SMEs. In particular, RBRU focuses on pre-export finance and equipment finance, whichbenefit Russian exporters and the manufacturingindustry, supporting Russia’s balance ofpayments and a diversification of its export base.Over the next 5 years the bank expects to addanother 95 employees, who will benefit from theRZB network for on- and off-site training.

MIGA has provided a $9.5 million guarantee toRaiffeisenlandesbank Steiermark registrierteGenossenschaft mit beschränkter Haftung,

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Graz, of Austria, to cover its $10 million share-holder loan to OOO Raiffeisenbank Leasing(RLRU), in Russia. The coverage is for 5 years,and is against the risks of transfer restriction andexpropriation of funds.

The project will finance the expansion ofRLRU's operations, and is consistent with TheWorld Bank Group strategy in Russia, whichidentifies the development of a sound, efficientbanking system as a strategic goal. Theinvestment will have a significant developmentalimpact as it will help bolster the Russianfinancial sector through the provision ofmedium-term, asset-based financing, which isstill relatively rare in Russia. RLRU expects toprovide leasing mainly to SMEs. The companyexpects to add 34 employees over the next fiveyears. The employees will benefit from the RZBnetwork for on- and off-site staff training, thuspromoting knowledge transfer to Russia.

MIGA provided a $2.1 million guarantee toSungrain S.A., of Switzerland, covering its $2.3 million equity investment in OJSCTatsinsky Elevator (OTE) in Russia. Theguarantee is for up to seven years, and is againstthe risks of transfer restriction, expropriation,and war and civil disturbance.

Russia's agricultural sector has experienceda substantial decline since the beginning of the1990s, and rural poverty is a significant problem.The World Bank Group strategy for the sectorincludes support for the acceleration of farmrestructuring, development of land markets, andelimination of the remaining restrictions ontrade and marketing of agricultural products andinputs. This project, which involves the acqui-sition and modernization of an agricultural com-modity storage facility in the Rostov region,reflects the Group’s strategy.

The project’s impact will be significant:knowledge and technology transfer to Russia’sagro-business sector will improve the quality andquantity of agro-industrial products available tothe local markets; the provision of prime storagecapacity for local farmers will lead to reductionsin the current losses of grains and seeds;upstream and downstream benefits to industriesin the region, such as transportation and trading,will ensue; the local procurement of all requiredgoods and services (other than fertilizers) willbenefit local businesses; and the project willprovide full-time employment for about 50people, along with an additional 50 during peak

harvest times. Over the next five years, OTE willpay approximately $2.5 million in taxes.

TURKEY

MIGA has issued guarantees to Tractebel S.A. ofBelgium, and BNP Paribas of France, in theamounts of $35 million and $80.5 million, respec-tively, to cover their $39 million loan guaranty and$84.7 million non-shareholder loan to BayminaEnerji A.S., (Baymina). The guarantees are for 15years, and are against the risks of transferrestriction, expropriation, war and civil dis-turbance, and breach of contract.

The project, which is located approximately40 kilometers to the southwest of Ankara,consists of the construction and operation of acombined cycle power plant, comprising two gasturbines and one steam turbine, delivering a totalnet capacity of 763 megawatts (MW). The WorldBank has been working with the government ofTurkey on its energy sector reform, and MIGA’sparticipation in this project supports this effort,and reflects the project’s significant positivedevelopmental impact that is anticipated. Basedon conservative economic growth scenarios,Turkey will need at least 2,000 MW of additionalinstalled capacity per year to meet increaseddemand. The project, which is due to be com-missioned in late 2003, is therefore expected tohelp meet the increased demand and allowTurkey to both rely less on imported electricityand to focus more on natural gas as a fuel source(as part of its national energy strategy).

MIGA has provided a $22.5 million guarantee toIngersoll-Rand European Holding Company,B.V., (IR-Europe) of the Netherlands to cover its$15.3 million investment in, and retainedearnings from, IR Emniyet ve GüvenlikSistemleri Sanayi A.S. (IR-Turkey) for a period ofup to 15 years. The coverage is against the risksof transfer restriction, expropriation and war andcivil disturbance.

The project involves the acquisition of a lockmanufacturing facility in Duzce, Turkey, whichelected to discontinue manufacturing operationsdue to the country’s currency devaluations andits resulting cash-flow strain. IR-Turkey, which willupgrade and modernize the facility to improveworking conditions and inaugurate an expandedproduct line (such as door locks, cylinders, panicdevices and door frames), is expecting to re-hire

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all 600 previous employees of the company, andto create additional new jobs. Once fully opera-tional, the company will employ about 780 Turkishnationals. This will make IR-Turkey the largestemployer in Duzce, a city severely affected by theearthquake of 1999.

IR-Europe will provide training for theworkers, along with transportation, meals, andhealth services. IR-Turkey is committed to localprocurement, which should result in strong mul-tiplier effects on upstream and downstreamindustries. Over the first five years of operation, itis estimated that IR-Turkey will contribute approx-imately $19 million in foreign exchange earnings,and $7 million in tax revenue. Moreover, IR-Europe is committed to reinvesting all earnings inIR-Turkey’s operations during this period.

UKRAINE

MIGA issued a $19 million guarantee to RaiffeisenZentralbank Österreich AG, of Austria, to cover its$20 million shareholder loan to JSCB Raiffeisen-bank Ukraine, a Kiev-based bank. The coverage isagainst the risks of transfer restriction and expro-priation, and extends for up to seven years.

The project is part of an overall World BankGroup strategy for Ukraine that lists private sectordevelopment among its primary goals. A properlyfunctioning financial sector is critical to privatesector development and economic growth. Thebank currently directs its lending to companiesengaged in trade, metallurgy and mining, foodand beverages, printing and publishing. The loanwill allow the bank to expand operations andcontinue lending to these sectors, as well asprovide additional funds to finance privatizationsand small- and medium-sized enterprises. Thebank also specializes in pre-export finance and, assuch, should help stimulate Ukrainian exports.The provision of funds for short- and medium-term lending should assist the country’s financialsector. The bank, which follows the parentcompany’s corporate governance standards, isexpected to have a positive effect on other banks.It will provide staff with ongoing training.

TECHNICAL ASSISTANCE ACTIVITIES

ALBANIA

MIGA participated in a joint mission with FIAS toTirana to discuss the planned establishment of a

new investment promotion agency and the needsfor MIGA capacity-building assistance. It isexpected that the Albanian Parliament will adoptthe law regarding the establishment of the agencylater this year, and that the agency will be createdshortly thereafter. MIGA has signaled itsreadiness to provide assistance to the new agencywith regard to strategy development, skillstraining, and development of promotionalmaterials, once the requisite legal and institu-tional framework is in place.

ARMENIA

MIGA has played a central role with the WorldBank in the development of a LIL for Armenia,which finances a capacity-building program forthe government's FDI and trade arm—the ADA.MIGA participated in a mission to Armenia todevelop project proposals. Following themission, an agreement was reached with the gov-ernment on the scale of a $1.6 million program.The LIL’s capacity-building component, led byMIGA, was recently launched and involves thedevelopment of a sector promotion strategy,investor targeting, lead generation and trackingsystems, training in investment promotion andfacilitation, and on outreach techniques such asmarketing, missions, and exhibitions.

YUGOSLAVIA, FED. REPUBLIC OF

MIGA agreed to provide capacity-buildingassistance to the newly established SerbianInvestment and Export Promotion Agency(SIEPA) through a recently-approved World Banktechnical assistance grant for private sectordevelopment in Serbia. Under this project, MIGAwill assist SIEPA in developing a nationalinvestment promotion strategy, train SIEPA staffin effective promotion and outreach techniques,and provide support for the development of an ITstrategy, promotional materials and an effectiveweb presence. Implementation of the two-yearprogram started in the first quarter of fiscal 2002,with the hiring of a long-term part-time advisor,launching of the strategy development andanalysis work, and support for the procurementof needed IT equipment for the agency. MIGAand SIEPA also reached agreement on contentprovision to the FDI Xchange service and ondelivery of hands-on training on the contentprovider interface.

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During the course of the fiscal year, MIGA supported 11 projects in the

Latin America and Caribbean region through its guarantee program.

As of year-end, MIGA’s total exposure in the region stood at

$2.9 billion, representing 55 percent of the Agency’s outstanding

gross portfolio. During the year, MIGA also undertook 12 technical

assistance activities in the region.

MIGA’s technical assistance activities focusedon investment promotion in countries that havenot been recipients of substantial FDI inflows inthe past. A collaborative approach to capacity-building, in cooperation with the lending oper-ations of the World Bank, allowed MIGA toleverage significant financial resources. InGuatemala, El Salvador and Nicaragua, MIGAdeveloped cooperative agreements with otherdivisions of the Bank to provide local investmentpromotion intermediaries with a broaderspectrum of services, assistance and funding.Similar strategic efforts were initiated in coop-eration with the World Bank in Bolivia.

The FDI Xchange was deployed with teninvestment promotion intermediaries in theregion. These agencies are using this newservice to publicize new market research,investment, and business opportunities toMIGA’s online services audience.


BRAZIL

MIGA has provided guarantees totaling $61.68 million to a consortium of Spanish com-panies for their respective investments in, anddividends from, Metrô de Salvador S.A.(Metrosal) in Brazil. This amount includes$1.68 million in coverage for the consortium’sperformance bond. The total investmentamount is $40 million. Construcciones y

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Auxiliar de Ferrocarriles S.A., which leads theconsortium, has received a $9 millionguarantee; the guarantees for Inversiones enConcesiones Ferroviarias and CompaniaEspañola de Financiacion del Desarrollo are for$24 million each, and the one for DimetronicS.A. totals $3 million. The guarantee period is 15years, and the coverage is against the risks oftransfer restriction, expropriation, war and civildisturbance, and breach of contract.

The project is a Build, Operate, andTransfer (BOT) scheme for the operation of theurban rapid rail transportation system in themunicipality of Salvador de Bahía, and includesthe supply and installation of rolling stock andsignaling equipment, and commercialoperation of the system for the 25-year con-cession. Currently, the urban transportationsystem in Salvador, Brazil’s sixth-largest city, isunderdeveloped and largely road-based,causing significant congestion and delays. Thislevel of road-based transport has significantimpacts on the local economy and envi-ronment. For this reason the municipality andthe state, together with the World Bank, havebeen involved since 1992 in the design andimplementation of a transportation strategy.This project is an integral part of the strategy.

The project aims to improve the quality ofpublic urban transportation in the area by con-necting currently-excluded low-income neigh-borhoods, and by furthering the development ofa fully integrated urban transportation system.The fare system has been designed to ensurethat the out-of-pocket cost to end-users will notbe significantly higher than those already beingpaid. The local government stands to benefitdirectly from the project, as concessionpayments over the first eight years of the projectare expected to total approximately $9 million.When the system becomes operational (cur-rently anticipated for 2003), the projectcompany will pay an annual concession feeaveraging some $27 million. It will also employabout 350 full-time local staff, who will receiveextensive training from the companies thatmake up the consortium.

MIGA has provided ECI Telecom Ltd. (ECI) ofIsrael with guarantees totaling $83.5 million tocover its $27 million equity investment in, and$165 million loan investments to, Global VillageTelecom Ltda. (GVT) of Brazil. A guarantee wasissued to ECI in fiscal 2001 for $20 million, and

an additional $10.5 million was insured earlier infiscal 2002. These coverages were supersededby the final coverage issued in fiscal 2002, for$83.5 million. The coverage is for up to eightyears, and is against the risks of transferrestriction, expropriation of funds, and war andcivil disturbance. Of the guaranteed amount, $53 million has been reinsured by IFTRIC.

In Brazil, a key development objective is thesupport of the infrastructure sector throughdecentralization and increased private partici-pation, as well as projects that will improve theprospects for additional investment and growth.The GVT project focuses on telecommunicationsinfrastructure, and involves the construction andoperation of a fixed line telephone network in thecentral and southern region of Brazil. Oncecomplete, GVT is expected to provide state of theart telecommunication structure and to extendphone service into new areas, such as rural andremote communities. In addition, the projectshould increase competition in the telecomsector, generate approximately $70 million in taxrevenues annually, and provide continuousemployment for up to 1,500 Brazilian citizens.GVT expects to source locally for goods andservices, generating revenues for Brazilian sup-pliers and service providers. The company plansto target SMEs for specialized services such asdata transmission and internet access.

MIGA has provided Keppel FELS Energy Pte. Ltd.of Singapore a $130 million guarantee to cover itsinvestment of over $100 million in NordesteGeneration Ltda. (Nordeste) of Brazil. Thecoverage is for three years and is against the risksof transfer restriction and expropriation, includingthe failure by the host government to honor itspayment obligation under the Host GovernmentGuarantee to the electrical power supply contractissued in favor of Nordeste. $80 million of thisexposure has been syndicated though MIGA’sCooperative Underwriting Program.

Brazil is in the midst of a severe energycrisis, caused by underinvestment in new gen-eration and transmission capacity and madeworse by a series of droughts in recent years, dueto dependence on hydro generating facilities.The state of Bahia, in northeastern Brazil, hasbeen among the most affected by the droughts,which caused serious electricity shortages. Thisproject involves the installation, operation andmaintenance of a barge-mounted emergencypower generation facility in Bahia, to address the

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short-term demand until new, permanent gas-fired power projects are brought on line and canput their energy contribution into the nationalgrid. In addition to the benefits to residents innortheastern Brazil, the project is expected togenerate significant tax revenue during its threeyears of operation. The project will employ up to300 local people for construction and anestimated 160 during operation. Training for theemployees will be provided by the sponsor.

COSTA RICA

MIGA has provided a $1.6 million guarantee toMarriott International, Inc. (Marriott), to cover its$1.8 million management agreement with, and$1.4 million loan guaranty to Caribe HospitalityDe Costa Rica, S.A. (CHDCR) of Costa Rica.MIGA has also issued a $4.4 million guarantee to Bank of Nova Scotia (Scotiabank) for its $4.8 million non-shareholder loan to CHDCR.The guarantee to Marriott is for three years, andis against transfer restriction; the one forScotiabank is for 11 years and is against the risksof transfer restriction, expropriation and war andcivil disturbance.

Since the early 1980s, the government ofCosta Rica has placed a high priority ondeveloping its tourism industry. This project,which involves the construction and operation ofa hotel in the La Sabana suburb of the capital, SanJosé, supports that initiative. Increased interna-tional travel into the country in recent years andcommercial growth in San José have contributedto a growing number of business travelers andtourists. The new hotel will help accommodatethe increased demand for hotel rooms and isexpected to encourage more visitors. The hotel isalso part of a new business developmentcorridor, which is expecting to see rapid growthas a new highway is completed. The hotel will playa role in facilitating this growth. Once opera-tional, it is estimated that the hotel will contribute$19 million in foreign exchange earnings for thegovernment during the first five years of oper-ations, plus tax revenues. Marriott will providetraining programs for the estimated 58 locallyhired workers, and local building materials will beused for construction. Multiplier effects oftourism are expected to be significant as well, supporting the growth of the transportation,food processing, furniture-making, hospitality, tour operations, infrastructure and financialservices industries.

In fiscal 2001, MIGA issued a guarantee to Wingsof Papagayo, LLC to protect its equity investmentin Grupo del Istmo de Papagayo, S.A., a CostaRican development project against the risk oftransfer restriction. This past year, MIGAincreased the coverage from $16.4 million to $38.3million, to cover the total equity investment of$27.6 million, and a shareholder loan of $15.0million to the project. The coverage is against therisk of expropriation, and is for 13 years.

The project, which is dedicated to highstandards as an eco-sensitive project, involvesthe development of a 210-room resort set onapproximately 120 acres of the PapagayoPeninsula in the country’s pacific northwestprovince of Guanacaste. Further details of theproject appear in MIGA’s 2001 Annual Report.

DOMINICAN REPUBLIC

MIGA has provided BCH International PuertoRico (BCH), of the United States a guarantee for$5 million to cover its $5.3 million non-share-holder loan to Consorcio Energetico Punta Cana-Macao, S.A. (CEPM) of the Dominican Republic.The coverage is for eight years, and is against therisks of transfer restriction, expropriation, andwar and civil disturbance.

The government of the Dominican Republicis working to implement a reform agenda, whichincludes increased private sector participation,particularly in the infrastructure sector. Inaddition, the government has targeted thetourism sector as an important potential sourcefor job creation. This project, which expands onan existing investment previously guaranteed byMIGA, is expected to contribute to the realizationof both these objectives. The project is a stand-alone power generating station near the town ofBayahibe, a burgeoning tourist destination in thecountry’s Punta Cana region. The local areaeconomy is dependent on the tourist industry,which is growing rapidly and bringing with it newjobs. However, the area is not connected to thenational electricity transmission grid and haslong suffered from periodic blackouts. It nowrelies on CEPM for electricity generation, trans-mission and distribution. BCH’s loan will enableCEPM to purchase and install two new three MWdiesel-fired engines, thereby increasing totalplant capacity to 13.2 MW, and helping to addressthe increasing demand for power in the area. Inaddition to hotels, local residents and businesses

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will also benefit from the additional, reliablepower generated.

MIGA has provided Unión Fenosa InternacionalS.A. (UFI) of Spain with guarantees of $90million for its $212 million equity investment in,and shareholder loan to Empresa de DistribucionSur (EdeSur) and Empresa de Distribucion Norte(EdeNorte) of the Dominican Republic. The cov-erages are for 13 years and are against the risks oftransfer restriction, expropriation, and war andcivil disturbance.

The government of the Dominican Republichas been engaged in a comprehensive programto reform the power sector. The sector has longbeen plagued by frequent, disruptive blackoutsthroughout the country due to inefficiencies inpower generation and transmission, as well as alack of installed power generation capacity, andlimited distribution, especially in rural areas. Asstate-owned electricity distribution companiesare broken up, the involvement of the privatesector will play a key role in the accomplishmentof this agenda. This project will allow UFI toacquire from the state utility, and rehabilitate twodistribution companies, EdeNorte and EdeSur,which together serve more than 75 percent of thecountry. By injecting foreign capital into the dis-tribution sector, UFI is providing urgently neededshort-and long-term investments. The new com-panies are expected to improve efficiency andquality, decreasing the reliance on expensive self-generation. The economy in general will benefitfrom more reliable service and operating effi-ciencies, and it is expected that the trade,tourism, industry and construction sectors inparticular will see positive benefits. The projectwill create new jobs, both within the companiesthemselves, which are expected to add 140 localstaff, and provide training for them, and withlocal construction companies, which areexpecting to hire more than 1,700 workers duringconstruction. In addition, the two new com-panies should help improve the government’sfiscal position by reducing operating losses,energy losses, and subsidies.

JAMAICA

MIGA has provided The Bank of Nova Scotia(BNS) of Canada with a guarantee of $45 millionto cover its $50 million medium- to long-termloan to The Bank of Nova Scotia Jamaica Limited

(BNSJ) of Jamaica. The guarantee is for up tofifteen years and is against the risks of transferrestriction and expropriation of funds.

In Jamaica, increasing availability of low costlong-term hard currency funds in both thefinancial sector and the general economy is acrucial development objective. Expansion of localbank lending activities is expected to play animportant role. This project will allow BNSJ toexpand the scope of its medium- to long- termhard currency lending to fund projects in the infra-structure, tourism, port services, wharfageservices, water distribution and manufacturingsectors at preferential interest rates. In addition toincreasing availability of such funds, the project isexpected to increase competition among loanproviders, thus creating incentives to improve effi-ciency and quality. The project’s positiveupstream and downstream impacts—on severalindustry sectors—will enhance the country’sgeneral economy, thereby contributing positivelyto the country’s foreign exchange position.

BNSJ has also demonstrated a commitmentto extensive community activities, throughspecial lending programs and charitable work inthe education, health and social developmentsectors. Examples include: special low-cost loansfor SMEs; advantageous mortgages for first-timehome buyers and university graduates; universityscholarships; and a special micro-finance jointventure (with the Canadian InternationalDevelopment Agency and the KingstonRestoration Company) to focus on projects inimpoverished areas of Kingston’s inner city.

NICARAGUA

MIGA has provided Unión Fenosa InternacionalS.A. (UFI) of Spain with a guarantee for $81.2million to cover a $90.2 million equityinvestment in Empresa Distribuidora deElectricidad del Norte, S. A. (DISNORTE) andEmpresa Distribuidora de Electricidad del Sur, S.A. (DISSUR) of Nicaragua. The coverage is forten years and is against the risks of transferrestriction, expropriation, war and civil dis-turbance, and breach of contract, including theunfair calling of a performance bond.

Over the past several years, the Nicaraguangovernment has focused on instituting structuralreforms, including privatizing electricity gen-erating and distribution facilities. Following suc-cessful completion of the first phase of privati-zation, UFI was awarded the electricity distri-

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bution concession for the western part of thecountry (divided into north and south), wheresome four million people reside. The project isexpected to result in significant savings due toreduced losses in the distribution system, cur-rently estimated at 30 percent. UFI expects toretain the core employees of DISNORTE andDISSUR, and has promoted the establishment oftwo new companies, which will provide supportservices to the project. The project should expandand improve services, allow under-served ruralcommunities new access to electricity and con-tribute an estimated $50 million in taxes over thenext seven years. The project is participating in arural electrification program, which also receivesfinancial support from the Swiss government.Additionally, the enterprise is providing schol-arships for ten low-income students per year toattend Managua National University’s engi-neering program. Meanwhile, the generaleconomy is expected to reap benefits throughimproved reliability and quality, as a result ofimproved management and technology andequipment upgrades.

PERU

MIGA has provided Banque Sudameris S.A. ofFrance a guarantee for $58.4 million to cover its$50 million shareholder loan (and interest) toBanco Wiese Sudameris of Peru. The coverage isfor five years, and is against the risks of transferrestriction and expropriation of funds.

A key development objective for the gov-ernment of Peru is to increase medium- to long-term financing, especially for SMEs and for resi-dential housing. This project will allow BancoWiese Sudameris to expand its operations inPeru and support Peruvian companies withfinancing, which is in short supply in the country.It is expected to have a significant developmentalimpact since the bank will concentrate on theretail sector, SMEs and mortgage financing.

MIGA has provided Fraport AG, of Germany,with a guarantee for $11.5 million, to cover its $12.8 million counter guarantee for a performance bond posted for the privatizationof Lima’s airport, Jorge Chávez InternationalAirport (JCIA). The coverage is against the risk ofexpropriation (the wrongful call of the per-formance bond), and extends for eight years.

Peru depends greatly on its airport network

because of the country’s geography, andbecause ground handling transportation infra-structure has not been fully developed. JCIA isespecially important to the country, since it isPeru’s main operating international airport,accounting for 97 percent of international traffic,as well some 58 percent of national traffic. JCIAalso functions as a regional hub for all cargotraffic. The airport privatization is considered bythe government as a key factor in the expansionof employment opportunities, the creation of amodern transportation facility to serve as Peru’sgateway to the world, and for the enhancementof tourism, an industry that the government isactively trying to expand.

The airport’s privatization is expected toprovide the government with additionalrevenues through increased income tax, customduties, and concession fees. During the first fouryears of the concession, the consortium isexpected to invest more than $130 million in newinfrastructure, including upgrades to the currentterminal, construction of a new passenger con-course, expansion and addition of new aircraftaprons and taxiways, and creation of a hotel andworld-class retail center within the existingairport perimeter. Upgrades in the technologyand services at the airport will create approxi-mately 49 additional positions, mostly for experttechnicians and service operators. The sponsorshave instituted an employee profit-sharing plan.The majority of the goods and services requiredby the airport refurbishment will be sourcedlocally, and most ongoing capital expendituresforeseen, amounting to $1 billion over the entirelife of the concession, will be sourced locally.Furthermore, the government will benefit fromimprovements in JCIA’s operation, through arevenue-sharing agreement as well as a landingand take-off fee-sharing agreement.


BOLIVIA

MIGA is working with the government of Boliviaand the World Bank to support foreign directinvestment in Bolivia. Building on technicalassistance activities carried out over the pastyear, MIGA implemented an investor trackingsystem to support identification, targeting andcommunication with prospective investors.Additionally, staff of CEPROBOL, the country’s

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investment promotion agency, were trained inthe utilization of effective investment promotiontools and techniques. MIGA has assisted theagency in developing a program now beinglaunched to identify target sectors for export tothe U.S. market that draws upon external con-sulting services and will continue into fiscal 2003.

EL SALVADOR

Private sector development and foreign directinvestment are key elements of the gov-ernment’s economic development strategy in ElSalvador. MIGA’s efforts have been directedtoward revitalizing the economy in the wake ofthe 2001 earthquake, which devastated thenation and its infrastructure. This year, as part ofa strategic planning session, MIGA met withpublic and private sector leaders, including ElSalvador’s Vice President, the Minister forEconomy, officials from the National Office ofInvestment, and other board members ofPRO.ESA—the country’s investment promotionagency. MIGA deployed a client relationshipmanagement system for PRO.ESA, and providedtraining for investment promotion officers andother staff of the agency in the use of the newsystem in their marketing efforts. Work alsobegan on the agency’s web presence, with MIGAassisting in the monitoring of PRO.ESA’s 2001results and strategy planning for 2002.

GUATEMALA

Work continued on MIGA’s comprehensivetechnical assistance program with the Ministryof Economy and the National CompetitivenessProgram to develop institutional and promo-tional capacity at Invest in Guatemala, thenational investment promotion agency. A MIGAteam also worked with the agency on several ini-tiatives, including the implementation of aninvestor tracking system. MIGA also helpedcreate a comprehensive investment informationsystem that provides potential investors withtimely and accurate data on the benefits oflocating in Guatemala. At the request of the government, MIGA staff undertook a six-weekfield assignment in January-February 2002, todevelop the national network of partnersinvolved in promoting and registeringinvestment, to improve the preparation andeffective execution of outbound investment

missions, to create a system to better hostinbound investment missions and site visits,and to train staff in the use of effective sales andpromotional techniques during meetings withpotential investors, local partners, and the press.

NICARAGUA

As part of the ongoing technical assistanceprogram with the Center for Exports andInvestments (CEI) in Nicaragua, MIGA held aworkshop on investment promotion tools and techniques, for staff from CEI and otherorganizations within Nicaragua associated with investment promotion. MIGA’s work inNicaragua is part of the activities undertakenunder a World Bank LIL. MIGA participated in an investment forum associated with the inaugu-ration of the Nicaraguan president to observeand advise on ways future events should bemanaged. MIGA met with potential investors,members of the new government, and key localbusiness people. Perspectives were sought onthe government’s new stance on FDI, futureprospects, and MIGA’s continuing assistanceprogram. MIGA’s latest mission involved anassessment of investment promotion activitiesbeing conducted by the private and publicsectors. The main recommendations includedthe establishment of a coherent and unifiedstructure for effective promotion with a well-defined mandate from government.

PANAMA

In cooperation with IFC, MIGA is providingtechnical assistance to the Howard Project—theconversion of the former Howard Air Force Baseto the Howard Special Economic Zone. MIGA issupervising and evaluating market, legal, andregulatory studies that are being conducted. Infiscal year 2002, MIGA presented the results ofthese studies to the government, the privatesectors and the public news media. MIGA repre-sentatives also participated in the 5th AnnualLatin American Free Zones Conference, hostedby the Colon Free Zone and the Association ofCompanies of the Colon Free Zone in PanamaCity, Panama. This event provided MIGA with anopportunity to present best practices ininvestment promotion, and to gauge the interestof free zone developers in the Howard SpecialEconomic Zone project.

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While no new guarantees projects in the region were executed during

the fiscal year, MIGA’s marketing efforts in this area yielded strong

leads, which are expected to yield concrete results in fiscal 2003. The

positive momentum included concurrence from MIGA’s Board of

Directors for three projects in the region, in the tourism, telecommu-

nication and oil and gas sectors. MIGA was also successful in pro-

viding support to regional investors making investments outside the

region, providing political risk coverage for Africa-bound investment,

particularly in the telecommunications sector. At year-end, MIGA’s

total gross exposure in the region stood at $96 million, approximately


MIGA staff undertook two technical assistanceinitiatives in the region during the fiscal year.Staff also participated in regional conferences,including the Ninth Conference of ArabBusinessmen and Investors, held in Dubai,United Arab Emirates. A MIGA presentation atthe conference summarized the Agency's bestpractice research into Internet-basedinvestment promotion, and provided anoverview of MIGA's online investment infor-mation services.

The Agency continued its emphasis onmarketing its activities in the region to promoteFDI through two mobile offices, visitingLebanon, Morocco, Saudi Arabia and Tunisia.In each country, MIGA staff held presentationsfor the respective investment communities,and met with numerous companies, financialinstitutions and project advisers. The visits toMorocco and Tunisia were part of a broaderWorld Bank Group outreach effort, aimed atpromoting a wider array of The World BankGroup’s tools for developing the private sector.

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The FDI Xchange was deployed in Jordanand Tunisia. Several more content providersare in the process of signing on to use this new service to augment their own investoroutreach efforts.

In May 2002, MIGA organized anddelivered a regional workshop in Amman oninvestor research and targeting using Internetresources. The workshop was customized tothe Middle East and North African region,planned in cooperation with WAIPA, andhosted by the Jordan Investment Board. As thelast English-language workshop in a series ofseven joint MIGA-WAIPA workshops, thiscapacity-building activity drew extensiveinterest from investment promotion interme-diaries from within as well as outside theregion. Nineteen participants from ten dif-ferent countries, including The Gambia andTurkey, attended the workshop.

The organization of the workshop arose inpart due to the highly favorable response to aregional MIGA workshop on investment pro-motion convened in Amman in the fall of 2000and organized by the Inter-Arab InvestmentGuarantee Corporation and FIAS. During thethree-day workshop, convened in a computer-equipped learning center, MIGA staff providedtraining in the use of online business infor-mation resources to identify and researchpotential investors and to perform bench-marking analysis of key sectors vis-à-vis com-petitor markets. In addition, the sessionscovered the effective use of websites and e-mailtechnology in communicating with prospectiveinvestors and the use of other informationtechnology tools, such as client relationshipmanagement systems, in managing theinvestment promotion process.

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EGYPT

In fiscal 2002, MIGA received requests forassistance from the General Authority for Investment and Free Zones, as well as theSecretariat of the Industrial ModernizationProgram, which is a e250 million initiativefunded by the European Union (EU). One com-ponent of the program is specifically targeted toimproving Egypt’s investment promotion capa-bilities. An initial assessment mission wasundertaken by MIGA in June 2002 and MIGAexpects to undertake an initial set of capacity-building activities in fiscal 2003 in which it willcoordinate, and potentially collaborate withFIAS, and the EU.

SAUDI ARABIA

Saudi Arabia is faced with the challenge of stim-ulating and supporting economic diversifi-cation, and MIGA has been working with thegovernment toward this end since 1999.MIGA’s assistance has taken the form of bothgeneral capacity-building and a joint projectwith the World Bank to develop and presentstrategic options in the mining sector. In fiscal2002, MIGA provided strategic training forsenior staff and advisors of the Saudi ArabiaGeneral Investment Authority (SAGIA). Theinformation technology department alsoreceived assistance and training. The workfollowed on an assessment of SAGIA conductedby FIAS and presented in September 2001, andpaves the way for further MIGA assistance infiscal 2003.


The sub-Saharan Africa region is a priority area for MIGA—and fiscal

2002 activities reflect this emphasis. New investment project guar-

antees during the year aimed to provide greater access to more

reliable power and communications services. The launch of a new

regional office, the work by MIGA field staff, two mobile offices, more

than 30 field missions, a US-Africa Business Summit and a multi-

agency initiative were all factors in helping to attract new investment

and build greater institutional capacity in the region.

During the course of the year, MIGA supportednine projects through its guarantee program.At year-end, MIGA’s total gross exposure in theregion stands at $792 million, over 15 percentof the Agency’s outstanding portfolio. TheAgency also undertook 37 technical assistanceactivities in the region.

The March 2002 launch of MIGA’s fieldoffice in Johannesburg was a highlight of thefiscal year. The office will have a regional focusto encourage and facilitate the flow ofinvestments to projects throughout Africa. Aseminar held to mark the official openingfocused on the need for infrastructureinvestment in southern Africa and how best tosupport privatization efforts involving public-private partnerships.

Several other business developmentmissions to Africa occurred during the year.Mobile offices were undertaken in Central andWest Africa, and in South Africa andMozambique. In Cameroon, Côte d’Ivoire andGabon, discussions centered on using MIGA’sservices to help investors benefit from recenteconomic reforms, including potential infra-structure investment opportunities resultingfrom privatization programs. MIGA has alsoactively supported efforts under the New AfricaPartnership for Development (NEPAD) ini-tiative, and has participated in relatedsymposia and discussions. This is an initiative

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that MIGA will continue to actively promote, as it evolves.

In April 2002 MIGA joined the World Bank-IFC Mining Department in a seminar in theDemocratic Republic of Congo (DRC), whichdiscussed the role of the mining sector in theeconomic recovery of the country. Animportant outcome of the event was the prom-ulgation of a new mining code in the DRC,which is expected to have a positive effect onthe environment for attracting FDI.

Four member countries—Ghana,Mozambique, Senegal and Tanzania—havebeen identified for prioritized technicalassistance programs under the MIGA-SwissPartnership for investment facilitation. Thethree-year program expands the scope anddepth of ongoing capacity-building efforts inthese nations to encourage investors to takeadvantage of increased African trade access tothe US market though the Africa Growth andOpportunities Act (AGOA), and to the EUthrough the Cotonou Agreement. Altogether,MIGA now has technical assistance programsin 12 of 39 sub-Saharan member countries.MIGA has signed FDI Xchange content partneragreements with 14 investment promotionagencies in ten countries within the region, andis in the process of deploying the service to aid these agencies in their investoroutreach efforts.

Under the Multi-Agency Initiativelaunched at the third United NationsConference on Least Developed Countries inheld Brussels in 2001, MIGA and FIAS joinedwith UNCTAD and UNIDO to agree on aprogram coordinating support to five LDCs.While these agencies all have separatemandates, each provides assistance thatsupports efforts to attract FDI. Apart fromCambodia, all of the countries are located inAfrica—Mali, Mozambique, Tanzania, andUganda. To ensure maximum synergy, MIGAcooperates closely with the other agencies indesigning, delivering and sequencing technicalassistance and advisory services to supportthe investment promotion programs inthese countries

The three-year long Promote Africatechnical assistance program, funded under aPHRD grant from, concluded in fiscal 2002.Evaluation of the program’s effectiveness anddevelopmental impact, begun this year, willoffer insights and direction for future work.


BENIN

MIGA has provided guarantees to InvestcomHolding S.A., of Luxembourg, and to its wholly-owned subsidiary, Investcom Global Ltd., of theBritish Virgin Islands (together referred to asInvestcom), totaling $8.06 million, to covertheir $9.9 million equity investment in, share-holder loan to, and loan guaranty benefitingSpacetel Benin S.A.R.L. (Spacetel). Investcom isowned by Lebanese investors. The coveragesare for ten years for the equity investment andshareholder loan, and six years for the loanguaranty, and are against the risks of transferrestriction, expropriation, and war and civil disturbance.

MIGA’s support represents its first for aproject in Benin. Spacetel is installing a newGSM mobile telephone network in the country,which suffers from a severe shortage of reliabletelephone lines—the teledensity level of 0.65percent (1999) is among the lowest in theworld. This project will help increase teledensityand improve connections, voice quality andclarity, and is expected to be particularly bene-ficial to the local business community. It isanticipated that the project will generateapproximately $6.5 million in tax revenues forthe government over the first five years ofoperation. The project is expected to provideemployment to 54 people, who will benefit fromextensive training in telecommunication oper-ations, as well as marketing and sales skills; itwill benefit local businesses through in-countryprocurement of various goods and servicesneeded for its operations.

KENYA

MIGA has provided Ormat Holding Corp. of theCayman Islands, a wholly owned subsidiary ofOrmat Industries Ltd. of Israel, with a $70million guarantee to cover its equity investmentand shareholder loan totaling $171 million, inOrPower 4 Inc. in Kenya, as well as future loansto the project. The coverage is against the risksof transfer restriction, expropriation, war andcivil disturbance and breach of contract, and isfor a period of 14 years. Additionally, MIGAincreased coverage on Phase 1 of the plant,insured by MIGA in fiscal year 2000, by $11.5 million.

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OrPower 4 Inc. involves the design, con-struction and operation of a 48 MW geot-hermal power plant, located in the Olkariageothermal fields, in Kenya’s Rift Valley, some50 kilometers north-west of Nairobi.Geothermal power is a clean, renewable, andlow-cost source of energy, and Ormat will bringto the project its experience in this area, as wellas state-of-the-art geothermal technology. Theplant will add to the capacity already providedby a 12 MW plant built during Phase 1, whichMIGA insured in fiscal 2000, and will helpalleviate the problem of severe powershortages from which the country suffers. In acountry where only about 10 percent of the pop-ulation has access to electricity, the project willprovide power to many first-time users.OrPower 4 will also help reduce Kenya’s heavydependence on hydroelectric power. Withsome 70 percent of the 1,000 MW installedcapacity being hydroelectric, Kenya’s nationalpower production was severely curtailed duringthe three-year drought that ended in 2001. Theproject will play an important role in achievinggreater reliability, security, and stability ofpower within the national grid, and will reducethe dependence on imported thermal energy,thereby having a positive impact on the balanceof payments.

Situated in a rural area with high unem-ployment and under employment, the project isexpected to employ 44 people for operationsand up to 700 full and part-time workers duringthe construction. There will be a significanttransfer of skills and technology. Trainingprograms will be set up, and will include opti-mization of operations, plant maintenance,geothermal technique, security, business, andadministration. Approximately 80 percent ofgoods and services will be procured locally. Inaddition to royalties, the project will pay approx-imately $27 million in taxes to the governmentover its lifetime.

MADAGASCAR

MIGA has provided Hydelec of France withguarantees totaling $2.06 million for its $2.21 million equity investment in, and share-holder loan to, Hydelec BPA for a power projectin Madagascar. The guarantees are for tenyears and provide coverage against the risks oftransfer restriction and inconvertibility, expro-priation and war and civil disturbance.

The project is the construction/instal-lation, operation, and maintenance of agreenfield 10 MW thermal peaking powerstation, which will provide electricity to thecapital city of Antananarivo. Madagascarsuffers from daily brownouts and blackouts,and the project will help alleviate this problemby supplying approximately 10 percent of thecapital’s electric consumption in peak periods.The reliability of the power supply will beimproved, and one immediate consequencewill allow a number of electricity-dependentlocal companies will be able to extend theirdaily hours of operation. The project willemploy and train 17 people, 16 of whom are local.

This is the first private foreign energyproject in Madagascar, and through a positivedemonstration effect, it is expected toencourage further foreign direct investmentinto Madagascar’s electricity sector. It will alsofree up capacity at the state-owned utilitycompany to proceed with required main-tenance of its own generating facilities, whichat present are over-strained. The project willpay approximately $2.2 million in taxes,including royalties and duties, to the government.

MAURITANIA

MIGA provided guarantees totaling $40.76million to the Office National desTélécommunications (Tunisie Télécom) ofTunisia, for its $70.1 million equity investmentin, and loan guaranties to the SociétéMauritano-Tunisienne des Télécommuni-cations (MATTEL) in Mauritania. The coveragesare for 15 years for the equity and eight years forthe loan guaranties, and are against the risks oftransfer restriction, expropriation, and war andcivil disturbance.

Until the year 2000, Mauritania had onlyone phone operator, the national telecomprovider, which had a capacity of approximately32,000 fixed lines, serving a population of 2.5million people. In 1998, with the assistance ofthe World Bank, the Mauritanian governmentinitiated a telecommunications reform processaimed at improving the availability of telecom-munications services through the liberalizationof the market and the introduction of privatesector participants. In May 2000, through acompetitive bidding process, the government

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awarded the first mobile telephone operatinglicense to MATTEL, and it is this project thatMIGA is supporting.

The project, the first that MIGA has sup-ported in Mauritania, involves the installation,operation, and maintenance of a new “GlobalSystem for Mobile Communication” (GSM)telephone network. The project intends toincrease teledensity from 0.6 percent as of 2000(among the lowest in the world), to 4 percent by end-2002. As well as expanding thescope of service, the improvement in quality willbe an important positive development for thelocal business community. MATTEL, which paid$28 million in upfront license fees, will be paying$150,000 equivalent per year in frequency andregulatory fees to the government. The projectanticipates providing employment for 64 people,who will benefit from extensive training intelecommunication operations, as well as mar-keting and sales skills. MATTEL will also indi-rectly benefit local businesses through the localprocurement of various goods and services.

MOZAMBIQUE

MIGA has provided guarantees to PortusIndico-Sociedade de Serviços Portuarios S.A.(formerly DEAIR—Comercio Internacional,Consultoria e Serviços, S.A.) of Portugal, of $459,000 to cover its $510,000 equityinvestment in, and $6.1 million to cover $6.8 million of shareholder loans, plus interest, to the Maputo Port Development CompanyS.A.R.L. The guarantees are for fifteen years, and are against the risks of transferrestriction, expropriation, and war and civil disturbance.

The project involves the rehabilitation,development, financing and operation of the Maputo Port under a Build Operate andTransfer scheme. At its peak, the port’s revenues represented 80 percent ofMozambique’s balance of trade. Civil war and ageneral economic decline have left the porthandling only 2.5 to 3 million tons per annum(tpa), compared to the 12.5 million tpa handledin the late 1960s. By awarding the concession tothe private sector in 1997, the governmentsought to restore port operations to fullcapacity, lower the cost of port tariffs throughimproved operating efficiencies, and boost theeconomy through improved export outlets forthe country’s traditional products. Given its

location, in proximity to three main railway con-nections, the port provides a very efficient andlow-cost outlet for trade not only forMozambique, but also Zimbabwe, Malawi,Botswana, Swaziland, Zambia, and northernSouth Africa. These areas are either currentlynot served, or served through higher cost alter-natives in South Africa, which are alreadyoperating at capacity.

The port and connecting railway upgradesare expected to raise gross revenues from thecurrent $80 million to $150 million in the shortterm, indicating a significant increase in trafficvolumes. At the same time, direct operatingcost will be reduced substantially and translatedinto lower tariffs for exporters, includingoperators in neighboring countries. During thethree-year construction period, the port willcreate about 800 additional jobs, all with localcontractors. The project will provide its workerswith training on new equipment and pro-cedures. The project owners have also pledgedto invest $250,000 annually in local communityprojects during the construction period, and $1million, cumulatively, thereafter. Targetedprojects include the creation of new schools inthe area, donations to local clinics, and upkeepof local road infrastructure. The project is alsoexpected to contribute $8.8 million in taxes peryear to Mozambique, an IDA-eligible countrystill recovering from the long civil war andrecent devastating floods.

MIGA has provided a $2 million guarantee toKjær Group A/S of Denmark to cover its $2.2million equity investment in the form of rein-vested retained earnings in Motorcare Lda inMozambique. The risks covered are transferrestriction, expropriation and war and civil dis-turbance, and the coverage period is 15 years.

The project is in the automotive retailingsector, and will expand Motorcare operations inMozambique using revenues that would oth-erwise be transferred out of the country. Theinvestment will have a positive developmentalimpact, as it will allow Motorcare to continuesupporting transport fleets in Mozambique.The increased provision of vehicles to com-mercial companies and Mozambican nationalsis expected to facilitate regional trade. Equallyimportant, given that aid and developmentorganizations are among Motorcare's mostfrequent customers, the project will expandand improve the company's ability to respond

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to emergencies—an important considerationin one of the most crisis-ridden areas of Africa.The project already provides training to itsstaff, and this investment will specificallyexpand the staff education program and facilitate further technology transfer. It isalso expected to create a number of new permanent positions.

NIGERIA

MIGA has provided Econet Wireless Limited, aUK-registered company wholly-owned byEconet Group of South Africa, with a $10 millionguarantee for its equity investment (of up to$19.3 million) and retained earnings in EconetWireless Nigeria Limited (EWN) in Nigeria.MIGA has also provided Ericsson Credit AB, awholly-owned subsidiary of LM Ericsson ofSweden, with a guarantee of up to $70 million,for its $70 million non-shareholder loan, plusinterest, to EWN. The coverages are for fiveyears, and are against the risks of transferrestriction, expropriation, and war and civil dis-turbance. $30 million of this exposure has beensyndicated through MIGA’s CooperativeUnderwriting Program.

The project—the first that MIGA has sup-ported in Nigeria, and notable for being a South-South project exemplifying intra-African cooperation—involves the installation,operation and maintenance of a country-wideGSM mobile telephone network, under a 15-yearlicense. By supporting this project, MIGA willassist the government of Nigeria in its ongoingefforts to deal with the acute shortage of reliabletelephone services in the country. Nigeria, themost populous country in Africa, has a tele-density of less than 1 percent, one of the lowestlevels in the world. This project will be helpingto address the issue, which will have a positiveimpact on the economy in general.Furthermore, the project will contribute toestablishing a minimum required telephonyinfrastructure, a vital pre-condition to attractingforeign direct investment into the country.

EWN will yield additional direct andindirect benefits to Nigeria, includingnumerous employment opportunities andbenefits of technology transfer. The project itselfis expected to generate jobs for more than 1,000Nigerian staff, who will receive extensivetechnical operations and sales training, and isexpected to create several thousands indirect

jobs. The license fee provided the governmentwith $285 million in revenues, and EWN will paythe government an additional annual license feeequal to 2.5 percent of net revenue. The projectis expected to facilitate additional tax revenuesby accelerating economic development and improving the efficiency of local businessenterprises.

MIGA has issued a $50 million guarantee toMobile Telephone Networks InternationalLimited (MTNI), a Mauritius-registeredcompany, wholly owned by Mobile TelephoneNetwork Holding Limited (MTN) of SouthAfrica, covering its $285 million non-share-holder loan to MTN Nigeria CommunicationsLimited (MTNN) in Nigeria, against the risk ofwar and civil disturbance.

The project involves the installation,operation and maintenance of a country-widemobile telephone network, based on the GSMtechnology, under a 15-year license. This projectsupports the government’s ongoing efforts toaddress the acute shortage of reliable telephoneservices in the country, and, as such, is expectedto have a positive impact on the economy ingeneral. By the end of 2004, the network isexpected to cover about 60 percent of the geo-graphic area of Nigeria, and have sufficientcapacity for about 2,000,000 subscribers.MTNN is also helping to establish telephonyinfrastructure in the country, which is essentialto attract foreign direct investment. The projectis expected to generate numerous employmentopportunities, as about 1,000 Nigerian staff areexpected to be hired and trained for mobile oper-ations, and it is anticipated that a further 800local staff would be outsourced for the provisionof security, catering and maintenance. In linewith international practice, the project willprovide the government with an up-front licensefee (of $285 million), as well as an additionalannual fee equal to 2.5 percent of net revenue.The project is expected to facilitate additional taxrevenues by accelerating economic devel-opment and improving the efficiency of localbusiness enterprises.

SENEGAL

In MIGA’s first coverage for a project in Senegal,the agency has provided Mr. Alain Tagini, a Swissbusinessman, guarantees totaling $3.2 million

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for his $0.5 million equity investment in, and$2.3 million loan to, the Thalassotherapy Centerin Dakar. The coverage period is for up to 15years, and provides coverage against the risks ofexpropriation and war and civil disturbance.

In Senegal, an IDA-eligible country, thetravel and tourism sector is experiencinggrowth, and investments to introduce newproducts to the tourism industry are expected tocontribute to building this sector, and to createnew jobs. The therapeutic center, which is basedon the beneficial aspects of the sea envi-ronment, will be located on the grounds of theMeridien President Hotel Dakar. The project isexpected to create approximately 30 local jobsand generate about $1 million in local taxrevenues. This project is a pilot for the entre-preneur, who plans to expand by buildingsimilar centers in other west African nations.

TECHNICAL ASSISTANCEACTIVITIES

BURKINA FASO

In fiscal 2002, MIGA carried out an institutionalneeds assessment for Burkina Faso's investmentpromotion structures as a first step in resumingdiscussions with the government begun at theMining Symposium in Ouagadougou inDecember 2000. Burkina Faso has made consid-erable progress in implementing economicpolicy reforms since embarking on a stabilizationand structural adjustment program supported bythe IMF and the World Bank in 1991. A keyelement of the policy regime is the encour-agement of private investment, including FDI. Incontrast to most other countries in the region,Burkina Faso does not have a specializedinvestment promotion agency. Thus, the MIGAteam held meetings with a variety of Governmentagencies involved in private enterprise devel-opment, including foreign direct investmentattraction and export promotion. In particular,the visit explored possible ways in which MIGA’stechnical assistance could help the countryattract foreign direct investment in other sectors,and examined the possibility of including aforeign direct investment component in theIBRD’s Competitiveness and EnterpriseDevelopment Program.

CÔTE D’IVOIRE

In fiscal 2002, MIGA resumed discussions withthe country's investment promotion agency(CEPICI), government and private sector insti-tutions to update and validate a preliminaryneeds assessment carried out a few years ago,prior to Côte d'Ivoire's political challenges andchange in government. In fiscal 2001, MIGAhad started to assist CEPICI to refocus itsinvestment promotion; however, implemen-tation of the technical assistance program—designed jointly with the World Bank and inte-grated into a larger private sector capacity-building program—was put on hold due to thepolitical situation in the country. A follow-upmission will be conducted with the World Bankto tailor a collaborative approach to assistCEPICI in fulfilling its development objectives.

EQUATORIAL GUINEA

In a joint effort with FIAS, and following arequest from the government, MIGA completedan assessment of the institutional environmentfor FDI promotion in Equatorial Guinea. WhileEquatorial Guinea enjoys the benefits of sig-nificant oil deposits, the challenges facing thecountry in terms of economic diversificationand employment generation are substantial.MIGA and FIAS cooperated on a pair oftechnical assistance reports assessing and pro-viding recommendations on both theinvestment environment and promotion effortsof the country. The reports were presented tothe country’s Ministry of Planning and recom-mended government actions needed toimprove the conditions for FDI in both the oiland non-oil sectors and to maximize the impactof these flows. The studies were carried out inadvance of the official opening of a new ethanolplant, in hopes of better positioning the countryto take advantage of the international investorattention the new plant will generate.

GHANA

The World Bank Group has played an active rolein supporting trade and private sector devel-opment efforts in Ghana through the GhanaGateway project, an initiative to establishGhana as the trade and service hub of WestAfrica. MIGA has been involved in the project

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since its inception, which includes the provisionof technical assistance to the Ghana InvestmentPromotion Centre and the Ghana Free ZonesBoard as a key element. In fiscal 2002, MIGAassisted in the development of new websites forthe Ghana Investment Promotion Centre andthe Ghana Chamber of Mines, using theIPAworks web template, to enable the agenciesto enhance their outreach to investors through amore sophisticated web presence. Agency staffwere trained in site administration and contentdevelopment functions. MIGA also launchedactivities under the MIGA-Swiss Partnership,carrying out a benchmark study of investmentactivity in recent years and an assessment of thecapacity-building needs of the investment promotion structures.

MALAWI

In prior years, MIGA provided substantialtechnical assistance to the Malawi InvestmentPromotion Agency (MIPA) in developing andimplement tools and systems to monitorinvestment leads. In fiscal 2002, MIGAevaluated and modernized MIPA’s InvestorTracking System to improve monitoring ofinvestor interest and project implementation.Technical assistance also included a trainingprogram for department staff on the use of ITtools for facilitating investment.

MALI

As a follow-up under the multi-agency initiative,MIGA carried out a needs assessment for Mali'sinvestment promotion agency (CNPI) to assessthe capacity of the agency and to discusscapacity-building needs and the scope ofpotential technical assistance. Mali is seekingto expand foreign investment in the country andis particularly focused on attracting investmentin agribusiness, with support from USAID inthis effort. Following the assessment, MIGAdelivered an investor-servicing workshop to thestaff of the CNPI in June 2002.

MOZAMBIQUE

With the end of civil conflict and the improvednational investment climate, Mozambique hasenjoyed considerable success in attracting

several large-scale foreign investments. Now,the country faces the challenge of expanding thescope of FDI promotion efforts to encourageinvestment by businesses that generate sub-stantial employment, and identifying and capi-talizing on opportunities for linkages with thelocal economy. A key player in this effort isCPI—the investment promotion agency. As oneof the pilot countries under the MIGA-SwissPartnership, Mozambique is receiving hands-on support and advisory services for the CPI.MIGA initiated a long-term, multi-componentcapacity-building program in Mozambiqueduring fiscal 2002. The program builds on workinitiated earlier (1998 to mid-2001), taking intoaccount the findings of a needs assessment that MIGA conducted for the Centre. MIGA is also aiding Mozambique on free zone development efforts.

NIGERIA

Nigeria has been a focus of WBG and bilateralattention since the democratically elected gov-ernment assumed office in 1999. The WBG hasmade private sector development one of threepillars in its assistance strategy, and MIGA hasbeen involved in that effort since its inception.Most recently, MIGA participated in the presen-tation of a joint FIAS/MIGA Action Plan forrestructuring and strengthening the country’sinvestment promotion agency, the NigerianInvestment Promotion Centre. MIGA also con-ducted tailored capacity-building sessions forthe agency, including a four-day trainingprogram focusing on investor servicing andpolicy advocacy to about 140 management andstaff members and the national privatizationagency—the Bureau of Public Enterprises.MIGA is prepared to offer further capacity-building support once the recommendationsare implemented and is coordinating this workprogram with FIAS.

SENEGAL

MIGA undertook the first phase of work underthe MIGA-Swiss Partnership, carrying out abenchmark study of investment activity in thecountry in recent years. MIGA has been activelyworking with The World Bank Group in supportof private sector development in Senegal, and infiscal 2001 prepared the five-year business plan

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for the national investment promotion agency,APIX. MIGA’s work in this assistance served asthe basis for the agency to receive $1 million infunding from the World Bank in support of thework program. Under the MIGA-SwissPartnership, MIGA is also evaluating thecapacity-building needs of APIX in light of thebusiness plan implementation.

TANZANIA

As one of the pilot countries under the MIGA-Swiss Partnership, Tanzania receives assistancefor the Tanzania Investment Centre and theZanzibar Investment Promotion Agency indesigning sector marketing plans, and usingnew technology in investment promotion. Inpartnership with the Development Bank ofSouth Africa and the European Commission,MIGA has also helped Tanzania develop anational strategy to promote tourisminvestment, and is currently organizing aTourism Investment Forum slated for October2002 in Arusha. MIGA’s work in the tourismsector is aimed at attracting investment intoregions of the country that are presently unde-veloped not only in the tourism projects them-selves, but in related infrastructure andservices. The work is complemented by and coordinated with WBG efforts in support of establishing linkages between small- and medium-sized enterprises and foreigninvestment.

UGANDA

Following a needs assessment, MIGA developeda work program for the Uganda InvestmentAuthority (UIA). As the national investment pro-motion agency, the UIA has received a great dealof attention over the past ten years, as the Bankand other donors have reacted positively toUganda's economic reform effort and havemounted an expanded level of donor support.Additionally, Uganda is a beneficiary under theMulti-Agency Initiative. MIGA evaluated theagency’s investor tracking system and installedthe IPAworks software package, while trainingstaff and management on the use of these toolsin investor outreach. MIGA also assisted the UIAin organizing a trade and investment outreachmission to the United States, helping identifyNorth American company leads.

ZAMBIA

In cooperation with USAID, MIGA assisted the Zambia Investment Centre in developing anew web presence using the IPAworks websitetemplate. MIGA provided advice on contentdevelopment and integration of the webpresence in the overall marketing strategy.USAID funding supported the technical consultants and graphics development.

REGIONAL ACTIVITIES

US-AFRICA BUSINESS SUMMIT

A MIGA delegation attended the US-AfricaBusiness Summit in Philadelphia. The eventwas organized by the Corporate Council onAfrica, a non-profit membership organization ofmore than 170 American corporations ded-icated to strengthening and facilitating the com-mercial relationship between the United Statesand Africa. The summit attracted more than1,400 US and African business and governmentleaders concerned with African trade andinvestment, and offered a prime opportunity toraise the profile of MIGA’s services to Africanmember countries and interested investors. R

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ENDNOTES

1. (page ii) Some projects address more than onepriority area. Coverage provided to previously sup-ported projects is not counted towards fiscal year2002 Priority Area figures.

2. (page ii) MIGA shares the same working definitionof SMEs as IFC: A small enterprise meets two of thefollowing three conditions—up to 50 employees,total assets up to $3 million, total annual sales of upto $3 million; A medium enterprise meets two of thefollowing three conditions—up to 300 employees,total assets up to $15 million, total annual sales up to $15 million.

3. (page vii) In fiscal 2000, MIGA initiated aCommittee of Sponsoring Organizations (COSO)compliance exercise (a control self-assessment)designed to identify and address critical areas of riskin the Agency’s operations.

4. (page vii) In April 1998, the IBRD made a granttransfer of $150 million to MIGA. In March 1999,MIGA’s Council of Governors approved the Agency’sCapital Increase of $850 million.

5. (page 11) In December 2001, MIGA secured $1.7 million in funding from the Swiss governmentto support the launch of a three-year investmentfacilitation initiative. The MIGA-Swiss Partnershipfor Investments in Sub-Saharan Africa will reach outto investors to encourage them to take advantage ofinvestment opportunities, including those createdby the increased African trade access to the USmarket through AGOA and to the European marketsthrough the Cotonou Agreement and Everything ButArms (EBA) Agreement.

6. (page 17) In fiscal 2001, MIGA paid a $15 millionclaim to Enron Corporation to compensate for a can-celled power project in Indonesia. The governmentof Indonesia has agreed to reimburse MIGA for theprincipal amount of the claim, plus interest, overthree years. Through fiscal year 2002, $10 millionhas been repaid, plus interest.

Documents

REGIONAL ACTIVITIES...REGIONAL ACTIVITIES Asia and the Pacific 30 Europe and Central Asia 34 Latin America and the Caribbean 40 Middle East and North Africa 46 Sub-Saharan Africa 48