Risk Mitigation for Investments in MOZAMBIQUE Good morning Ladies and Gentlemen, I am told we have 30 minutes for this presentation. I intend to give you an overview of what we do, hopefully in half the time. Then I will respond to your questions. But please, interrupt me as we go along if you have to. This talk is mainly about the role MIGA can play in further stimulating FDIs in developing countries Christophe Bellinger Director, Europe October 3, 2003

History and Membership Mission: Facilitate FDI into developing member countries Founded April 1988 Field offices in Africa, Asia and Europe Total FDI Facilitated (est.): $50 billion; total coverage: US$12.4 billion 163 Members 22 Category One countries 141 Category Two countries When talking about non-commercial risks, we mean political risks. Typical cases of which include: - repossession of privatized assets, defaults on government obligations revocation of concessions given by previous governments. in some cases projects have simply been shelved there have also been cases of financing difficulty for new projects due to government interference, and frustrations due to inadequate legal & regulatory frameworks in many countries

MIGA Products Insurance Against Non-Commercial Risks protect investors and financial institutions from non-commercial risks War and civil disturbance Transfer restriction and inconvertibility Expropriation Breach of contract coverage for medium to long-term investments (3 to 15/20 years) complement public and private political risk insurers Investment Promotion and Mediation Services advice to investment intermediaries on-line investment promotion services mediation services and dispute resolution between investors and host countries Training to public and private political risk insurers To achieve its objective, MIGA provides two types of services: The first consists in assisting local investment promotion agencies or in offering mediation services. The second and the main role of MIGA is to offer political risk insurance. MIGA can provide coverage up to US$200 million per project and US$420 million per country.

MIGA’S GUARANTEE PROGRAM Host Country Approval All MIGA-guaranteed projects must be approved by the host country Purpose: Inform host country about project and MIGA coverage Ensure that MIGA coverage is consistent with host country development priorities Approval is not a government counter-guarantee, nor does it imply a contingent liability MIGA offers four types of political risk coverage, which are: currency transfer restriction and inconvertibility expropriation war and civil disturbance, and breach of contract

MIGA’S GUARANTEE PROGRAM What Does MIGA Cover? equity and quasi-equity shareholder loans and loan guaranties commercial loans other forms of investments capital markets transactions technical assistance management contracts operating leases franchising and licensing agreements performance bonds movable property turnkey contracts MIGA can support equity and investments and shareholder loans. We also cover loan guarantees, and other forms of investments such as leases, management contracts, technical assistance, licensing agreements, and performance bonds.

Guarantees Portfolio gross Exposure, by region Guarantees Portfolio gross Exposure, by region* and sector, in percent (as of 06/30/03) Latin American and Caribbean Europe and Central Asia Sub-Saharan Africa Asia and the Pacific Middle East and North Africa 43 26 19 12 3 $5.1 B Infrastructure Financial Manufacturing Mining Oil and Gas Tourism Services Agribusiness 41 29 10 6 4 3 1 * Figures exceed 100% due to master contract with one client

MIGA Priority Areas IDA-eligible countries Africa South-South investments SMEs Complex infrastructure projects --------------------- Conflict-affected countries Under-represented regions (MENA, Africa, Asia) To achieve its objective, MIGA provides two types of services: The first consists in assisting local investment promotion agencies or in offering mediation services. The second and the main role of MIGA is to offer political risk insurance. MIGA can provide coverage up to US$200 million per project and US$420 million per country.

FDI Trends for Sub-Saharan Africa 13,814 FDI ($ million) Less than 1% of global FDI flows Less than 5% of FDI flows into developing countries Majority of FDI into only 3 countries: South Africa, Angola, Nigeria 8,092 7,000 6,506 6,076 1998 1999 2000 2001 2002* *estimate

MIGA Guarantees Portfolio in Africa 893 Gross exposure ($ million) 788 Total issuance: Over $1.1 billion in 23 countries FDI facilitated: $5.3 billion (est.) FY99: 8% of portfolio – FY03: 18% FY99-03: 58 projects covered 621 524 294 FY99 FY00 FY01 FY02 FY03* *estimate

MIGA in Mozambique Mozambique is MIGA’s 4th largest host country, overall and MIGA’s largest host country in Africa MIGA’s Guarantees have facilitated $2.8 billion in FDI into the country MIGA’s outstanding portfolio in Mozambique consists of 18 contracts of guarantee Exposure: 5.2% of the Agency’s gross exposure Total of $262 million in gross exposure and $192 million in net exposure

Guarantees in Mozambique MIGA currently underwriting 4 projects in Mozambique (total coverage: $100 million) In the second half of FY03, MIGA supported 3 important projects (issuing $107 million in coverage) Sasol (Oil & Gas) Moma (mining) Maputo Port (infrastructure)

CASE STUDY: Sasol/Mozambique Investors Sasol Gas Holdings; Sasol Petroleum International (South Africa) gas field and pipeline equity coverage $72 million in guarantees for 15 years against: transfer restriction expropriation war and civil disturbance breach of contract South-South, IDA, post-conflict investment Joint project with WB, IFC Development Impact: Over $2 billion in payments, taxes, etc. to Mozambique Local purchases: over $1 million/year Job creation Improved infrastructure Landmine removal

Investment Marketing Services in Mozambique MIGA works with the Mozambique Investment Promotion Center (CPI) to support its efforts to attract FDI and strengthen linkages with the local business community In FY03, MIGA focused on the completion of a baseline evaluation of Mozambique as a beneficiary under MIGA-Swiss Partnership (MSP) MIGA completed the investigations required to define a targeted technical assistance program under the MSP Under MSP, MIGA carried out an assessment of country’s apparel sector: an apparel industry outreach program for Mozambique to Honk Kong in September 2003

Thank you www.miga.org Christophe Bellinger Director, Europe 66 Avenue d’Iena 75116 Paris Tel: (33) 1 40 69 32 75 Justin Kouakou Senior Underwriter 66 Avenue d’Iena 75116 Paris Tel: (33) 1 40 69 32 81 In conclusion we see ourselves playing an increasingly important role in financing Foreign Direct Investments in developing countries We also believe that MIGA can further stimulate investments into its Category Two member countries Clearly, there are a few constraints due to our status as a multilateral institution. But overall, we believe we are on the right track.