MIGA suggests that insurance may encourage investments in developing countries
Insurance may be the key to ensuring that new investment frontiers are taken seriously, according to the World Bank’s Multilateral Investment Guarantee Agency (MIGA). New investment frontiers are emerging in the developing markets of Africa, Asia, and the Middle East. These markets are inundated with a significant amount of risk, some of which is linked to politics. These risks threaten returns on the investments made in these markets, causing investors to be cautious. Insurance may be the answer to this problem, suggests MIGA.
Political risks and other factors contribute to caution amongst investors
MIGA notes that the number of investors looking to expand into new markets is on the rise, particular where developing countries are concerned. Developing countries present a certain degree of promise due to the lengths they are willing to go to attain growth and their ability to sustain this growth for significant periods of time. Developing countries are also host to serious risks, especially in terms of politics. MIGA notes that shifting politics in the Middle East and ongoing conflicts in Africa have both encouraged new investments and scared away cautious investors.
MIGA aims to provide insurance coverage to investors
MIGA has embarked on a mission to encourage the investments coming to developing countries and their markets by offering insurance coverage designed to mitigate loss on returns. The organization has begun providing political risk coverage in the hopes of creating a more secure environment for investors looking to enter into markets in the Middle East and Africa. Last month, MIGA issued $148.5 million in insurance coverage in Pakistan to Korea Water Resources Corp and Daewoo Engineering for the development of an alternative energy system.
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Eased sanctions could open up promising markets
MIGA notes that African and Middle Eastern markets are prime locations for growth. The availability of insurance for those looking to invest in the development of these regions could help hasten the growth of these particular markets. MIGA is also drawing attention to the easing of sanctions against countries like Myanmar, suggesting that these countries could be ideal places for ambitious investors.
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