MIGA Meeting Highlights Changing Financial Landscape

“What a week, what a year.” Those were the opening words of James Bond, Acting Executive Vice President and Chief Operating Officer of MIGA at a meeting of some 150 business executives and staff on Sunday, October 12.  The gathering brought together private sector investors to participate in a dialogue on the theme: “New Opportunities—New Challenges in a Changing World.”

Bond moderated the discussion and opened with comments highlighting the current turmoil in the financial sector that has already led to a vastly changed financial landscape. Bond believes more regulations are on the cards for the sector, possibly even at the global level, along with lowered growth in developed countries and slowing growth in developing countries. He expects Foreign Direct Investment (FDI) to decline, although he still foresees real FDI in infrastructure.

The Minister of Finance and Economic Empowerment from Mauritius Ramakrishna Sithanen said he believes the outlook is not as gloomy as some might think.  “Growth is strong in Africa.  We have to be able to diversify our markets and accelerate the process of regional integration and take advantage of South-South FDI.”  He said it is a question of having the capacity to build resilience, which is a global challenge and needs a global response. The important thing, he noted, is to embrace the open economy that has yielded benefits but to curb the excesses.  “Casino capitalism has to be managed and controlled. The state has to play a bigger role in oversight, but doesn’t have the answers for everything.”

Hurley Doddy, the Chief Operating officer of Emerging Capital Partners, said his company is still investing despite the current turmoil and noted it is currently managing some $1.5bn of equity across Africa. He said a number of sectors are still potentially strong, including telecoms, financial services and natural resources. But he noted his company likes to see the local private sector invest in projects, such as in the power sector, before his company goes in. “The local private sector has to show its own confidence before we feel confident.” 

Another opinion from the private sector came from the Spanish banking community.  Carlos Contreras, the Executive Managing Director of Caja Madrid, believes investment into emerging markets will fall and that infrastructure will suffer as returns are lower.  However, he did have some good news. “South-South investment will attract more sovereign wealth funds into infrastructure projects.” He predicted a shake-up in global banking, with only those institutions that are well-capitalized and liquid able to survive the latest financial crisis.

MIGA stands ready to help investors weather the storm in the global financial markets. “MIGA is poised to offer streamlined products and new flexibility as we move forward in order to meet the demands of the changing situation,” said James Bond.