EDFI: Africa and Energy Access - Financing Impact

Energy is arguably one of the major challenges the world faces today. For those living in extreme poverty, the lack of access to modern energy services dramatically affects health, limits opportunities and widens the gap between the Haves and Have-Nots. In Africa, the lack of affordable and reliable energy impedes economies to develop by shortening business operating hours, making business production uncertain and discouraging investment. The poorest people pay a high price in health, labor, time and cash for the energy they use. Access to energy and affordable energy in Africa is a necessary precondition to achieve development goals that extend far beyond the energy sector: it provides the basis for the development of modern forms of healthcare, education, transport, production and communication.

Energy is back on the agenda of governments, international organizations and the development scene in Africa. 2012 was declared International Year of Sustainable Energy for All by the United Nations. The UN Secretary-General Ban Ki-moon launched the “Sustainable Energy 4 All” (SE4All) initiative, urging all stakeholders to take concrete action toward three critical objectives: (1) ensuring universal access to modern energy services; (2) doubling the share of renewable energy in the global energy mix and (3) doubling the global rate of improvement in energy efficiency. The global target date for achieving the SE4All targets is 2030 but this will not become a reality without massive increases in the quantity and quality of energy services. Africa is the continent with the highest priority on energy development: in 2012 nearly half of the countries in Africa face energy crisis. Even though the African continent is well endowed with renewable energy resources (hydropower and geothermal especially), most remain untapped. However, changes in precipitation can result in loss or variability in hydro-electricity potential, variations in runoff and impacts on biomass production. Therefore, access to energy in Africa also includes developing conventional energy such as gas and diesel, to provide for instance stability to grids, because of the changing climate conditions of Africa and dwelling resources. There is no (or less) renewable power to provide when there is no (or less) water, sun or wind.

Africa is a key priority for many of the 15 European bilateral development finance institutions (EDFIs): in 2011, €689 million have been invested in 61 projects in Africa. To benefit from additional financial leverage and risk sharing, EDFI has also created two joint financing initiatives with the European Investment Bank (EIB): European Financing Partners (EFP) especially designed for Africa, the Caribbean and Pacific countries and the Interact Climate Change Facility (ICCF), which also includes the Agence Française de Développement and is especially designed for projects focused on clean energy or energy efficiency. EFP and ICCF’s unique decision model is effective, efficient and serves as the foremost example of the strong partnerships, which European institutional investors are increasingly forging, in order to play a leading role in sustainable private sector development in Africa and in the energy sector. For every project, the EDFIs have upheld the highest standards on environmental and social issues, and in corporate governance in Africa.

The European Development Finance Institutions (EDFI) and its joint financing initiative in ACP countries: European Financing Partners and in energy efficiency: Interact Climate Change Facility. EDFI seeks to support economically, environmentally, and socially responsible development by fostering the growth of the private sector in developing countries, and do so by providing capital for long-term investments. EDFI member institutions often join forces to finance larger projects, which will serve their clients, while achieving higher development impact. Approximately €375 million has been approved for 26 projects under the EFP through 2011, 20% of which has been committed to power or energy projects. On the individual projects, this funding is complemented by additional financing coming directly from individual EDFIs. With the success of EFP, EDFI decided to create the same type of co-investment facility focused on energy efficiency and climate change projects. Interact Climate Change Facility was created in February 2011.

Why invest in joint instruments when bilateral development finance institutions can do it individually? Firstly, EFP and ICCF financing supplements the total financing raised, which enables EDFIs to invest in larger projects. This is important because many energy infrastructure projects require economies of scale to be bankable and because long term funding is scarce, especially in Africa, where the country risks are often considered too high for commercial banks to provide funding. Secondly, EFP and ICCF financing enables broader participation by a range of DFIs with minimal additional costs and without the requirement for their significant dedication of administrative resources, as the execution and subsequent monitoring of the project is undertaken by one of the EDFIs on behalf of the group of DFIs. EFP and ICCF enhance very much the efficiency of the transaction.

What are the Impacts for Energy Investments in Africa?

On the African continent, according to ARE (Alliance for Rural Electrification), the overall amount of people without access to electricity has reached 589 million in 2008. The number of people that have no access to electricity has increased by 9 million people annually[1]. Access to sustainable sources of reliable and affordable energy has a profound impact on multiple aspects of human development; it relates not only to physical infrastructure (e.g. electricity grids), but also to energy affordability, reliability and commercial viability. Most firms are less concerned with the price of power than with the quality and reliability of supply. So, how to invest and in which country? EDFI and its joint financing instruments EFP and ICCF focus on energy investments with the highest impact potential in target countries with binding constraints. Two example countries with these characteristics are Kenya and Zambia.

Energy supply in Kenya is a constraint on growth: Kenya has required emergency power generation every year since at least 2005. A 2009 World Bank study suggests significantly improving electricity generation capacity could increase Kenya’s annual GDP growth rate by 1.7 percentage points. In contrast to Kenya, Zambia is not yet supply constrained, though it still has a growing need for investment. In particular, the country has tremendous potential to grow its energy production, especially hydro, with the aim of exporting power to other countries. Zambia is rich in lakes and rivers, and has a potential hydro capacity of 6,000 MW[2].

In 2012, EDFI contracted Dalberg Global Development Advisors to undertake an independent evaluation of three energy projects in sub-Saharan Africa financed by EFP: Copperbelt Energy Corporation in Zambia (CEC), Olkaria III in Kenya; and Rabai Power in Kenya[3]. The consultants analysed the impact of the projects and the role of EFP: while not always the only option, EDFIs provided finance on terms unavailable from commercial lenders, and sometimes key advisory support as described for the three energy projects evaluated:

Example of energy projects financed in Africa by EDFI

Olkaria III (Kenya): First geothermal independent power producer (IPP).Expansion of the capacity to 48 MW from 13MW. Olkaria III is the only IPP geothermal plant in Kenya and possibly the most efficient plant of any kind in the country. Since the expansion of the plant, Olkaria III has always averaged over 96% availability, and has been dispatched at an average of 92%.
Rabai Power(Kenya): Thermal independent power producer (IPP).The plant became operational just as the country was experiencing nationwide power rationing due to poor hydrology. Rabai is the most efficient thermal plant in Kenya, but is not currently operating at full capacity because of transmission line bottleneck.
Copperbelt energy –CEC-(Zambia): Transmission CompanyCEC transmits power to all the mines in Zambia’s Copperbelt region. Mines consume about 60% of Zambia’s power. The acquisition finance was complemented by a guarantee on a capital expenditure loan for upgrades to CEC’s network and expansion of its operations. This expansion has included the exploration of new business activities such as power generation.

Why did the European Finance Partners invest?

- Commercial lenders did not understand geothermal IPP generation- Delays meant that financing came after project construction
- EDFIs were willing to take on the risk of lending in a time of high political risk in the country – could have collapsed without their support- DFIs as equity partners helped improve overall credibility of the project
- EDFIs were preferable to other investors because of loan durations required, and equity participation which enabled the borrower to get continued advice

The catalytic role of EFP: other inputs from DFI financing

- EDFIs took lead in structuring own finance offering
- EDFIs expedited dealings with the government speeding up the development process- EDFIs assisted borrower in achieving high environmental and social standards
- EDFIs have a good reputation in the country, and ensure that the borrower is viewed favorably by the government- The borrower considers the EDFIs higher SHE requirements to be useful

Development effects

The electricity generated by the Kenya IPP projects reduced the supply shortage and now generates national cost savings of USD 20 million and USD 59 million in 2011 for Rabai and Olkaria III respectively. Kenya IPP environment has been cited as the most advanced sub-Saharan African country, having progressed farther on energy reform programs than most other countries on the continent.
Linked to the acquisition was CEC’s subsequent listing on the Lusaka Stock Exchange.

The three projects assessed, illustrate the potential multiplied impact of energy infrastructure investments, especially in constrained environments. For the Kenya IPP projects, new electricity generation should help support hundreds of thousands of jobs additional to the number of jobs created in the plant. Furthermore the projects will lead to national cost savings in the tens or even hundreds of millions of dollars. For example, Olkaria III has allowed economic benefits from lower costs and higher reliability: the plant added 3.5% in national capacity; is currently supplying 6% of Kenya’s energy consumption; and helped reduce load shedding in the country while keeping the environmental impacts especially small. In Zambia, CEC’s transmission infrastructure was already in place, but its maintenance and expansion is important to growth of Zambia’s most important export sector, mining, and the government’s plans to double the contribution of mining to GDP by 2015.

[caption id="attachment_1197" align="alignright" width="300"] Olkaria III plant in Kenya (Copyright: DEG)[/caption]

The Rabai project may never have been completed without DFI finance due to the high political risk in the country at that time, whereas for CEC, the acquisition arrangements would likely have been sub-optimal without DFI finance.

Through the EFP cooperation and financing arrangement, the three financially sustainable energy projects are making important contributions to development outcomes in two energy-constrained countries in sub-Saharan Africa. Energy infrastructure projects can provide very high development returns on investment, due to the potential for high multiplier effects, and there is a clear role for EDFI financing in the private sector.

"Energy infrastructure projects enable DFIs to achieve public sector scale, with private sector efficiency."

- Dalberg Global Development Advisors, EFP evaluation, 2012

Additionality in Investments

EDFI members are bilateral institutions funded by government resources. The EDFI members provide their financing to projects on commercial terms. An overall criterion for the decision to participate in the financing of a project is that the EDFIs are additional to commercial funding available in the market. In general, the EDFIs will engage with the commercial institutions willing to participate in the funding and, if sufficient resources are available from these, EDFIs will refrain from participation. However, the capital markets of most African countries are simply not able to provide adequate long-term financing for infrastructure projects.

EDFIs have very strict environmental and social requirements for projects they finance in order to ensure that the highest standards are applied for the benefit of the host country and its citizens. EDFI financed projects are committed to mitigating any negative effects of their operations and improving the community in which they find themselves. EDFIs are in most investments actively involved in the establishment of environmental and social management systems as well as providing training to the staff of the investee company.

The EDFI institutions will continue to finance energy projects such as Rabai, Copperbelt and Olkaria. But Africa needs much more than that. The country has extraordinary energy resources but most remain untapped. In the 90 percent of rural sub-Saharan Africa that depends on traditional biomass energy for energy supplies, even modest improvements in access to modern energy services can have a big impact. The major question is: how can access to modern energy services be improved on the huge scale needed to attain the UN goal of sustainable energy for all by 2030? More institutions financing infrastructure projects and prioritizing energy access as a key driver of social and economic development is undoubtedly the first step towards achieving universal energy access. The governments and public sectors also need to be onboard as the private sector will not step in to finance energy access for the poor without governmental policies and regulations to remove barriers, such as prohibitive tariffs, weak off takers or weak structural frameworks.

Author: Claire Meyer

EDFI asbl
81A rue de la Loi, 1040 BRUSSELS
www.edfi.eu

EDFI, the Association of European Development Finance Institutions, is a group of fifteen bilateral European development finance institutions, whose members provide long term finance for private sector enterprises in developing and emerging economies. The main objectives of EDFI, which was founded in Brussels in 1992, are to foster cooperation among its members and to strengthen links between these and EU institutions. At the end of 2011, the total investment portfolio of EDFI members was €23.7 billion in 4 421 projects.

The EDFI members are: BIO, Belgium - CDC, United Kingdom - COFIDES, Spain - DEG, Germany - FINNFUND, Finland - FMO, Netherlands - IFU/IØ, Denmark - NORFUND, Norway - OeEB, Austria - PROPARCO, France -SBI/BMI, Belgium - Sifem, Switzerland - SIMEST, Italy - SOFID, Portugal - SWEDFUND, Sweden”

[1] Alliance for Rural Electrification elaboration of IEA data, 2011 (consult the study)

[2] Zambia, department of Economic Regulation (consult the website)

[3] EDFI Joint Evaluation on EFP Energy Infrastructure Projects, Dalberg Global Development Advisors, March 2012. Summary available on the EDFI website.


Brazil Cuts Interest Rates to Record Low to Stimulate GDP Growth

[caption id="attachment_1220" align="alignright" width="272"] Prime Minister Cameron and President Rousseff outside No. 10[/caption]

As less consumer spending and lower business confidence cause the Brazilian economy to slow, President Rousseff looks to boost growth by cutting and simplifying taxes while the Central Bank cut interest rates. President Rousseff just met with Prime Minister Cameron at No.10.

Brazil’s economy has been slowing down and economists’ outlook for Brazil's economic growth in 2012 is 1.9%, and unchanged according to a recent survey. The survey's results are the median forecast of analysts polled by the central bank at about 100 financial institutions.

That would be the weakest growth in the world's No.6 economy since 2009, when it contracted slightly, and nothing like the 7.5% growth boom seen in 2010.

Authorities are slightly more upbeat, with the Finance Ministry forecasting 3% growth this year. The official estimate was revised down last week from 4.5%.

Unemployment remains at historic lows of about 6%.

Economists expect Brazil’s inflation to stay at about 5% this year and 5.5% next year, both of which is within the central bank target of 4.5% plus or minus 2 percentage points.

The central bank is forecast to cut interest rates to a new record low of 7.5% in August and then stop to assess if the economy improves as expected.

Unemployment remains at historic lows of about 6%. Rousseff's popularity also remains at all-time highs, in part because many Brazilians see the problems as a mere pause in their country's long-term emergence as an economic power.

Officials in Brasilia are aware, however, that the situation could deteriorate if business leaders become convinced the slowdown is permanent. Recent surveys show confidence among industrial executives at its lowest level since the global financial crisis of 2009, and second-quarter corporate earnings are expected to be the worst since that year.

The slowdown, along with efforts by Rousseff to limit increases in government spending, has allowed Brazil's benchmark interest rate to fall to 8%. That is still high by global standards, but it is a record low for Brazil, which officials hope will stimulate consumer spending. That has not always and not recently been the case in the UK and other developed countries where low interest rates have not caused economy to boil with surging spending and investment.

Some business leaders have called for Rousseff to take even more dramatic and structural measures, such as a reform package that could substantially reduce and simplify Brazil's taxes. Rousseff is now looking to consolidate two federal taxes known as PIS and Confins.

The two levies, which experts say often overlap and are confusing to calculate, account for roughly a third of Brazil's federal tax collection. Their importance to the budget could make them hard to reform without losing revenue. Nevertheless, Rousseff seems determined to press ahead with tax reform. But how is a President to balance the public books while also cutting taxes? She could discuss that predicament with the fast learning expert in number 10, David Cameron, as she held talks with the Prime Minister, while visiting London for the Olympics. Perhaps, President Rousseff could even spare a moment to teach the British Prime Minister a trick or two on how to keep employment low as well as how to simplify and cut income taxes.

So far in Brazil, there has been no increase in layoffs and the unemployment remains low. However, that can quickly change with consumer sentiment deteriorating and business confidence sinking. As the UK and the rest of Europe can testify to, it is very hard to fight back from when taking too little action, too late.


Institute for New Economic Thinking (INET) and INET Council on the Euro Zone Crisis (ICEC): Europe is Sleepwalking Towards Disaster of Incalculable Proportions

The alternative to fixing the euro is a catastrophic crisis with the euro zone socially unsustainable.

The dilemma is how to unwind the high debt levels and losses in competitiveness accumulated and do this in the middle of recessions that are beginning to strain some societies to the breaking point, and in light of the overwhelming size, power, and scepticism of financial markets.

ICEC suggest the answer must involve a combination of extraordinary measures, which include institutional and fiscal-structural reforms aimed at minimising the immediate output cost of real exchange rate and fiscal adjustment, support from existing funds (the EFSF and ESM), additional support from surplus countries, voluntary debt restructuring, an exceptional role for the ECB, and exceptional emergency macroeconomic and monetary policy measures.

A recent report “Breaking the Deadlock: A Path Out of the Crisis” summarizes:

It is still possible – economically and politically – to find a way out of the euro zone crisis if policy makers separately address two problems: dealing with the legacy costs of the initially flawed design of the euro zone, and fixing the design itself. The former requires significant burden sharing and an economic strategy that focuses on stabilising the countries that are suffering from recession and capital flight. In contrast, fixing the design requires a financial (banking) union with strong euro-area institutions and a minimal fiscal backstop.

The key findings by ICEC (from NR):

This dramatic situation is the result of a euro zone system that is thoroughly broken. This systemic failure exacerbated a boom in capital flows and credit, and complicated its aftermath after the boom turned to bust.

It is the responsibility of all European nations that were parties to the euro’s flawed design, construction, and implementation to contribute to a solution.

Absent a collective effort the euro zone will disintegrate quickly. The stresses have been building for a long time and conditions in several countries are not socially or politically sustainable much longer.

In formulating recommendations, the ICEC report makes a clear distinction between the legacy problems that were created by the dysfunctional design of the euro zone over the past 10 years and the challenges of re-design that would restore the soundness of the Euro zone system.

One cannot deal with the legacy overhangs as long there is no clear commitment to long-term re-design.

At the same time it is impossible to build long-term mechanisms such as a banking union as long as the legacy overhang of debt imbalances debt, competitiveness, and capital inadequacy of financial institutions impede the path toward a healthy Europe.

The report begins:

We (ICEC) believe that as of July 2012 Europe is sleepwalking toward a disaster of incalculable proportions. Over the last few weeks, the situation in the debtor countries has deteriorated dramatically. The sense of a never-ending crisis, with one domino falling after another, must be reversed. The last domino, Spain, is days away from a liquidity crisis, according to its own finance minister. This dramatic situation is the result of a euro zone system, which as it is currently constructed, is thoroughly broken. The cause is a systemic failure that exacerbated a boom in capital flows and credit and complicated its aftermath after the boom turned to bust. It is the responsibility of all European nations that were parties to its flawed design, construction, and implementation to contribute to a solution.

Deepening recessions and high unemployment are tearing at the social fabric in the deficit countries and causing enormous and avoidable human suffering

- INET/ICEC

ICEC goes on:

Deepening recessions and high unemployment are tearing at the social fabric in the deficit countries and causing enormous and avoidable human suffering. Alleviating this suffering should be the first priority of euro zone policymakers.

ICEC identifies a downward economic spiral in the deficit countries also to be labelled as “deficit countries”, “debtor countries”, “crisis countries” or “south” to refer primarily to Italy and Spain. Ireland, Portugal, Greece, and Cyprus could also be considered to be in this group, but their situation is somewhat different because they are in IMF-EU supported adjustment programmes. ICEC avoid the “centre” versus “periphery” terminology that has become engrained in the last year because a country such as Italy is too central to Europe – geographically, economically, and historically – to be considered part of the “periphery”.

The deficit countries are experiencing a self fulfilling fiscal crisis as the deficiency of aggregate demand at present leaves many resources unnecessarily idle, and narrows the tax base at a time of fiscal stress.

Stabilising output and employment in the recession-struck deficit countries is impossible without delaying some of the on-going fiscal adjustment and channelling more support to the deficit countries.

Policy makers in the surplus countries (“Surplus countries”, “creditor countries”, or “north” interchangeably refer to countries such as Austria, Finland, Germany, Netherlands, and the Slovak Republic) must make an effort to convince their voters that significant burden-sharing is necessary to stop the crisis, because deficit countries will otherwise remain stuck in a spiral where fiscal adjustment depresses output in the short run, making it harder for the private sector to repay its debts, putting pressure on asset prices and asset quality of banks, constraining credit, and further depressing output and revenue, which undermines fiscal adjustment. This leads to a breakup of the euro zone, which imposes largely avoidable but very high economic and other costs on both surplus and deficit countries.

ICEC have many specific recommendations for fixing the euro even without further political integration, without full fiscal union, without euro zone bonds and only limited mutualisation (Really? Is that possible? Wauw!). The recommendations have no common liability in any of the long-term proposals beyond those necessary to establish and backstop the banking union and the ESM, and both are subject to strict safeguards.

The diabolical loop between banks and sovereigns is dragging both down as each rescues the other.

- INET/ICEC

Some of these interrelated recommendations to structurally fix the euro and to put the euro zone on a firm footing include:

Financial union, particularly reform of the institutions governing the integrated EMU banking sector.

Financial Reform to fix the malfunctioning of the financial sector.

Banking union. Financial integration is critical to a stable union. The diabolical loop between banks and sovereigns is dragging both down as each rescues the other, most notably in Spain and Ireland, and could do the same elsewhere. As confidence disappears and investors run away, only the states finance the banks and only the banks fund the state. Breaking this nexus requires making the stability of the banks the concern of the entire union.

An EU or euro zone-level financial supervision and resolution agency must be established, either in the ECB or both in the ECB and in the form of a new agency with authority over national supervisors.

Raising monetary policy to a supranational level.

Stronger centralised control over both fiscal policy and banking supervision.

Fiscal controls to discourage fiscal free riding.

A euro zone-level lender of last resort

A debt-restructuring regime

A common risk-free asset not tied to or issued by a specific country to counter the impact of pure panics, i.e. sudden drops in risk appetite of investors. This safe asset could represent a significant source of new income and be created without joint and several liabilities across countries

Some of the urgent short run measures include:

Partial and temporary mutualisation of legacy debt by a new “redemption fund” with the power to issue bills under a joint and several guarantee.

Voluntary debt restructuring could take the form of offering to exchange existing bonds for new bonds with the same face value and coupons but longer maturities (say, the original payment dates plus 5 years).

Fiscal-structural reforms, which could include raising the pension age, staff reductions in bloated public administrations, and labour market reform.

“Fiscal devaluations” e.g. by substituting payroll taxes with indirect taxes.

Outright transfers from the E.U. budget.

Low interest loans from the EFSF/ESM.

A temporary role for the ECB in the crisis, which could and should be committing to much larger interventions in the market for debt of sovereigns, who are meeting their obligations.

Emergency macroeconomic and monetary policy measures.

ESM to undertake direct capital injections into the national banking system as a commitment to “catastrophic loss insurance” at the euro zone-level.

A minority of Council members believe that avoiding future crises requires changing the statute of the ECB toward a dual mandate that includes output and employment objectives, and that the price stability objective should be revised to also target nominal GDP growth.

Source: The Institute for New Economic Thinking (INET)

About ICEC and INET: This article is from a new report “Breaking the Deadlock: A Path Out of the Crisis” from July 23, 2012. The Institute for New Economic Thinking (INET) has sponsored the formation of the INET Council on the Euro Zone Crisis (ICEC) that is comprised of 17 leading European economists. The group held its first meeting on June 26-27 in Brussels (which included George Soros and Adam Posen) and a nonstop virtual meeting has taken place since then. As the pressures toward disintegration of the euro increase and the deep social unrest in Spain, Italy, and other countries erupts, the INET Council of the Euro zone members felt compelled to issue a brief report that creates a vision of how the euro zone could be repaired and redesigned at this desperate juncture. The signatures include:

Patrick Artus
Global Chief Economist , NATIXIS - Banque de Financement et d’Investissement

Erik Berglof
Chief Economist and Special Adviser to the President, European Bank for Reconstruction and Development

Peter Bofinger
Professor, Universität Würzburg

Giancarlo Corsetti
Professor, University of Cambridge

Luis Garicano
Professor of Economics and Strategy, London School of Economics

Paul De Grauwe
Professor, London School of Economics and Political Science

Guillermo de la Dehesa
Chairman, Centre for Economic Policy Research (CEPR)

Lars Feld
Professor for Economic Policy, University of Freiburg

Jean-Paul Fitoussi
Professor Emeritus, Institut d'Etudes Politiques de Paris

Daniel Gros
Director, Centre for European Policy Studies (CEPS)

Kevin O'Rourke
Professor of Economic History, University of Oxford

Lucrezia Reichlin
Professor of Economics, London Business School

Hélène Rey
Professor of Economics, London Business School

Andre Sapir
Senior Fellow, Bruegel

Dennis Snower
President, Kiel Institute for the World Economy

Hans-Joachim Voth
ICREA Research Professor, Universitat Pompeu Fabra

Beatrice Weder di Mauro
Professor of Economics, Johannes Gutenberg University of Mainz


MIDA: Malaysia – Your Profit Centre in Asia

Malaysia is strategically located at the crossroads of East-West trade. The country consists of thirteen states and three Federal Territories, with a total landmass of 329,845 square kilometers (127,354 sq mi). The capital city is Kuala Lumpur, while Putrajaya is the seat of the federal government. Malaysia borders Thailand, Indonesia, Singapore and Brunei.

[caption id="attachment_1298" align="aligncenter" width="595"] Kuala Lumpur skyline[/caption]

Malaysia has unveiled an ambitious plan through the Economic Transformation Programme (ETP) to propel the country towards becoming a high income and developed country by 2020. The Malaysian Government has also unveiled the 10th Malaysia Plan 2011 – 2015 and the 12 National Key Economic Areas (NKEAs) under the ETP.

The ETP has identified 131 Entry Point Projects (EPP) worth US$ 444 billion to be implemented over the next 10 years and expected to generate some 3.3 million jobs. In this regard, the government recognizes that international companies and foreign direct investments assume a vital role in realizing the government’s vision.

"Malaysia’s foreign direct investment (FDI) inflows in 2011 jumped 31.5% to US$11.97 billion from 2010"

To date, a total of 110 EPP projects have been announced by the Government with investments amounting to US$56.8 billion. These projects are projected to contribute some US$41.1 billion in gross national income and create over 313,741 new jobs by 2020. Amongst the NKEAs prioritized are oil and gas and energy sector, electrical and electronics, ICT, education and tourism.
To move the country forward, the government has embarked on a drive to shift Malaysia from a current upper middle income country of around US$9,700 per capita income to US$15,000 by 2020. For this to happen, the economy must grow at 6 percent per annum over the next 10 years.

Based on the latest figure by UNCTAD’s World Investment Report 2012, Malaysia’s foreign direct investment (FDI) inflows in 2011 jumped 31.5% to US$11.97 billion (RM37.83) from 2010, making the country the top five preferred investment destinations in Asia. Malaysia is also the third most popular destination for FDI in Asean after Singapore and Indonesia.

[caption id="attachment_1306" align="alignleft" width="300"] Port Klang, Malaysia[/caption]

Based on UNCTAD's new FDI Contribution Index, Malaysia was among the few economies that had exceeded the organisation’s expectations, noting that the country is in a solid position to implement its new set of "next-generation" investment policies.
The FDI Contribution Index ranks the countries surveyed based on the significance of FDI and foreign affiliates to their economies in terms of value added, employment, wages, tax receipts, exports, research and development expenditures and capital formation.

The Malaysian Government is also increasingly liberalizing its services sector as this will be a key driver for growth. Services industries where Malaysia is emerging as a strong leader include, regional establishments, tourism, medical travel, Islamic finance, R&D activities, education, logistic and professional business services, can be avenue for enhancing bilateral investment further.

For a country with a population of 28 million people, Malaysia today is one of the world's top locations for offshore manufacturing and service-based operations with the presence of more than 8,000 foreign manufacturing companies. Over the years, many of these companies have expanded and diversified their operations, reflecting their continued confidence in the country’s potentials and prospects as an investment destination.

There are many factors that have enabled Malaysia to attract quality investments over the years. Among others, include its continued political stability, a diversified economy, developed infrastructure, liberal and transparent business policies, strong supporting industries and a strong financial services sector.

"Malaysia today is one of the world’s top locations for offshore manufacturing and service-based operations"

The country has a multi-ethnic and multilingual workforce that can effectively communicate with most markets in the region. A.T Kearney Global Services Location Index has ranked Malaysia as the 3rd most attractive location for outsourcing destinations for nine consecutive years since the inception of the index in 2003.

Malaysia’ location in the centre of the ASEAN region provides easy and convenient access to the other markets in the region. Investors can use Malaysia as a launch pad into ASEAN, the economic powerhouse of more than 600 million people while Gross Domestic Product growth expected to average six per cent, annually. If ASEAN were a single country, it would be worth US$2 trillion, and rank as the ninth largest economy in the world and third largest in Asia.

Malaysia, being a progressive Islamic country, is also gaining reputation as a global leader in the areas of halal products and Islamic finance. Malaysia’s halal certification has gained international recognition which also meets stringent international health and safety standards.

Malaysia’s conducive and vibrant business environment was acknowledged in several international rankings. The World Bank ranked Malaysia 18th in the Ease of Doing Business Report for 2012.
This ranking is up 5 notches from 2011 ranking.

Malaysia also ranked the 14th most competitive economy in the world for 2012 by the Institute for Management Development (IMD) Switzerland in the latest World Competitiveness Yearbook (WCY) 2012 survey. Malaysia moved up two spots from 16th to 14th ahead of countries such as Australia (15th), Britain (18th), South Korea (22nd), China (23rd), Japan (27th) and France (29th). This positive ranking will continue to support the country’s investment promotion drive. The report assesses a country based on four competitiveness factors: Economic Performance, Government Efficiency, Business Efficiency and Infrastructure. Among the four competitiveness factors, Malaysia registered commendable improvements in the Business Efficiency factor, from 14th last year to 6th position and Government Efficiency to 13th from 17th in 2011.

Based on the A.T. Kearney’s latest 2012 Foreign Direct Investment (FDI) Confidence Index, Malaysia climbed to 10th spot in ranking from the previous 21st position. The country’ favorable position in these reputable rankings reflects investors’ confidence in the government's various initiatives to transform the country into a high-income economy by 2020.

Malaysia has adopted a more selective and targeted approach in attracting investment. The Government recognises the need to develop the high technology sectors as part of its strategy to sustain the momentum of economic growth and to improve the competitiveness and resilience of the Malaysian economy.

[caption id="attachment_1300" align="alignleft" width="300"] Entrance to MIDA offices[/caption]

Against this backdrop, the Malaysian Investment Development Authority (MIDA) is adopting a more focused and targeted approach in attracting quality investments. MIDA will continue to intensify its efforts in identifying and attracting investments in the high value-added industries, high technology and knowledge intensive industries.

The Malaysian Investment Development Authority (MIDA) will assume an important role in ensuring that there is a significant leap in investment activities in all sectors of the economy led by a more dynamic private sector to achieve the targets set under the 10th Malaysia Plan (10 MP) and Economic Transformation Programme (ETP).

In this regard, MIDA have chosen a new logo that is vibrant and modern, reflecting MIDA’s key roles and core competencies. The bold, block letters of the new MIDA corporate logo represent the integrity and professionalism of the organization. The grey lettering suggests neutrality and reliability, enhanced by an eye-catching, strong red motif that resembles an arrow moving forward.

As a one-stop centre for investment, MIDA assist companies that wish to operate in Malaysia to obtain manufacturing licenses, investment incentives and work permits for expatriates. It also provide post-licensing assistance, e.g. providing exemption from import duties on raw materials and machinery used in manufacturing, and assisting investors to obtain approvals and facilities from state governments and local authorities to implement their projects.

MIDA has also been empowered by the Government with the necessary authority to negotiate directly with investors for targeted projects and provide the necessary support, including special incentives. With this development, MIDA will be able to make decisions expeditiously on approval of projects and incentives in the manufacturing and selected services sectors.

In order to sustain Malaysia’s competitiveness, the government will continue to implement new policies and fine-tune existing measures to facilitate the conduct of business and to assist the private sector to access new markets.

About MIDA

Malaysian Investment Development Authority (MIDA) is the principal Malaysian Government agency responsible for the promotion and coordination of the manufacturing and services sectors in Malaysia. MIDA assists companies in the implementation and operation of their projects. Please visit www.mida.gov.my for more information.


European Investment Fund (EIF): EUR 180m of Loans for Microbusinesses Across Europe Under Progress Microfinance

After completing his 26-month military service, Andronikos (23) set up his own car wash business on his parent’s land. The land in Episkopi had been unused for a few years and even though he had thought of opening a carwash before, he did not have the means to buy the equipment needed. He went to the Co-operative Credit Society Kouriou to ask for a micro-loan of EUR 20 000 and weeks later was able to buy a brand new vehicle lift to get the business off the ground and is now washing around 60 cars per week. He currently employs two people and with plans to start washing larger vehicles including tourist buses, tractors and trucks, he will start looking for a new employee to handle the new vehicle lift in the next few months.

What is “micro”?

Microfinance is the provision of basic financial services to poor (low-income) people (who traditionally lack access to banking and related services) (CGAP Definition, Consultative Group to Assist the Poor).

Microcredit is defined by the European Commission as a loan or lease under EUR 25,000 to support the development of self-employment and micro-enterprises. It has a double impact: an economic impact as it allows the creation of income generating activities and a social impact as it contributes to the financial inclusion and therefore to the social inclusion of individuals.

A microenterprise is any enterprise with fewer than 10 employees and a turnover below EUR 2m (as defined in the Commission Recommendation 2003/361/EC of 6 May 2003, as amended).

Source: EIF

Andronikos is one of many micro-entrepreneurs across the European Union who had business ideas but didn’t have the cash to turn these ideas into a reality. The funding issue is not just a problem for micro-borrowers but also for microfinance providers. According to a European Microfinance Network (EMN) study, ‘the most pressing problem for the microfinance providers is the lack of access to long-term funding’. Progress Microfinance, an EU initiative launched in 2010 helps to bring a solution to this pressing problem. By working with Microfinance Intermediaries to provide support for microbusinesses, Progress Microfinance has helped to remove barriers previously preventing entrepreneurs like Andronikos from accessing finance.

EIF Took Kit for SMEs: The EIF focuses on the whole range of micro to medium-sized enterprises, starting from the pre-seed, seed-, and start-up-phase (technology transfer, business angel financing, microfinance, early stage VC) to the growth and development segment (formal VC funds, mezzanine funds, portfolio guarantees/credit enhancement).
Source: European Small Business Finance Outlook, May 2012 (EIF)

Progress Microfinance was set up in November 2010 with EUR 203 million of funding from the European Commission and the European Investment Bank. Targeting all EU-27 Member States, Progress Microfinance helps to increase access to finance for people who have lost or are at risk of losing their job or have difficulties entering or re-entering the labour market. Examples of potential micro-entrepreneurs targeted by Progress Microfinance include female entrepreneurs, young entrepreneurs, entrepreneurs belonging to a minority group, entrepreneurs with a disability and sole traders.

The European Investment Fund (EIF) acts as Management Company for the EU Microfinance Platform - European Progress Microfinance Fund, the main vehicle through which Progress Microfinance is implemented. Progress Microfinance does not provide direct financing to micro-entrepreneurs or individuals but loans of less than EUR 25,000 are provided by selected intermediaries participating in the facility.

"Microfinance has traditionally been a tool for fighting poverty in developing countries."

Eligible intermediaries under Progress Microfinance are any public and private institutions across the EU-27 Member States that provide micro-credits and/or guarantees on micro-credits to individuals or micro-enterprises established in the EU Member States. These could include financial institutions, microfinance institutions, guarantee institutions and other institutions authorised to provide microfinance loans/guarantees. The selection of intermediaries involves looking at their financial standing and capacity, operational capabilities, non-bank status and strategic planning to reach financial sustainability.

Microfinance has traditionally been a tool for fighting poverty in developing countries. However there is a real need for microfinance resources also in the EU and Progress Microfinance aims to meet those needs. A recent EIF working paper on microfinance in Europe provided a comprehensive analysis of the market, concluding that the microfinance market is still immature and fragmented. At the same time it also highlighted its growing importance as a market segment with a potential to help to reduce unemployment while fostering financial and social inclusion. Microfinance fits hand in glove with the EU 2020 objective of targeting social inclusion. The example of Andronikos in Cyprus shows how young entrepreneurs with visions but without finance can eventually become economically self-sufficient through targeted microfinance support. Having sufficient finance to make a business work creates jobs, creates futures and creates important structures within an inclusive society.

 Overall situation of European micro-firms compared to other enterprise size classes: When looking at the business climate of micro-enterprises, the EU Craft and SME barometer shows that micro-enterprises on balance estimated their overall situation substantially less favourable than small or medium sized firms in the second half of 2011.
Source: European Small Business Finance Outlook, May 2012 (EIF) - UEAPME Study Unit (2012)

Less than two years after the launch of Progress Microfinance, 20 microfinance intermediaries have entered into funding or guarantee agreements with EIF which over the next 2-3 years are expected to generate more than EUR 180 million in new micro-credits in15 countries across the European Union. The selection of intermediaries will continue until 2016 with a target to generate EUR 500 million of new micro-credits across EU-27 by 2019.

Banco di Credito Cooperativo Mediocrati (BCCM) is the 20th and most recent transaction signed under Progress Microfinance since its inception in 2010. To date, commitments of close to EUR 80 million under Progress Microfinance have been signed for microfinance providers across the EU including in Belgium, Bulgaria, Cyprus, France, Greece, Lithuania, Poland, Portugal, Romania, Spain and The Netherlands.

Financial support under Progress is often complemented by other forms of microfinance support. Through JASMINE technical assistance funding, MFIs can improve visibility and quality of services and products offered. The EIF signed a EUR 3 million senior loan agreement with ‘Mikrofond’ aiming at supporting micro-enterprises in Bulgaria and with ‘microStart’, Belgium, a micro-credit pilot programme based in the Brussels neighbourhoods most affected by unemployment. These two microfinance institutions both benefited from Progress Microfinance funding instruments and from JASMINE technical assistance.

"... commitments of close to EUR 80 million under Progress Microfinance have been signed for microfinance providers across the EU ..."

In addition to Progress, EIF provides Technical Assistance to selected microfinance institutions and micro-credit providers active in the European Union to increase the quality of their internal processes. JASMINE Technical Assistance services consist of an institutional assessment or a rating exercise performed by Microfinanza Rating or Planet Rating and Capacity building in the form of tailor-made trainings to the staff and management of the selected MFI. Trainings are delivered by experts from the Microfinance Centre, a network based in Poland and active in Asia, Africa and Europe on the other hand. The trainings focus on the weaknesses observed during the assessment / rating reports.

The Technical Assistance is financed by the European Commission, Directorate General for Regional Policy and it is free of charge to the beneficiary institutions. Currently 25 non-bank micro-credit providers were selected to receive an assessment, a rating and up to twelve days of advisory support per year under JASMINE.

The JASMINE Initiative acts as a doorstep to potential funding at a second stage under EIF-managed microfinance mandates, helping non-bank microfinance institutions to scale up their operations and maximise the impact of microfinance products on micro-enterprises development and unemployment reduction within the European Union. Good examples of these synergies are Permicro in Italy, the first EIF direct equity investment into a non-bank MFI, and Qredits in The Netherlands which both signed a guarantee agreement and loan deal with the EIF.

Background information:

The EIF at a glance:

EIF's central mission is to supportEurope's small and medium-sized businesses (SMEs) by helping them to access finance.  EIF designs and develops venture capital and guarantees instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment. The EIF total net commitments to private equity funds amounted to over EUR 6bn at end 2011. With investments in over 370 funds, the EIF is a leading player in European venture due to the scale and the scope of its investments, especially in high-tech and early-stage segments. The EIF guarantees loan portfolio totalled over EUR 4.4bn in close to 220 operations at end 2011, positioning it as a major European SME guarantees actor and a leading micro-finance guarantor.


UPDATED: Spain Still Up for a Class Ride

[update 06/08/2012: further gallery images added]

Drive Espana – High Performance Luxury Touring

Drive Espana was created in 2004 to give discerning owners of High Performance Sports Cars great driving holiday experiences

So Why Spain? Simple – miles and miles of  empty roads, all in good condition with virtually no traffic. The chance to join a road which runs arrow straight for miles, or storm over a twisting mountain pass. The Scenery – Plains, mountains, forests some of the mountain passes are over 1500m and have stunning views. At the end of each day there is a welcoming hotel, usually a Parador. Paradores is Spain’s National Traesure, a chain of hotesl which have been built in ancient buildings. One night a 15th Century Convent, another night a Castle where the king stayed in Medieval Times.

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Tours often have a theme as well, Jasper Gilder Principal of Drive Espana says “ Some groups are really motorsport oriented so we take them to the racing or organise an exclusive trackday, others want winery visits or the chance to visit Spain’s historic heritage. There has been a real gastronomic revival in Spain in recent years and we recently organised a tour where every hotel had Micheiln starred chefs”

Tours usually start at Portsmouth and Brittany Ferries new high speed service has moved Spain twelve hours closer to the UK. The group embarks mid morning and at lunchtime the following day they are getting off. The ferries are modern and large with comfortable cabins – all with a window, but the real highlight is the excellent food. A convivial day together also lets people get to know each other and often friendships are formed which last long beyond the end of the trip.

On arrival at Bilbao or Santander the group meet up with participants from mainland Europe who may have chosen to drive to join the group, and the fun begins in earnest! Drive Espana started hosting tours for owners of the very special English TVR brand but the word soon got around and the Aston Martin Owners Club and Ferrari Owners Club were quick to see the attraction of Spain as a destination, ever more so when members return from tour wanting to know when the next one is!

Twenty Ferraris or Aston Martins disgorging from a ferry into Spain is a sight to behold, but the Company Principal actively discourages group members from forming big convoys. “ Convoy driving causes all sorts of problems” Gilder says “ People have different driving styles, some want to go down the motorway to the next stop, others want to get off the main roads into the country where the great driving is to be found, people want lunch at different times and in different places…But the biggest issues are around safety, driving in convoy can cause a driver to allow his or her driving decisions to be made by the driver of the car in front – the feeling of a need to keep up can cause people to take risks added to which they may be driving looking at the back of the car in front , we came to Spain to get away from that!”

So every day people go off and do their own thing – they receive a roadbook which tells them where the next hotel is and they go off in ones twos or threes to explore. When everyone arrives they have all had different experiences so nthe feeling at the dinner table is akin to that on a cruise liner, it’s just that this ‘cruise’ is on land.

What is there to see? Fantastic scenery to start with. Inland Spain is unknown to many visitors, but the rugged mountains, forests and great views soon captivate. Seeing the Sierra Nevada, just seventy miles from the Mediterranean, with snow still lying in April against a bright, bright blue sky is a wonderful sight. There is much history to explore as well, in Merida there are excellently preserved Roman Ruins, in Granada the Alhambra, Palace of the Moorish Princes who ruled Spain for Centuries. In Cordoba visitors should visit the Mesquita, a huge mosque built in the middle ages, it feels like being in an indoor forest until the visitor rounds a corner and discovers a Cathedral built in the centre of it. The builders regretted what they had done almost as soon as they had finished but the contrast is amazing.

In Toledo Drive Espana uses a Hotel with a panoramic view over the ancient City which sits on a redoubt in a bend of the River Tajo. The Cathedral and the Alcazar dominate the skyline and a visit to the Cathedral Sacristy will allow the visitor to see the very first gold bought back to Spain from the New World.

Many of the Conquistadors came from the Extramadura, that part of Spain which borders Portugal. This is an area of ancient walled cities which time seems to have passed by, hilltop settlements like Oropesa and Trujillo are linked by virtually empty roads which are a delight to drive on and arguably the best in Spain  “ One Client who keeps a number of Ferraris in the UK and South Africa texted me from a stop on one of our favourite roads to say he thought this was the best driving in the world – roads like the route from Guadalupe to Navalmoral or from Zafra to the coast are amazingly engaging to drive – in one case over fifty miles of twists and turns. For Sports Car Owners this is close to Nirvana”

Trackdays are often part of the mix and Drive Espana is fortunate to have forged a close relationship with the Circuito Michael Greenhalgh at Guadix in the South. Jasper Gilder explains “ You can never sensibly discover what a sports car can do on the open road, but a trackday allows you to discover what your car and you can do in comparative safety. Our trackdays are exclusive so we have the circuit all day with never more than twenty cars. Safety is vital and after a thorough briefing about safety and etiquette drivers are taken out for acclimatisation laps. After that the pitlane is opened and people can go out at will. Racing is not allowed and free instruction is always available. The team who run the circuit are English so there are no communication issues and the owner, who was a successful racing driver in his own right, is always generous with his time and expertise. There are a number of people driving in amateur racing championships in the UK who got bitten by the bug on their first trackday at Guadix.  People also like the association with Motorsport. Lewis Hamilton trained at Guadix in his early years and leading national and international teams use the circuit for testing and car preparation leading up to the season, so there is often some interesting machinery in the pit garages.

Sounds like these are lad’s tours. Not so. There is inevitably some talk about sprockets and grommets in the car park, but most participants bring their wives or girlfriends and boring conversations about grubscrews are mercifully rare.

Every year there is a tour to coincide with the Portuguese historic racing meeting in October on the Algarve. The circuit is great for spectating and a hospitality box is laid on. On one of the night water taxis are organised to take tour clients to a waterside restaurant and these extra touches make a trip really memorable.

So – is Drive Espana a success? We think so – there is a very high repeat booking rate and some clients have done over five tours – one has done nine! It is not uncommon for Jasper Gilder ( who tries to accompany every tour) to be besieged by people asking ‘What are we going to do next year?’ as a tour winds down.

The final touch? Clients are asked to send all their photos in and a few month later a coffee tablebook is produced a momento of Great Drives, Great Hotels, Great Trackdays and Great Times

Contact Drive Espana for individual or group bookings on 0044 1442 842542 / 0044 7831 327727

info@driveespana.com

www.driveespana.com

[caption id="attachment_722" align="alignleft" width="159"] Jasper Gilder[/caption]

Drive Espana is run by Jasper Gilder who has been visiting Spain for over thirty years. A self confessed car and motorsport lover Jasper has owned high performance cars for a similar time. During a motoring tour of the Paradors in 1989 he saw the potential for drving tours of Spain, but it was only after the major investment in infrastructure by the Spanish Government in the 1990s that the dream could become reality and Drive Espana ran its first tour in 2004.

Jasper is based outside Hemel Hempstead in the UK and, when not running tours, he runs a training and management development business which he set up in 1988.


“The Entrepreneur” - A Sense of Balance

By Mona Vyas

From the moment of conception to the surrender of the last breath, entrepreneurs have to fight innumerable battles: political, cultural, economical, sociological, psychological, metaphysical, geopolitical, hereditary and biological.

The world today reflects a complex, unpredictable and incalculable playground. Are there underlining factors surfacing and steering the success and failure rates of enterprises?

Predictably, the headlines are covered with business closures throughout the globe. The UK has a very high failure rate for start-up businesses. It is reported  two-thirds of entrepreneurs fail. In 2011, 23,600 businesses collapsed. This is expected to hit 25,600 in 2012 and 25,800 in 2013[1]. These are startling figures that cannot be ignored.  How many jobs are lost? How many families are effected? How many health problems arise and literally how many lives are lost?

One of the great failures is a poor fit between the entrepreneur and their venture. But we must question “poor fit” at which level? The entrepreneur and “the markets” or the entrepreneur and “the mind”?

Another reported fact is that 69% of VAT-registered businesses cease to trade within ten years of registering for VAT[2]. This figure does not take into account the failure rates amongst the majority of start-up businesses, which undoubtedly is higher, some predicting almost 80%.  Naturally, this means our societies are accepting these great failure rates.  So how does an entrepreneur achieve success when faced with  growing, interconnected markets with so many varieties of inner and outer conflicts? Can a balance between competing interests truly be achieved?

The world of global commerce is fast-paced and set within a polarised world; the right wing and the left wing; the republicans and the democrats; the rich and the poor. It is fragmented yet intertwined at best, the coalition government an example. The world of commerce has no global governance, no global regulations and indeed, the absence of a global model that is aligned throughout economies. It is evident that opposites are in conflict, and the “modern entrepreneur” is placed facing a fractured world. The entrepreneur is competing for victory in every encounter of the fast changing global world.

Despite the downturn, the global economy has expanded, albeit at a slower pace than in 2010. This year the U.S economy has grown by 1.8 per cent, and the GDP of the troubled eurozone rose by 1.6 per cent in comparison to 2011. Asia has reported an outstanding economic growth of 7.9 per cent for this same period[3]. A reason for this expansion? Perhaps a greater sense of balance has been achieved by entrepreneurs.

So what is an entrepreneur? An entrepreneur is an enterprising individual who builds capital through risk and/or initiative, contributing significantly to its economy, and thus the global economy. Entrepreneurship is unquestionably the back bone of each community, economy, country and continent. SME’s in the UK account for 99 per cent of all enterprises, employing 13.8 million people and have an estimated annual turnover of £1.5 billion[4]. In a recent study[5] between 2002 and 2010, 85% of all net new jobs were created by SME’s.

Yet, alarmingly, it has been reported that there was a 20.3% increase in businesses failing in Quarter 3 2011 compared to the same period in 2010 and a 7.8% increase in failures for Quarter 3 2011 compared to Quarter 2 2011[6]. These are astonishing figures. This sector can no longer be overlooked and is screaming for aid. But why do they fail?

The most common reasons are inadequate understanding of the business and insufficient capital to sustain the venture. Even though these are the two most obvious contributors cited, entrepreneurs face two conflicting yet interlinked sensory battles on their path to success prior to these. I believe the journey in 2012 is into the more personal aspects of entrepreneurship and a new dimension on solving difficult problems and conquering challenging times.

"I believe the journey in 2012 is into the more personal aspects of entrepreneurship..."

- Mona Vyas

The inward battle - the physiological, the sociological, the determination, the culture, the mythology, the natural creativity, and one’s integrity, morals, ethics, and disciplines; and

The outward battle - the systems, the government, the bureaucracies, the geopolitical constraints, the turbulent markets, the challenges and obstacles beyond one’s control and predictions.

Within these battles are underlining principles that surface and form a great part of the journey to an entrepreneur’s success. It is these underlying (and often overlooked) principles that determine the success or failure of a venture, and indeed, the entrepreneur; in advance of the common factors being brought in to play. This article serves to highlight the importance of the underlying principles. In conjunction rests the notions of conflicting but intertwined inward and outward battles. A successful enterprise can only be achieved by accepting that neither the inward nor outward battles will be sustainable without the other. In essence, it requires a conscious “sense of balance."

Underlying principles:

An introspection of “the self”

At the core of all enterprises lies evident the “seed planted". An introspection of your own strengths, weaknesses, cultural assets and indeed, your life’s purpose; how can one connect to the world of entrepreneurship? Fundamentally, it is an examination of the inward battle.

It's an examination of one’s attributes, discipline, ethics, morals, determination, and creativity, and aligning that to the venture itself. It is the relationship of how these core tenets will enhance the venture, and the examination of how they will interplay with outer influences; how they will affect the market place, how the business will be a reflection of the entrepreneur’s core being. Unless there is a perfect alignment between the founder of the enterprise and the venture itself, there will be a high chance of failure.  This exercise is vital prior to putting any business plans into action.

Vision & Mission

The vision will be the greatest personal resource of an entrepreneur. A visual that is perfect and reflects a compelling cause of the future outcome will lay a strong foundation.

The mission is the drive to achieve the vision. It can be condensed to a statement that defines the enterprise at the most basic level that drives your vision forward, serves as a reminder of your vision and guides the actions of the enterprise.

The Game Plan

Great thinking precedes great achievements. Intelligent strategic planning will usually result in a fortunate future. Planning for the future requires long-term thinking; setting priorities and concentrating until they are accomplished. It is being aware of the obvious such as securing capital, the premises, the employees, the business plans, to the unobvious of identifying, and forming relationships with, key players who impact and add value to the venture, as well as setting quarterly targets, monthly milestones, weekly agendas and daily disciplines. It is here where an entrepreneur will sometimes collide with the outward battle, but minimising risk is taking a step closer to achieving success.

What is the end goal? How will you get there? There is a fine line between the altruism and the enlightened venture’s self-interest that ensures long-term profitability. Profits must be kept in their appropriate framework. The late Peter Drucker, the management expert, said it so well: “There is nothing so useless as doing efficiently that which should not be done at all.” Be clear on your activities. It is the power of focus, for clarity precedes success.

Cultural awareness

Deal first or relationships first? Informal relationships or formal relationships? Decisions, decisions... It is imperative to appreciate patterns of cross-cultural business behaviour across the globe. Cross-cultural influences cannot be escaped in an increasingly globalised economy.

Cultural differences impact everything from communication, attire, organisational culture to project management. Entrepreneurs who take cultural differences into account and practically prepare strategies for global liaisons will stand a higher chance of success than those that are ignorant. This interplays with an earlier tenet of introspecting oneself; realising the value of one’s own culture, which is interlinked within the global business culture.

The venture will only enhance to the degree the entrepreneur is willing to learn and develop. In today’s globalised world, culturally educating oneself is a prerequisite to success. Understanding self-development is a lifelong learning process can only elevate an entrepreneur’s success.

Philosophy

Many say philosophy is for fools. But much of the history of the 20th century is more or less the product of a small number of philosophical ideas and the philosophers who created them: Marxism ruled the lives of more than a 100 million people; Fascism destroyed the lives of millions of people and caused a World War; both Marxism and Fascism were opposed by men in the name of Liberalism, Democracy, Catholicism, Protestantism, or Science, each of which are themselves either specific philosophies or derived from more comprehensive philosophical systems. Whilst Marx and Nietzsche were regarded as unsuccessful, it can be argued that their ideas and values created and destroyed civilisations.

The lives people lead and the choices they make are the result of the philosophies they hold, whether they are conscious or unconscious of this fact. Human beings orient their lives around their perceived realities, what they believe is the prism through which they explain their experiences and relationships with others and the basis upon which their moral code is formed and developed.

Similarly, the entrepreneur’s philosophy is one of the leading causes affecting the success of the enterprise. Fundamentally, philosophy deals with the logical side of life’s information and thinking habits. What we know determines our philosophy, how we feel about what we know determines our attitude toward market conditions. It is the “business philosophy” that will determine the direction of the venture and steer forward the enterprise.

Never before have enterprise creation, economic risk, political barriers, regulatory framework and geopolitical aspects been more closely intertwined.  Entrepreneurs must accept the conflicting inward and outward battles. Entrepreneurs must consciously capitalise on their strengths and weaknesses learnt from the sensory plains of inward and outward introspections.  Failure can no longer be accepted; perseverance must be the course for steering the enterprise. Through a sense of balance and alignment, entrepreneurs must renew their own determination to conquer the venture’s mission and enhance global economies.

Mona Vyas - CEO of Global Portfolio Partners Ltd (UK)

Mona Vyas demonstrates a wealth of international commercial experience and expertise. Widely respected by both clients and investors alike for her dedication and professionalism, Mona has been associated with ground-breaking projects, using her extensive business connections to secure contractors and provide comprehensive strategic business evaluation.

Mona has worked on a number of large scale real-estate projects in Europe, Africa, the Middle East, Asia and Central America.

Throughout her career, the business activities of Mona have been wide and varied with focus on three principal business sectors; business analysis, turnkey solutions and valued engineered solutions for integrated resort schemes.

Cultural nuances may be important too, and understanding them can be a vital ingredient in developing successful projects. She speaks four languages fluently in addition to English, and is comfortable operating all over the world.

With 25 years of experience in international business development, Mona has developed a refreshing and innovative approach. She has sound business acumen, and possesses a highly-developed sense of personal integrity, combined with an altruistic nature. She sees no conflict between these attributes and gaining commercial success – indeed quite the opposite.  She believes that it is only with these attributes that she, and her clients, can achieve the full extent of success they strive for.

All of the above skills are supported by a robust and impressive education track record; at the core of which you will find a specialism in Business Administration, International Marketing, Business Finance and International Leadership (I.F.L.P).

Contact details - www.Gpp-ltd.com | partners@gpp-ltd.com

[1] A report by  BDO LLP -Industry watch survey

[2] FinancialPreneur.com

[3] Knight Frank Global Wealth Report 2012

[4] Department for Business Innovation and Skills November  2011

[5] Presented by the European Commission

[6] Equifax Quarter 3 Business Failures Report 2011


Rio Negócios: Celebrating Two Years and R$3 Billion of Investments in the City

Rio de Janeiro is one of the cities that most attracts foreign direct investment in the world, launched recently in global spotlight with the encouragement of a powerful global marketing platform, efficient management, as well as all of its qualities known in postcards. The aim is that more companies see opportunities in strategic sectors like energy, information technology and communication, financial services, creative industries, hospitality, urban infrastructure and life sciences.

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In 2010, Mayor Eduardo Paes created Rio Negócios – an organization to attract new investment – which will celebrate its two years birthday on May the 14th and became the official agency of the city for this purpose. The public-private partnership, made possible by the joining of forces between the City Hall and the Commercial Association of Rio de Janeiro, is already responsible for the arrival of about R$ 3 billion in projects during this period.

"... responsible for the arrival of about R$ 3 billion in projects ..."

The agency is the gateway for investors in Rio and Brazil and has two key areas in this operation - commercial and business intelligence. The goal, in addition to promoting closer ties with the relevant bodies to facilitate the arrival of new companies, is to consolidate and customize information relevant to business customers and is also an important source of research for the city.

Rio Negócios was inspired by Think London, one of the most important entities in attracting investment in the world, that attracted $ 7 billion for London over 15 years. The focus of the Brazilian agency are sectors where the city meets its vocation. The list of companies that the agency has supported shows that the work has achieved success. GE, Wellstream, Direct Edge, EMC, IBM, Siemens, BG, L'Oreal, Fiocruz, State Grid, Haobo, Erowlabs, Rolls Royce, Columbia University, Diageo, Lekunbide, House in Rio, IMD and Cisco counted on the support of Rio Negócios.

"We have in our favor not only the international projection which Rio de Janeiro is going through, as also the existence of several features that together make our business environment unbeatable. We are the Latin American capital of energy, we have the greatest logistics potential of the country, with two ports and three airports, we hosted leading companies in various sectors, we became a hub of innovation, beyond academic excellence offered in the city, with institutions of reference for the whole country," says the executive director Marcelo Haddad.

Information for the press:

Isabela Fonseca: ifonseca@rio-negocios.com
Phone: (21) 3031-4015


LEX Africa: The Changing Face of Power in Africa

By Greg Nott, director at Werksmans Attorneys, South African member firm of Lex Africa

No longer the “dark continent”, Africa is shedding light on investors’ quest for new sources of energy. Recent oil and gas finds, coupled with renewable energy progress and power project successes, have switched attention from the problems of the past to the promise of the present.

While oil and gas are still being discovered in a few other parts of the world, including the Eastern Mediterranean, Northern Europe and Gulf of Mexico, it is the finds in Africa that are arguably fuelling the most investor excitement.

To quote Paolo Scaroni of European energy giant, ENI, as reported in the New York Times of 10 April 2012, “Africa will be the backbone of our production and growth in the next 10 years”.

His words have been echoed by other major players in the international energy industry, hailing natural gas finds off the northern coast of Mozambique and Tanzania as the most significant gas discoveries in a decade. With Nigeria being the fifth largest producer of liquified natural gas (LNG) in the world and Nigeria, Equatorial Guinea and Angola being significant sources of oil, the stage is set for Africa to play an increasingly important role in meeting the world’s energy needs.

According to media reports, recent gas finds in Mozambique (including by ENI of Italy and Anardarko of the USA) rival the entire reserves of Kuwait, and expectations are rising that there is much more to come since this part of the world has been virtually untapped.

"... the stage is set for Africa to play an increasingly important role in meeting the world’s energy needs."

- Greg Nott

Adding to the buzz about Africa are new oil fields in Ghana and Uganda, natural gas fields off Namibia, and exploration being undertaken in East African countries such as Kenya and Tanzania, previously overlooked in favour of oil-rich West Africa.

These headline-making events are not the only reason for investors’ high hopes for Africa as the new energy frontier.  Other developments that are sparking optimism are the continent’s recent successes in achieving power project closure, along with regulatory reform in the energy sector and the progress being made in renewable energy.

Power deals signed and sealed

In the past, Africa earned an unfortunate reputation as a continent with a poor track record for achieving closure in infrastructure projects in various sectors, including energy.

Two of the largest failed power projects were the World Bank-funded oil pipeline from Chad and Cameroon to the Atlantic Ocean, at a cost of US$4.2 billion, and the electricity generation component of the Lesotho Highlands water project, involving about US$3.5 billion in funding from the World Bank, European Investment Bank and African Development Bank.

The Chad-Cameroon pipeline project turned sour when the President of Chad elected to spend the funders’ money for other purposes, including arms purchases. The Lesotho electricity generation plan was clouded by corruption, which culminated in the conviction and imprisonment of the project’s chief executive.

Other big energy projects have suffered a more mundane fate. They typically took so long to reach closure, both financially and in respect of construction, that they limped along for years without any particular results being delivered until finally petering out altogether.

Change is certainly in the air. Recently, several major African energy projects have reached closure without the faintest taint of corruption or incompetence. In fact, they have been hailed as clear proof that the continent has turned the corner and that the 21st century will prove to be the age of the “African Lions”.

One such project is the Bujagali Hydropower Project in Uganda, a 250-megawatt power-generating facility built on the Victoria Nile River.  This project is surely one of the most rigorously reviewed, carefully planned and painstakingly executed projects in the energy sector in Africa.

It was initiated in 2006 when the project sponsor, Bujagali Energy Limited (BEL), was chosen as the preferred bidder in an international competitive bidding process, run by the government of Uganda with support from the World Bank.  Completion and commissioning is expected in the second half of 2012.

Stakeholder management and good governance emphasised

One of the requirements BEL had to meet was the filing of a social and environmental assessment, the aim being to ensure the hydropower project would deliver maximum benefits (including to local communities) while complying with strict environmental and other regulatory obligations, both during construction and operation.

[caption id="attachment_1481" align="alignright" width="300"] Photograph by Paul Grover[/caption]

Among other things, the project company committed to providing alternative water supplied for villagers whose access to the river would be restricted as a result of the project. It also undertook to plant indigenous vegetation on islands and riverbanks around the Bujagali reservoir, to monitor fish stocks and restock if necessary, to provide alternative facilities for white water rafting enterprises, and to minimise the effect of construction through traffic management and environmental management programmes.

Another important facet of the project has been an extensive public consultation and disclosure programme to increase community awareness and provide opportunities for community involvement.

On its website, BEL notes that because of the severe shortage of electricity in Uganda, electricity consumers regularly experience rotating blackouts of between 12 and 24 hours a day.  It also notes that the Bujagali Hydropower project, while going a long way towards alleviating Uganda’s energy poverty, will not cause greenhouse gas emissions, in contrast to most electricity generated in Uganda (much of it by diesel and oil generators).

Talking of minimising greenhouse gases, another major power project that is setting the pace for the transformation of the African energy landscape – and investors’ perceptions of it - is South Africa’s Renewable Energy Independent Power Producers Programme (REIPP).

Renewable energy set to become reality

Through the REIPP, the South African Department of Energy aims to procure a total of 3 725 Megawatts of energy from renewable sources such as wind, solar, biomass, biogas and landfill gas, among others.  The programme consists of five bidding phases or ‘windows’, the first two of which have already passed (in November 2011 and March 2012 respectively).

[caption id="attachment_1484" align="alignleft" width="300"] Wind Power in Morocco/AFP[/caption]

The Department has drawn widespread praise for its capable handling of an extremely complex bidding process.  So far, the REIPP programme has been immaculately executed, with industry watchers noting the comprehensive bid specifications, inclusive consultation process and disciplined approach to deadlines, as well as the integrity of the process of selecting preferred bidders.

Administrative efficiency has gone hand in hand with high-level political support, and this has not been lost on investors, advisors and other players, who have flocked to take part in the programme.

South Africans are eager to see the REIPP go into action to generate independently produced renewable energy. Business and consumers alike will welcome the prospect of competition to the national utility, not to mention the likelihood of greater security in their energy supply.

In many ways, South Africa’s REIPP is a flagship project not just for the country but all of Africa – and one that the investor community is watching closely. Other African countries are also developing renewable energy programs for example the largest wind farm in Africa is planned at Lake Turkana in Kenya, a GBP533 million project with a capacity of 300MW.  Wind power is also being developed in South Africa, Ethiopia, Tanzania, Egypt and Morocco.  The huge hydro-electric potential of the Democratic  Republic of the Congo remains undeveloped.

Political will is paramount

Government should always be the champion in setting the regulatory framework for private sector participation in the energy sector and it seems that this is a lesson Africa is taking to heart. As with Uganda’s hydropower project, the REIPP in South Africa has enjoyed top-level political support from its inception. If South Africa is to succeed in introducing independent power production – and in so doing set a precedent for other African countries – it will be critical to continue setting the tone from the top.

Up to now, South Africa’s energy sector has been dominated by a state-owned monopoly which, understandably, will be reluctant to lose its grip on the market. Investors, on the other hand, will need the assurance that fair competition will prevail and that new entrants will be protected from potential market abuse. They will also want clarity on how they will be expected to interact with the incumbent.

In this regard, the South African government is not only making the right noises but following up with appropriate action by preparing to establish the Independent System and Market Operator (ISMO). Briefly, ISMO’s role will be to procure power from the independent power producers so as to level the playing field and eliminate conflict of interest between the buyer and seller of electricity.

"... procure power from the independent power producers so as to level the playing field ..."

- Greg Nott

According to the ISMO Bill issued by the Minister of Energy, ISMO will be a separate juristic person with a nine-member board of directors, whose chairperson will be appointed by the Minister. It appears that ISMO, like Eskom (the South African state owned energy monopoly), will be regulated by the National Energy Regulator of South Africa (Nersa).

The Parliamentary Portfolio Committee on Energy has already held two public hearings on the ISMO Bill, which has been well received by a cross-section of energy industry stakeholders, including business, trade unions, academia and interest groups such as the Heavy Energy Users Group.

The latest round of public hearings, held in May 2012, attracted as many as 148 submissions. Some of the key issues that stakeholders raised in their submissions are the need for independent transmission lines to minimise connection risk, bulk electricity supply and network tariffs, and transparency in the allocation of megawatts between Eskom and independent power producers.

The Department of Energy has said it will consider the proposals submitted about ISMO when developing the policy guidelines and regulations that will pave the way for the creation of ISMO, which will no doubt further enhance the attractiveness of the sector to investors.

Africa-friendly investment

Africa’s energy landscape is changing rapidly, in more ways than one. New gas and oil discoveries in countries outside the traditional resources footprint in North and West Africa have fuelled a flurry of activity among energy investors from Europe, China and India. For the most part, Africa is welcoming the intense interest being shown in its power resources, the development of which is critical for economic growth and the eradication of poverty.

There is widespread understanding that investors not only need to know the rules by which they will be playing but also that these rules will be fairly and transparently applied. Africa is responding by introducing regulatory reforms, such as in South Africa where independent power producers are set to enter the market imminently. The continent is also showing itself capable of managing major power projects efficiently and transparently, sending positive signals to citizens and investors that Africa has the power to deliver on its promise. The need for sound legal advice when investing in Africa was the reason for the formation in 1993 of Lex Africa, Africa’s first and largest legal network with members in 27 African countries.  Pieter Steyn, Chairman of Lex Africa and director of its South African member, Werksmans Attorneys, notes that Africa is now a recognised emerging market not just for natural resources but increasingly for consumer goods and services such as telecommunications and banking.  With an ever increasing population, the need for energy security is becoming an important issue for African governments and provides enormous scope for effective public –private partnerships.

Author: Greg Nott, director at Werksmans Attorneys, is the Head of the Africa practice area at the firm. He specialises in corporate governance, cross border transactions, arbitration and public/private partnerships, as well as contractual, statutory and regulatory issues in the power, mining and telecommunication sectors.

In 2010 Greg was awarded Lawyer of the Year (Legal Business UK) and has been recognised in Chambers and Legal 500 Publications

Lex Africa: With its extensive network of leading legal firms spanning 27 African countries, Lex Africa affords the international business community access to an established pool of skilled and reputable lawyers, all of whom strive to facilitate trade and investment in the continent through best legal practice. Established in 1993 Lex Africa’s management office is situated at Werksmans Attorneys in Johannesburg. For more information on member firms and to view the 2012 Guide to Doing Business in Africa please visit www.lexafrica.com.


World Bank Group's PREM: Harnessing Trade Opportunities for Growth and Development

[caption id="attachment_1497" align="alignright" width="214"] Otaviano Canuto, Vice President and Head of the Poverty Reduction and Economic Management Network, The World Bank[/caption]

The pace of global trade integration over the past two decades has been extraordinary. Trade has been a key driver of global growth, convergence, and poverty reduction. During 1983–2010, global trade grew twice as fast as gross domestic product (GDP). Developing countries in particular have benefited—on average annual exports from low- and middle-income countries have expanded some 14 percent every year since 1990.

The share of manufactured products in total exports of low- and middle-income countries increased from just 15 percent in 1970 to roughly 60 percent today, a level approaching the share in high-income countries (72 percent). While the world economy has been hit hard by the 2008 financial crisis and its aftermath, it is important to recognize the progress made in recent decades to leverage trade opportunities for creating employment and reducing poverty.

The rapid and sustained expansion in trade was enabled by a process of economic reforms aimed at removing barriers to trade, a multilateral trading system that reduced uncertainty for traders, and technological advances that reduced trade and communications costs. Average tariffs today are well below 10 percent, and in many countries a significant share of trade is duty-free. Advances in transport (such as containerized shipping) and information and communications technologies have greatly reduced the cost of shipping goods and of managing complex production networks. Together these developments led to two major changes in the structure of global trade: (a) the vertical and spatial fragmentation of manufacturing into highly integrated “global production networks”; and (b) the rise of services trade.

The open global trading system and the rise of global “fragmentation of production” (supply chains) make it much easier for countries to exploit trade opportunities. Examples abound. Take Macedonia, where in 2009 an EU-based chemical manufacturer opened a plant in a recently-established special economic zone. The plant began production of emissions-control systems used in automobiles. Two years later, this investment drove chemical products to the third-highest spot on Macedonia’s export list, lessening the country’s reliance on metals and textiles. Or take Nicaragua, where a combination of low labor costs and an improved security situation contributed to a dramatic expansion of investment in free zones, attracting producers of electronic wires and medical devices. Between 2006 and 2008, “ignition wiring sets for vehicles” became the country’s fourth biggest export.

These examples demonstrate the powerful impact the new global trade and investment environment can have on small economies. Global value chains have made exporting manufactures much easier than in the past because firms can specialize in specific segments of a supply chain for a product. But if the benefits of global value chains are accentuated for small economies, so too are the risks. The 2008 trade shock demonstrated that complementary policies to manage the short term effects of volatility are critical. From a longer-term perspective, host countries for investments which are limited to a small part of a supply chain are vulnerable to any small change in the economic formula that brought the investment in the first place. Strategies that are focused simply on attracting investment may therefore have serious limitations in terms of sustaining economic growth and reducing poverty. The investments offer jobs – often a large number of them – but if a country offers little more than cheap labor, it might not retain “footloose” investors and weaken its longer-term prospects for economic development.

"... create greater linkages between the export-oriented foreign investors and the domestic economy."

- Otaviano Canuto

In a world of footloose, global value-chain oriented investment, a key objective is therefore to create greater linkages between the export-oriented foreign investors and the domestic economy. This can happen through three broad channels: 1) vertical linkages – expanding the reliance on domestic suppliers of goods and services and sales of products to domestic firms; 2) horizontal linkages – including collaboration between foreign investors and domestic institutions such as universities; and 3) movement of skilled workers in and out of foreign firms.

Facilitating vertical supply chain linkages

Embedding foreign investors into the local economy depends crucially on establishing links in the domestic supply chain, both forward and, most importantly, backward to local suppliers. Such links also facilitate the spillover of technology and knowledge from foreign investors to local firms and workers. Developing competitive local suppliers requires a strong, competitive local industry base. The characteristics of the business environment, notably the degree of home grown competition pressure, and the degree of exposure to foreign competitors in the domestic market and external markets, are important. In the fragmented global-value-chain environment, governments can boost their positions by establishing clear rules and enforcement mechanisms to reduce the risks (and thus the costs) of contracting and by providing incentives for foreign investors to use local sources for production inputs.

So-called FDI-SME linkage programs have been established in a wide variety of industries and country contexts. In most cases, they focus on a small set of large foreign investors, who contribute time and resources to supporting the technical upgrading of local SMEs, with the aim of identifying potential supply partners. One of the most successful in Latin America was Costa Rica’s Supplier Development Program (part of the Provee Program), which facilitated SME linkages in high technology sectors, following the influx of high technology FDI linked to the investment by Intel. This program, and others like it, show the potential of establishing sustainable supply chain partnerships even in small, developing countries. But they also highlight the importance of an aggressive, and resource-intensive effort on the part of government (typically through an investment promotion or SME agency) to support these initiatives.

Strengthening the absorptive capacity of local firms

Whether local firms can benefit from the knowledge and technology of foreign investors is critically dependent on their absorptive capacity. Among the most important policies here are those focused on the local learning and innovation environment infrastructure, including investments in education, interactions between institutions of higher learning (e.g. training centers) and the private sector, and technological research institutes. Policies should also target the elimination of barriers to firm growth.

Improving access to finance is one key element of enhancing local firms’ capacities to absorb FDI spillovers. Improved financing terms are often components of linkages programs, for example offering suppliers faster payment terms or leveraging the low credit risk of the large foreign investors to facilitate access or better terms for local suppliers. For example, the NAFIN factoring program in Mexico transfers the credit risk of the small suppliers to highly creditworthy buyers and enables the bank to offer factoring without recourse or any collateral from SMEs.

Building competitive domestic exporters

While large, foreign investors tend to account for the majority of exports, over the long term, sustainability of export flows will depend on the emergence of competitive domestic exporters. Indeed, the ability of local firms to survive the rigors of foreign markets is, in effect, proof that the domestic sector has come of age. A focus on SME competitiveness implies a need for export promotion agencies to move much further upstream in the value chain and target resources to improve the productivity of firms that are seen to have high “export potential”.

Conclusion

Developing countries have benefited enormously from the dramatic changes in the global trade and investment environment brought about by the development of global value chains. For small economies in particular, value chain oriented investment has brought with it export industries on a wholesale basis. To take advantage of the dynamic potential of FDI and lower the vulnerability to the footloose nature of value chain investments, export activities need to go beyond being an enclave. Leveraging the potential of value chain oriented export strategies requires building competitive domestic firms and establishing effective linkages between foreign investors and the domestic economy. These are essentially two sides of the same coin. Building up domestic supply side capacity is a long term and difficult challenge, but if done effectively within the context of global supply chains, it will leverage FDI as a platform for the development of a sustainable national export sector, on the backs of competitive, globally integrated, local firms.

About the Author

Otaviano Canuto is Senior Advisor on BRICS Economies in the Development Economics Department, World Bank, a new position established by President Kim to bring a fresh research focus to this increasingly critical area. He previously served as the Bank’s Vice President and Head of the Poverty Reduction Network (PREM), a division of more than 700 economists and other professionals working on economic policy, poverty reduction, gender equality and analytic work for client countries. He also served as an Executive Director of the Board of the World Bank from 2004-2007. Outside of the Bank he has held leadership positions at the Inter-American Development Bank where he was Vice President for Countries, and for the Government of Brazil where he was Secretary for International Affairs at the Ministry of Finance. He also has an extensive academic background, serving as Professor of Economics at the University of São Paulo and University of Campinas (UNICAMP) in Brazil.