WORLD BANK GROUP MULTILATERAL INVESTMENT GUARANTEE AGENCY Mobilizing the Private Sector for Public...

WORLD BANK GROUP MULTILATERAL INVESTMENT GUARANTEE AGENCY

Mobilizing the Private Sector for Public Education: The Role MIGA Can Play

Frank J. LysyChief Economist, MIGAJune 8, 2007

2WORLD BANK GROUP MULTILATERAL INVESTMENT GUARANTEE AGENCY

What MIGA Does

Member of World Bank Group

MIGA has its own balance sheet

Small: Only 100 staff now

Sells Political Risk Insurance to Private Foreign Investors


MIGA’s PRI Covers

Transfer and Convertibility Expropriation Breach of Contract War & Civil Disturbance

Investor can choose any one, or up to all four

Pays premium based on risk (to MIGA)


Why We Need Better Schools


Traditional Private Projects

Sale in a competitive market, by competing suppliers

Hence:– Price as measure of value at margin

– Private cost at margin generally approximates social cost (other than for externalities and subsidies)

PPP’s very different Must confirm to be of social value


PPP’s: Must Meet Four Tests

Does the PPP structure make sense?

Was the PPP contract or concession awarded appropriately?

Is there a positive social return (ERR)?

Is there adequate fiscal space?


Gabon Vocational Education

Private firm would design curriculum, rehab buildings, install computers, and manage for six years

Some student fees, but also govt support

Negotiated contract, with alternative suppliers considered

Reasonable ERR likely

Structure reasonable, although not ideal


Gabon: Vocational Education

ProjectManager

Banks

Management Contract$4.6m

Over 6 yrs

PerformanceBond$0.7m

After 3 yrs

Principal & Interest on 10 year loan

$56.3m

Gabon National Agency for Vocational Education

Counter-Guarantee of Ministry of Finance


Thank you!

Frank [email protected]

For more information visit www.miga.org

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