recommendations for moving from words to actions financing for development: united nations| ron...

8/8/2019 Recommendations for Moving from Words to Actions Financing for Development: United Nations| Ron Nechemia

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ECOSOC/ BWI Meeting: Increased coherence, coordination and cooperation for the implementation of

the Monterrey Consensus at all levels a year after Monterrey

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Recommendations for Moving from Words to ActionsFrom the Coordinating Committee of Business Interlocutors on

Financing for Development21 March, 2003United Nations

T he ECOSOC Chamber

9:30 a.m. 10:00 a.m.WELCOME ADDRESS &OPENING STATEMENTS

Ambassador Gert Rosenthal, President ofECOSOC

Moeen Qureshi (Chair) Chairman, EmergingMarkets Partnership, Former Prime-Minister ofPakistan and former Senior Official, World Bank

Maria Livanos Cattaui, Secretary General,International Chamber of Commerce

Paul Underwood, Executive Director, BusinessCouncil for the United Nations

PANEL DISCUSSIONSEach panel will commence with suggestions from businessrepresentatives, followed by responses from ECOSOCdelegates, including questions from the audience. Businessrepresentatives include executives from the BusinessCouncil of the United Nations, the International Chamberof Commerce, Money Matters Institute, SamuelsAssociates, and the World Economic Forum. In addition,also attending are: Mr. William Chew, Managing Director,Corporate & Government Ratings, S&P; Ms. Clare Cowan,Chief Executive Officer, Venture Exchange Network; Mr.Frank Fernandez, Chief Economist, Securities IndustriesAssociation; Mr. James Mutende, Manager (former),Uganda Commercial Bank; Mr. Ron Nechemia, Chairman,EurOrient Financial Group; Mr. Iqbal Quadir, Founder,Grameen Phone; and Mr. Robert Sheppard, ManagingDirector, J.R. Sheppard & Co. LLC.

______________________________________________10:00 a.m. 10:45 a.m .

PANEL 1:Identifying and eliminating businessenvironment impediments to private investmentCoordinator:

Maria Livanos Cattaui, Secretary General,International Chamber of Commerce (ICC)

10:45 a.m. 11:30 a.m.PANEL 2:Enhancing information, analysis andcommunication of country opportunities, risks andinvestment transaction servicesCoordinator:

Barbara Samuels, President, Samuels Associates

11:30 a.m. 12:15 p.m.Panel 3: Improving developing country access to long-term finance for infrastructure development and domesticcompaniesCoordinator:

Crocker Snow, Director, Money Matters Institute12:15 p.m. 1:00 p.m.PANEL 4: Establishing frameworks for collaboration andcoordination between the public and private sectors in theimplementation of the Monterrey ConsensusCoordinator:

Paul Underwood, Executive Director, BusinessCouncil for the U.N.

1:00 p.m. 1:15 p.m.

CLOSING SESSION REMARKSModerator/ Discussant:

Moeen Qureshi, Chairman, Emerging MarketsPartnership, Former Prime-Minister of Pakistan andformer Senior Official of the World Bank

1:15 p.m. 3:00 pm.

LUNCH BREAK

3:00 p.m. 6:00 p.m.

PROGRESS REPORTS ON ONGOING FFD BUSINESS PROJECTS:Status of Private SectorInitiatives to Implement the Monterrey Consensus (seeafternoon agenda and attached project summaries)


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OPENINGSTATEMENT FROMBUSINESSINTERLOCUTORS

We welcome the overall theme chosen for the spring ECOSOC/ BWI meeting:Increased coherence,

coordination and cooperation for the implementation of the Monterrey Consensus at all levels a year after Monterrey. It setsout the essential framework for any discussion of how to work towards and implement the principles andgoals embodied in the Monterrey Consensus.

Monterrey saw the emergence of many ideas, projects, and proposals for new mechanisms for financingdevelopment. Key was the recognition of the critical importance of mobilizing private sector investmentsfrom both within developing countries as well as internationally. The Monterrey Consensus states:

Private international capital flows, particularly foreign direct investment, along with international financial stability,

are vital complements to national and international development efforts. (Para 20) W e underscore the need tosustain sufficient and stable private financial flows to developing countries and countries with economies in transition.(Para 25)

In fact, today and looking forward, the private sector constitutes the dominant share of cross-borderinvestments in developing countries, accounting for over 75% of total net capital flows for all regions, andover 100% for those regions experiencing negative net official flows.

For its part, the FfD Coordinating Committee of Business Interlocutors put forward a series of specificproposals aimed at helping mobilize the resources of the private sector for development. However, in theyear that has elapsed since Monterrey, it has become clear that there has been insufficient forwardmovement on these various fronts, especially given the continued reduced level of private sector flows todeveloping countries (Appendix A).

The business proposals put forward in Monterrey are potentially important contributions, but they canonly be successful with the full and active participation and support of national governments, and theirinternational and regional organizations. If we are to be successful in implementing the MonterreyConsensus, business, governments, and their organizations must coordinate and collaborate in four criticalareas:

1) Sharing Accountability for Implementation: All of us across the private and public sectorsmust work together in designing, implementing, and financing new initiatives. For business FfDproposals to be realized, governments must participate actively and explicitly -- developing countrygovernments must take the political leadership to be pilot countries, and industrialized countrygovernments must contribute funding and expertise, and in sharing risks. It is also critical that

official financial institutions the World Bank, the IFC, MIGA, the IMF, and the regionaldevelopment banks all be active in supporting FfD private-public partnerships with expertise andfunding.

2) Overcoming Systemic Impediments: Critical are substantial systemic impediments to themobilization of private sector capital that need to be overcome if we are to break the barriers tocapital formation and investment. We must be forceful and relentless in identifying and eliminatingthe bottlenecks and inefficiencies. These exist at all levels national, state, and municipal as well asregional and global.


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3) Creating Systemic Enhancements: Often we lack the basic tools to realize investment potential.Governments and investors need to work together to insure the basic mechanisms for investmentare easily available to all: information, analysis, and communication on country opportunities and

risks, and investment transaction services as well as innovative tools that increase the supply andeffectiveness of finance in developing countries. We must communicate success stories, andprogress against performance benchmarks in a timely credible and easily-accessible manner.

4) Establishing a Framework for Measuring Progress against Consensus: Success inimplementation of the Monterrey Consensus is impossible without a concrete, defined frameworkfor collaboration, coordination, and coherence. We need to establish a means for communicationacross countries, sectors, organizations, and business. We need to establish a routine schedule andperformance benchmarks for monitoring progress specifically on these efforts to mobilize privatesector capital for development.

Our agenda this morning is built around these four areas of cooperation and coordination between

business, governments, and official institutions. We have prepared four sessions that focus on specificactionable areas for implementation, each session addressing specific impediments, needed systemicenhancements, and a framework with performance benchmarks for coordination going forward. Each ofthe four sessions has an opening statement, with three sections reflecting these points: Section One refersto the relevant Monterrey Consensus objectives we are trying to implement; Section Two on theImpediments that need to be overcome to realize these objectives; and Section Three on ProposedImplementation Steps, including suggested accountabilities for immediate actions. The Coordinator foreach session will begin with a very short statement reflecting the session points, and then ask our businessrepresentatives to briefly elaborate, before turning the floor over to government representatives for theirviewpoints, and to the floor for an open exchange.


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OBJECTIVES, IMPEDIMEN TS, & RECOMMENDED ACTION S

10:00 a.m. 10:45 a.m.PANEL 1:Identifying and eliminating business environment impediments to private investment

1) Objectives of the Monterrey Consensus:To attract and enhance inflows of productive capital, countries need to continue their efforts to achieve a transparent,

stable and predictable investment climate, with proper contract enforcement and respect for property rights, embedded

in sound macroeconomic policies and institutions that allow businesses, both domestic and international, to operate

efficiently and profitably and with max imum development impact. (Para 21)

Special efforts are required in such priority areas as economic policy and regulatory framework s for promoting and

protecting investments, including the areas of human resource development, avoidance of double tax ation, corporate

governance, accounting standards, and the promotion of a competitive environment. (Para 21)

2) Impediments to Realizing Objectives: Cumbersome administrative procedures and lack of a stable and predictable investment

environment. Lack of a mechanism for local and international business partners to consult in a systematic

way with government. Problems in finding capital for new entrepreneurial ventures. Inconsistencies and uncertainties in information of investment needs and opportunities.

3) Recommended Actions for Implementation: Implementation of objective investment guides built on surveys with all partners in countries

concerned. Setting up of business advisory groups. Supplying capital for new ventures and infrastructure.

10:45 a.m. 11:30 a.m.PANEL 2:Enhancing information, analysis and communication of country opportunities, risks andinvestment transaction services

1) Objectives of the Monterrey Consensus:W e encourage public/ private initiatives that enhance the ease of access, accuracy, timeliness and coverage of

information on countries and financial mark ets, which strengthen capacities for risk assessment. (Para 25)

Those public/ private initiatives could include the development of consultation mechanisms between international and

regional financial organiz ations and national G overnments with the private sector in both source and recipient

countries as a means of creating business-enabling environments. (Para 24)


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2) Impediments to Realizing Objectives: High Research Cost of Accessing Available Assessments (multiple official and private sector

sources)

Gaps in Needed Information for many countries (especially smaller ones) Concerns of Information Bias and Incomplete Disclosure (business and political vestedinterests)

Inadequate Timeliness (compared to market and media speed) Inadequate Resources of Developing Country Governments (to develop information and

responses to investor information queries)

3) Recommended Actions for Implementation: Private-Public Partnerships with support of official information providers (multilateral and

government) to improve investor access to developing country investment information Private-Public Partnerships with support of donors and technology firms to develop policy

consultation mechanisms for developing countries governments to consult cost-effectivelywith targeted investors on investment impediments and possible remedies

Donors increase aid to developing governments aimed at improving their capacity to improvecountry business-enabling environments (for example, covering the costs of business-oriented government staff and government web sites that enable governments tocommunicate directly with investors in a timely manner, and respond to investment problems)

Expert groups drawn from private and official sectors to develop relevant credibleperformance benchmarks, tracking improvements in country business environments

11:30 a.m. 12:15 p.m.Panel 3: Improving developing country access to long-term finance for infrastructure development anddomestic companies

1) Objectives of the Monterrey Consensus:To this end, it is important to provide ex port credits, co-financing, venture capital and other lending instruments,

risk guarantees, leveraging aid resources, information on investment opportunities, business development services,

forums to facilitate business contacts and cooperation between enterprises of developed and developing countries, as

well as funding for feasibility studies. (Para 22)

To complement national efforts, there is the need for the relevant international and regional institutions as well as

appropriate institutions in source countries to increase their support for private foreign investment in infrastructure

development and other priority areas, including projects to bridge the digital divide, in developing countries and

countries with economies in transition. A dditional source country measures should also be devised to encourage and facilitate investment flows to developing countries. (Para 22)

W e will support new public/ private sector financing mechanisms, both debt and equity, for developing countries and

countries with economies in transition, to benefit in particular small entrepreneurs and small and medium-size

enterprises and infrastructure. (Para 24)


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In that spirit, we invite bank s and other financial institutions, in developing countries as well as developed countries,

to foster innovative developmental financing approaches. (Para 23) Multilateral financial institutions could provide

further assistance for all those purposes. (Para 25)

2)

Impediments to Realizing Objectives: Unacceptable Risk Levels and Uncertainty Constrained Capacity of Official Risk-Sharing (through guarantees, co-financing, insurance,

etc) Costly Process for Official Sector Transactions Lack of Forums for Creating New Innovative Financing Schemes

3) Recommended Actions for Implementation: Official Financial Institutions (World Bank, IFC, Regional Development Banks) and Donor

Country Financial Agencies become Active Participants in Ongoing and New FfD Private-Public Partnerships, Projects, and Forums

UN FfD Secretariat specifies that Rollout FfD Implementation includes Private-PublicForums and Financial Support for New Innovative Financing and Risk Mitigating Schemes(for example, exit vehicles, exchange funds, devaluation liquidity facilities, regulatory riskinsurance for capital markets, take-out facilities to extend the tenor of project bonds, etc)

Official Financial Institutions and Donor Country Financial Agencies commit high-leveltechnical staff to develop new financing vehicles in above Forums, and provide financialfunding for related Projects

Official Financial Institutions Reduce Costs and Time for Private Sector Firms Participatingin their Finance Programs and Projects

Official Financial Institutions Review Official By-Laws to Insure Consistent with PrivateSector Fiduciary Responsibilities (for example, their rights and recovery to debtor are notimpeded)

12:15 p.m. 1:00 p.m.PANEL 4:Establishing frameworks for collaboration and coordination between the public and privatesectors in the implementation of the Monterrey Consensus

1) Impediments to Realizing Objectives: Difficulty in Overall Communication between FfD Official Sector Entities and Private Sector

Entities Lack of Monitoring Mechanisms to Measure and Report Progress for FfD Projects Lack of Funding to Support Technical Business FfD Support and Investor Outreach

2) Recommended Actions for Implementation:(a) UN FfD Secretariat coordinates with Business Interlocutors to define Framework needed

for collaboration and cooperation between Business and Official Sector Establish periodic reviews of projects -- quarterly meetings at UN with meaningful

participation from governments and business Set up mechanism for ongoing communication -- need to have names and contact info

on both business and government sides; email progress reports, etc.)


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Target expert groups targeted on critical problems and results no results withoutcollaborative work in partnership; BCUN and ICC can serve as platforms for expertgroups and investor outreach

(b)Business Interlocutors coordinate with Official Sector in monitoring PerformanceBenchmarks to Track Progress on Private-Public Partnerships, based on Accountabilities,and Identify Problem Areas (like millennium goal tracking but specific focus on FfDobjective of mobilizing private sector capital for development) Level of support from developing country governments (for example, number of

governments creating investment roadmaps, setting up policy consultationmechanisms, improving business environment with reduction of bureaucraticimpediments, etc)

Levels of private sector capital (subcomponents could be also established to measurespecific outcomes, such as number of infrastructure projects, SMEs receiving support,domestic capital financings, etc)

Levels of support from official institutions, including regional development banks(subcomponents could be amount of support from official institutions in co financing,guarantees, etc.)

Level of support from donor countries (for example, funding provided to private-public partnership FfD projects)

(c) Official Sector Provides Financial Support for Business Technical FfD Support andInvestor Outreach Activities (see above) Business Focus Inherently Limited to Economically Viable Investments In Political

Environment Perceived as Being Predictable Credible Official Support and FfD Outreach Program Critical for Enlisting Private

Sector in FfD Projects and Investments (from within developing and developedcountries)

Leadership Needed by Donor Countries, Regional Development Banks, andInternational Financial Institutions with Financial Assistance for Technical BusinessSupport and Expert Forums with Business Sector (for example, research on businessimpediments, how to increase private sector financing of power, SMEs, etc)

3:00 p.m. 6:00 p.m.Progress Reports on Ongoing FfD Business Projects:Status of Private Sector Initiatives to Implement the Monterrey Consensus

Chairs:

Maria Livanos Cattaui, Secretary General, International Chamber of CommercePaul Underwood, Executive Director, Business Council for the United Nations

1. GLOBAL H ORIZON FUND PROGRAM

Sponsored by State Street Global Advisors and the Money Matters InstituteIn cooperation with The United Nations

2. THE INVESTMENT ADVISORY COUNCIL (IAC)

Sponsored by the ICC jointly with UNCTAD


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3. IN VESTMEN T GUIDES

Sponsored by the ICC in coordination with UNCTAD4. TH E N EPAD BUSIN ESS GROUP (NBG)

Sponsored by the ICC5. POLICY ACTION GROUP ON VEN TURE CAPITAL

Sponsored by Venture Exchange Network6. EXPERTS GROUP ON PUBLIC/ PRIVATE RISK SH ARING IN CAPITAL MARKET FIN ANCING

OF DEVELOPING COUNTRY INFRASTRUCTURE PROJECTS

Sponsored by the BCUN and the Global Clearinghouse with support from the United Nations7. SOVERE IGN DEBT RE STRUCTURIN G AND CRISIS PREVEN TION

Sponsored by the Securities Industry Association8. GOVERN MEN T INVESTOR NETWORKS

Sponsored by Samuels Associates with support from the Ford Foundation, Norwegian Government, andSwiss Government

9. GLOBAL GOVERN ANCE INITIATIVE T O MON ITOR E FFORT ON UN MILLEN NIUMDEVELOPMENT GOALS

Sponsored by WEF10. AFRICA COMPETITIVENESS REPORT 2003-2004

Sponsored by WEF11. TH E GLOBAL IN FORMATION CLEARIN GHOUSE WEB PORTAL

Sponsored by Samuels Associates with support from Ford Foundation, Norwegian Government, and UN12. CLOSING DISCUSSION: H ow can Government and Business Collaborate to Accelerate Progress in

Implementing the Monterrey Consensus?

(Please see attached appendices for summaries of each project)


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APPENDICES:TABLE OF CONTENTS

APPENDIX A: GLOBAL HORIZON FUND PROGRAM

APPENDIX B: BUSINESS ENVIRONMENT IMPEDIMENTS TO INVESTMENT

APPENDIX C: POLICY ACTION GROUP ON VENTURE CAPITAL

APPENDIX D: EXPERTS GROUP ON PUBLIC/ PRIVATE RISK SHARING IN CAPITALMARKET FINANCING O F DEVELOPING COUNTRY INFRASTRUCTUREPROJECTS

APPENDIX E: ENHANCING FINANCIAL CRISIS PREVENTION AND RESOLUTION

APPENDIX F: GOVERNMENT INVESTOR NETWORKS: FACILITATINGIDENTIFICATION OF INVESTMENT IMPEDIMENTS AND REMEDIES

APPENDIX G: GLOBAL GOVERNANCE INITIATIVE

APPENDIX H : AFRICA COMPETITIVENESS REPORT 2003-2004

APPENDIX I: THE GLOBAL INFORMATION CLEARINGHOUSE WEB PORTAL

FACILITATING INVESTOR ACCESS TO INFORMATION ON DEVELOPING COUNTRIES

APPENDIX J: GRAPH NET PRIVATE FLOWS AS PERCENT OF TOTAL CAPITAL FLOW

APPENDIX K: GRAPH TOTAL NET CAPITAL FLOW,DEVELOPING COUNTRIES


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APPENDIX A

GLOBAL HORIZON FUND PROGRAMSponsored by State Street Global Advisors and the Money Matters Institute

BACKGROUND: Small entrepreneurial companies are a primary source of innovation, jobs and wealthcreation in the West. Such startups typically acquire their initial seed money as private equity, includingventure capital, based on high risk and high reward. This has developed into an institutionalized form offinancing readily available only in mature economies characterized by established capital markets, rule oflaw and openness to foreign investment. Such financing slowly has spread to some developing countries.A major boost for the goal of global economic development lies in fostering the culture of venture capitalmore widely to provide needed financing for those generating new economic activity in less developedcountries.

CORE CONCEPT: The Global Horizon Fund (GHF) program will be established as a linked series of4-5 private equity funds, each for a different region of the world. The regional funds will be dedicated todirect equity investments in early stage and emerging growth companies, buyouts and privatizations. Theprogram will operate with the principals of a proposal presented at the United Nations Financing forDevelopment conference in Monterrey, Mexico in March 2002, utilizing the standards and procedures ofthe for-profit private sector.

CAPITALIZATION: State Street Global Advisors, the global investment management arm of the StateStreet Corp., will seek capital commitments of up to $1 billion from a combination of private sources suchas corporate and institutional funds with interest in the Fund objectives and target countries and publicsources including regional development banks and multilateral agencies that are dedicated to assistingprivate sector initiatives regionally and globally.

MANAGEMENT: The GHFund will be administered by State Street Global Advisors as fund manager,the GHF founders (Crocker Snow Jr., president of the Money Matters Institute of Boston, HaniFindakly, president of Potomac Capital of Washington DC and Joseph W. Bartlett, partner of Morrison &Forrester and chairman of VC Experts Inc. of New York) and an experienced board of experts ininternational finance and equity investment in developing countries. Local fund managers will be selectedfor target regions and countries.

GOALS: The GHF program board and its managers will be dedicated to identifying worthy andpromising investment opportunities in start-up, early stage and emerging growth companies in a range ofdeveloping countries with the ultimate objective of job and wealth creation. The survival and success of

these investments will serve to enhance economic and social development, demonstrate the viability ofventure capital finance in developing countries, and, through creative public-private exit strategies such asexchange funds, achieve profits for the GHF program investors that equal industry standards.

For more information, contact Mr. Crocker Snow at [email protected]


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APPENDIX B

BUSINESS ENVIRONMENT IMPEDIMENTS TO INVESTMENT

Coordinator: Maria Livanos Cattaui, Secretary General, ICC

In chapter 2 of the Monterrey Consensus, there is a focus on M obiliz ing domestic financial resources fordevelopment. Paragraph 10 speaks about an enabling domestic environment in order to encourage themobilization of domestic and international capital flows and investment. Paragraph 20, specificallyaddresses the challenges to creating conditions for private capital flows, particularly FDI.

One of the areas of systemic hindrances to capital formation and investment that needs to bedealt with is that of business environment impediments. These include for example, cumbersomeand multiple steps required to obtain the necessary licenses to do business; complex and t ime-consuming procedures for customs clearance and the problems caused by corruption in business

relationships.

Some of the activities ICC is engaged in to address these problems are the Investment Advisory Council(IAC), the Investment Guides and the NEPAD Business Group (NBG).

TH E INVESTMENT ADVISORY COUNCIL (IAC) jointly with UNCTADThe Investment Advisory Council (IAC) for Least Developed Countries (LDCs) is a framework for high-level consultations between business and government leaders. The objectives of IAC include: facilitatingthe interaction between government and corporate representatives; providing governments of LDCs withadvice and recommendations that can help increase the level and quality of foreign direct investment.

INVESTMENT GUIDES in coordination with UNCTADThe principal goals of this ongoing project are to assist LDCs in attracting investment by joint surveys andefforts to remove impediments; and providing unbiased information to potential foreign investors. Suchguides have been prepared for Uganda, Bangladesh, Ethiopia, Mozambique, Mali, Nepal and Cambodia.Sponsors include: China, Finland, France, Italy, India, Norway, UNDP Cambodia, UNDP Eritrea. Welook for further support to continue this project with some 10 countries requesting new guides.

The N EPAD Business Group (NBG)ICC put together a number of business organizations around the world to support the NEPAD process bystrengthening local business and stimulating business-friendly measures. The NBG encourages Africangovernments to set up business advisory councils for consultations with the private sector. The aim is to:(1) work closely with government to be a real partner prior to introducing legislation, in the

implementation of a business-friendly environment and to measure success; (2) encourage that in eachcountry peer reviews of business are set up to complement peer review by government; (3) work on theconcrete actions needed to make regional markets actually happen.

For more information, contact Isabella Vourecas Petalas at 011 33 1 49 53 3066 or [email protected]


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APPENDIX C

POLICY ACTION GROUP ON VENTURE CAPITALSpeaker: M. E. Clare Cowan, Chair and CEO Venture Exchange Network

In December 2002, Venture Exchange Network established a Policy Action Group on VentureCapital. The Group will work with multiple stakeholders to address many of the issues raised theMonterrey Consensus surrounding public/ private partnerships and private foreign direct investment.Chapter II in the Resolutions adopted by the Conference addresses M obiliz ing international resources fordevelopment: foreign direct investment and other private flows. The Policy Action Group on Venture Capitalwill develop the public/ private partnership mechanisms outlined in paragraphs 21 and 24. Similarly,the initiative addresses the need outlined in paragraph 22 for increases in private foreign investmentand will facilitate the provision of international venture capital to developing countries.

The objective of the initiative is to foster the development of a more competitive and fair global

market for venture capital, encourage greater investment in developing countries, promote moresupra-regional investment to level the global playing field for venture capital, standardize the valuationsplaced upon growing businesses, remove the barriers to the free flow of venture capital acrossinternational borders, and support the growth and development of developing nations. Through theestablishment of a multi-stakeholder team representing private sector, government, and multi-lateralorganizations, the Group will leverage domestic and multi-lateral resources to illuminate investmentopportunities and mitigate to the private sector venture capital participants, the risks that havetraditionally been associated with foreign direct investment. The address by Ms. Cowan will review theimportance of venture capital investment in driving sustainable development in developing countriesand the efforts being made by the Group to facilitate greater venture capital investment intodeveloping countries from the worlds wealthiest nations.

The Policy Action Group on Venture Capital will begin in Asia by targeting a number of top-qualitycompanies that are seeking venture capital financing. With over 350 venture capital membersrepresenting over $180 billion under administration in venture capital funds, Venture ExchangeNetwork will be the living laboratory in which the Group will study and facilitate the internationalmovement of capital. A selection of qualified companies from developing countries that are seekingventure capital financing will be presented to venture capitalists and the progress of the companies willbe closely monitored and the efficiency of the global venture capital market will be assessed. Theentire process will be shared with the Group with the intention of analyzing the systems shortfalls,making specific recommendations to address the problems, and facilitating global deal flow intodeveloping nations.

For more information, contact Isabella Vourecas Petalas at 011 33 1 49 53 3066 or [email protected]


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APPENDIX D

EXPERTS GROUP ON PUBLIC/ PRIVATE RISK SH ARING IN CAPITAL MARKET

FINANCING OF DEVELOPING COUNTRY INFRASTRUCTURE PROJECTSSponsored by BCUN and the Global Clearinghouse, with Support from the U.N.

During the UN Conference on Financing for Development held in Monterrey, Mexico in March 2002,government officials and representatives of the business community addressed the need to increase accessto bond markets for developing-country infrastructure projects through enhanced risk sharing betweenpublic and private sector financial organizations. Subsequent to that meeting an Experts Group has beenestablished to continue this dialogue.

Members of the Experts Group come from the full range of organizations that are normally involved withcapital market project financing:

Developing country borrowers Developing country government agencies Foreign project sponsors Official multilateral and bilateral financial organizations Investment banks Financial advisory services specializing in developing country structured financing Law firms specializing in developing country structured financing Credit rating agencies Private companies offering partial credit or risk insurance or contingent liquidity facilities Monoline bond insurance companies Institutional investors

The Experts Groups discussions focus on how to incrementally improve the process of risk sharingbetween public and private sector organizations in ways that would provide developing countries betteraccess to bond markets. International bond markets are the primary focus, since this is currently the mostimportant source of long-term private sector funding for developing countries. However, opportunitiesfor increasing the use of domestic bond markets in the developing countries are also being considered.

The Experts Group will record, distill and disseminate the results of their collaborations. A clearinghouseof documents, data and recommendations, accessible via the Internet, is also being established. Much ofthe work of the Group will be conducted via an Internet based Discussion Forum that is being

constructed by the Global Clearinghouse Discussion Forum Service. This will allow detailed technicaldiscussions to be carried out on a continuing basis in a manner that facilitates maximum participation of alarge group of participants. The Business Council for the United Nations (BCUN) is providingadministrative and logistical support for the Experts Groups activities.

For more information, contact Chris Bailey at (212) 907-1386 or [email protected]


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APPENDIX E

ENHANCING FINANCIAL CRISIS PREVEN TION AND RESOLUTIONSponsored by the Securities Industry Association

Interim steps are required in an urgent basis to improve overall sovereign debtor and creditor relations, aswell as the sovereign debt restructuring process and ongoing country debtor-creditor communications.The Private Sector has set forth an integrated approach, encompassing proposals for enhancing creditor-debtor relations, crisis prevention, and resolution, including a recommended Code of Conduct and legalclauses, such as collective actions clauses. The recommended Code of Conduct for Emerging Marketsoutlines the respective roles that key parties could be expected to play in emerging markets finance,particularly during times of crisis, and is accompanied by an annex on crisis prevention. The ModelCollective Action Clauses (CACs), to be implemented with the context of this broader Code of Conduct,have been developed for English Law Bonds with Trustee and Fiscal Agent and New York Law Bonds

with Fiscal Agent. These CACs would be supplemented by a set of performance indicators to assistinvestors in monitoring borrowers' creditworthiness. Moving from Word to Action in these areas is ofcritical importance to realizing the Monterrey Consensus's objectives of strengthening the global financialsystem, improving developing country access to private sector capital, and reducing the severity and costsassociated with financial crises.

Below is a summary of proposals set forth by the seven major financial organizations representing majorsovereign creditors worldwide: The Emerging Markets Traders Association, Institute of InternationalFinance, International Primary Market Association. The Bond Market Association, Securities IndustryAssociation, International Securities Market Association, and the Emerging Markets Creditors Association.A copy of the full document can be found by visiting:http:/ / www.sia.com/ international/ pdf/ CollectiveActionClauses.pdf(Code of Conduct: Collective ActionClauses for Emerging Markets). Process issues are also the focus of Richard Gitlin's proposal for a"Sovereign Debt Forum", which can be accessed by clicking here:http:/ / www.sia.com/ international/ pdf/ SovereignDebtForumProposal.pdf(Sovereign Debt ForumProposal). An Internet platform connecting debtor governments with their creditors, such as that beingdeveloped by The Global Clearinghouse Initiative (www.globalclearinghouse.org), could also serve as acost-effective means for implementing these proposals aimed at enhancing communication and crisisprevention.

Recent debate has focused on legal approaches to managing crises in emerging markets. Specifically,alternative approaches have been advanced to facilitate the restructuring of external debt in cases where asovereigns debt is considered unsustainable. The private sector has proposed marketable CACs as part of

a market-based approach, while many in the official sector have advocated a "two track" approach,including both collective action clauses and a sovereign debt restructuring mechanism (SDRM) that wouldoverride current legal frameworks in all IMF member countries.

While the aim of each of these approaches would be to facilitate the process of restructuring sovereignexternal debt only in a limited number of cases, neither would, by itself, strengthen crisis prevention,promote a renewal of capital flows or facilitate the resolution of related problems involving domestic debt,private sector debt or debt extended by bilateral and multilateral agencies.


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By contrast, this Code of Conduct represents a more comprehensive approach to strengthening theframework of emerging markets finance, including -- but not limited to -- debt restructuring when debtlevels have become unsustainable. This approach rests on the premise that all participants, whatever theirroles and responsibilities, share a basic interest in promoting greater financial stability and growth in

emerging markets. It reaffirms a commitment by all parties to strengthened crisis prevention, promotesdebtor-creditor consultations before problems become unmanageable, and envisions the incorporation ofmarketable clauses in sovereign bond contracts that could help to make the restructuring process moreflexible. Furthermore, this approach explicitly recognizes that market participants accept full responsibilityfor their investment and lending decisions in emerging markets and that they do not expect "bail outs"from the official sector. This approach also takes into consideration the issue of aggregation of votingrights and addresses this through proven market practices on a case-by-case basis.

Unlike mechanisms that concentrate exclusively on debt restructuring and become relevant only followinga financial crisis, when severe losses in output and growth have already occurred, this approach is pro-active and growth-oriented. It seeks to avoid debt restructurings where still possible, facilitate them wherenecessary, and in all cases restore early market access.

For more information, contact F rank Fernandez at 212-618-0517 or [email protected]


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APPENDIX F

GOVERNMENT INVESTOR NETWORKS

FACILITATING IDENTIFICATION OF INVESTMENT IMPEDIMENTS AND REMEDIESSponsored by Samuels Associates with Support from the Ford Foundation, the Norwegian Government

and the Swiss Government

The Global Clearinghouse Initiative has begun to develop Intranet-based Government-Investor Networksto enhance the capacity of governments and business organizations to improve the business-enablingenvironments of developing countries; and mobilize private sector investment from both domestic andinternational sources. As a separate customized service for governments, Government-Investor Networksare specifically geared to help developing country governments identify opportunities, impediments, andpossible remedies on a cost-effective basis by linking investors with governments on a real-time basis toexchange views and information.

Establishing an Intranet between interested governments and their selection of existing and targetedcountry investors provides governments with a cost-effective means for directly communicating with bothdomestic and international investors. Uses of this platform include the following:

Direct timely explanations from government to investors on country developments, reducing therisk of misunderstandings and potential for financial contagion;

Direct cost-effective distribution channel for government notices to investors on governmentpolicies, investment programs, and opportunities, extending cost-effective government outreachand investment promotion;

Enhanced government capacity to track investor sentiment and perceptions of investmentimpediments, and investor views of possible remedies;

Mechanism for government policy consultation with private sector on ways to enhance business-enabling environments; and

Facilitation of investor feedback on relative importance of reforms, including adoption of globalcodes and standards, allowing governments to assess potential benefits and tradeoffs for theirparticular country.

A basic prototype for the Government- Investor Network has been developed based on investor andcountry input, with funding from the Norwegian government and the Ford Foundation. The next step willbe for pilot countries to assist in the further definition of the service. The Nicaraguan government hasagreed to participate in a pilot funded by the Swiss government beginning in the spring of 2003.

Upon completion of pilot testing and development, the completed technology platform for theGovernment-Investor Network would be freely available to all developing country governments for use incommunication with selected investors. Additional funding is needed to develop this government service,and for ongoing maintenance costs.

For more information, contact Dr. Barbara Samuels II at 845-868-7639 [email protected]


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APPENDIX G

GLOBALGOVERNANCE INITIATIVE

DAVOS, SWITZE RLAND 23- 28 JANUARY 2003Sponsored by the World Economic Forum

Davos, Switzerland 25 January 2003 -- The World Economic Forum this week is launching a high-levelInitiative to monitor progress in the global effort to implement the ambitious social, economic andenvironmental goals set forth in the United Nations Millennium Declaration and other documents.

This endeavor, known as the Global Governance Initiative, will publish an annual report assessingefforts by and cooperation among governments, civil society, the private sector and intergovernmentalorganizations to meet targets widely agreed to by 189 governments:

Halve the number of people living in poverty by 2015 Ensure universal primary education by 2015 Halt and reverse the spread of HIV/ AIDS and other major diseases by 2015 Fulfill commitments to reduce greenhouse gas emissions and implement conventions related to

conservation of biodiversity

Halve the number of people suffering from hunger by 2015 Uphold the Universal Declaration of Human Rights and other agreements related to the rights of

women and migrants, and ensure media freedom and the publics right to access to information

To seek to eliminate war between, within, and on states and to seek to eliminate the dangers posedby weapons of mass destruction

The report will include an overall numerical score of progress in effort and cooperation during the preceding year in each of the

above areas. It will also contain a discussion of the significant problems governments, civil society, the private sector andintergovernmental organizations face, and notable ex amples of progress during the year.

The Initiative will include seven international groups of expert groups, each dedicated to evaluating thelevel of effort and cooperation among key actors in one of the above areas. The Steering Committee of theGlobal Governance Initiative will convene for the first time during the 2003 Annual Meeting. The firstreport will be released in the name of the Steering Committee at the World Economic Forums nextAnnual Meeting in January 2004.

The Global Governance Initiative is intended to be an independent watchdog for the follow-up to the Millennium

D eclaration, drawing on ex pertise around the world to persistently remind the international community of its commitments

and constructively advocate greater partnership by all stak eholders. By spotlighting specific ex amples of successful programs andpartnerships, it will spread awareness of what models should be emulated or avoided. A nd by publicizing ideas about what

governments, inter-governmental organizations, businesses, and civil society organizations can do to meet specific goals laid out

in such documents as the Millennium D eclaration, it will help bring about the realiz ation of those widely shared goals.

For more information, contact Ann Florini, Project Director of the Global GovernanceInitiative and Senior Fellow at The Brookings Institution at (202) 797-6087 or Richard Samans,

Director for Global Issues and Associate Member of the Managing Board of the World EconomicForum at +41 22 869 1414.


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APPENDIX H

AFRICACOMPETITIVENESSREPORT 2003

Sponsored by the World Economic Forum

RATIONALE

At a time when the leaders of Africa, through the New Partnership for Africas Development (NEPAD),are poised to address the structural obstacles to the regions economic development, it has never beenmore timely and relevant to produce The A frican Competitiveness Report 2003, the World Economic Forumsthirdcompetitiveness report on the region.

Like the first two editions, thisR eporthas two goals:

First, at the international corporate level, The A frican Competitiveness Reportaims to focus the attention ofinvestment and business leaders on the region. There are success stories in Africa that are seldomreported. ThisR eportwill depict the strengths and weaknesses of the national business environments ineach country.

Second, theR eportis intended to serve as a tool for policy-makers in identifying and addressing theobstacles to economic growth. Through thisR eportand other reports of the Competitiveness Programme,the World Economic Forum seeks to establish a process whereby governments, business leaders and otherstakeholders can evaluate progress on a continual basis.

To be published by Oxford University Press, theA frican Competitiveness Reportseries is produced under theGlobal Competitiveness Programme. Since 1979, the World Economic Forum has produced each year the

Global Competitiveness Report, the most comprehensive assessment of the comparative strengths andweaknesses of national economies.

FEATURES

TheA frican Competitiveness Reportwill highlight the prospects for growth in the region and reveal theobstacles Africa must overcome to be competitive in an increasingly integrated and knowledge-basedglobal economy. TheR eportwill contain essays featuring the insights of experts from the region as well asoutside the region on a range of topics of great relevance to competitiveness such as growth performance,trade performance, investment, governance and health. Given the dearth of timely and reliable informationon the economic prospects of the region, this yearsR eportwill also contain an extensive data section

covering at least 25 countries in the region. Through in-depth analysis of regional trends and countryprofiles, theR eportwill assess the strengths and weaknesses of the leading African economies.

Other notable features of theR eport:

1) Comprehensive country pages, capturing not only economic indicators but also social indicators.The country profiles, which will also be available electronically, will feature detailed trade andinvestment performance data, as well as profiles depicting the quality of the business environmentand the level of individual well-being. Although the country profiles section will not contain


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contextual analysis, it will feature in bullets a competitiveness balance sheet highlighting selectedstrengths and weaknesses.

2)

Using data from the most recent Global Competitiveness R eportas benchmarks, theA fricanCompetitiveness Reportwill highlight the countries that are globally competitive for certain indicators.

3) This yearsR eportwill feature the most comprehensive governance data, which is highly relevant tothe peer review process of NEPAD and the allocation of the Millennium Challenge Account.

4) This yearsR eportwill also feature the most comprehensive benchmarking data for HIV/ AIDS andother relevant health information.

For more information, contact Richard Samans at +41 22 869 1414.


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APPENDIX I

TH E GLOBAL INFORMATION CLEARINGHOUSE WEB PORTALFACILITATING INVESTOR ACCESS TO INFORMATION ON DEVELOPING COUNTRIES

Sponsored by Samuels Associates with Support from the Ford Foundation, the Norwegian Governmentand the U.N.

The Global Information Clearinghouse Web Portal, with initial support from the Norwegian governmentand the Ford Foundation, is aimed at improving investor access to information needed by investors toidentify opportunities and risks, and execute investment transactions in developing countries.

Asan independent information initiative, the web portal is intended to bring together the full range ofinformation and assessments on developing countries generated by the official sector, host governments,and the private sector, employing leading-edge technology interfaces.Examples of content directly available to investors include:

1) Direct Reports from H ost Country Governments: The Web Portal can act as a centralplatform for investor outreach of country promotion agencies, and important communicationsfrom central banks, ministries of finance, and other host government entities. Governments caneasily reach their wide investor base with country information, and updates on economic, financial,and political developments of relevance to investor evaluations of opportunities and risks.

2) Direct Access to Official Sector Assessments and Data : Enormous resources are spent byan array of multilateral and bilateral agencies in assessing country opportunities and risks, andevaluating compliance with Global Codes and Standards. The Web Portal can organize theseassessments by user needs, enabling cost-effective access.

3) Direct Access to other Expert Country Assessments: The evaluations of private sectorcompanies and independent third-party services are also critical to enhancing investor capacity toidentify investment opportunities and develop prudent risk management strategies.

4) Easy Access to Investment Enabling Services: Investments can be facilitated throughproviding easy access to information on sources of capital, expertise, risk management services,and possible partners. The Web Portal brings together host government, donor country,multilateral, and private sector services on a country and topic basis.

By year-end 2003 core information on all developing countries will be available; additional funding isneeded for adding further content, technology development, and ongoing maintenance.

For more information, contact Dr. Barbara Samuels II at 845-868-7639 [email protected]


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APPENDIX J

N e t P r i v a t e C ap i t a l F l o w s a s P e r c e n t o f T ot a l C a p i t a l F l o w s :

D e v el o p i n g Co u n t r i e s 1 9 9 4 - 2 0 0 3

-100

-5 0

0

50

10 0

15 0

20 0

25 0

Afr ica Develop ing Asia Mid East & Turkey Count r ies in Transi t ion Western Hem i sphere Total

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Percent

SOURCE: International M onetary Fund, World Economic O utlook: Trade and Finance, September 2002, Table 1.3 Emerging Market Economies: Net

Capi ta l F lows ava i lab le a t h t tp : / / www. imf .org/ externa l /pubs/ f t / weo/2002/ 02/ pdf /chapter1 .pdf


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APPENDIX K

T o t a l N e t C ap i t a l Fl o w s : D e ve l o p i n g Co u n t r i e s 1 9 9 4 - 2 0 0 3

-5 0

0

50

100

150

200

250

1994 1995 1996 1997 1998 1999 2000 2001 2002 20

Y e a rTot al Pr i vat e Flows Tot al Off i c i al Flows Tot al of ALL Flows

SOURCE: In ternat iona l Monetar y Fund, Worl d Economic O utlook: Trade and Finance, September 2002, Tab le 1 .3 Emerg ing Market

Economies : Net Cap i ta l Flows ava i l ab le a t h t tp : / / www. imf .org / exte rnal / pubs / f t / weo / 2002 / 02 / pd f / chap te r1 .pd f

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