Excellencies, distinguished panellists, ladies and gentlemen,
Welcome to this session, and thank you to Professor Klasen for guiding our discussion.
A solar plant in a developing economy can use the same panels as one in Europe, often under a stronger sun, and still face financing costs at least twice as high. The difference is risk, and who is willing to carry it.
Before the conversations begin, I want to make two points. One on how risk is holding investment back. And one on how we can share it better.
I will start with how risk holds investment back.
Investors commit capital when they can price and manage risk. A sudden change in the rules, a conflict along a trade route, a currency that loses a third of its value: any one of them can turn a sound project into a loss. When those risks look unmanageable, finance becomes more expensive, or disappears altogether.
The least developed countries feel this most. Between 2015 and 2023, foreign direct investment in other developing countries rose by 17%. In the least developed countries, it fell by nearly 20%. And this year, by the measure our World Investment Report tracks, geopolitical risk has risen by more than half.
This brings me to how we can share risk better.
The tools exist. Guarantees, insurance and blended finance can place each risk with the institution best equipped to carry it. Between 2018 and 2022, political risk insurance covered around $150 billion of projects in developing countries.
The problem is reach. Investors and investment promotion agencies often struggle to find the right provider or prepare eligible proposals. Providers, in turn, struggle to find credible projects and local partners.
This session is a first step towards closer global collaboration on investment risk sharing. It brings together insurers, export credit agencies, development finance institutions, development banks and investment promotion agencies. Together with you, we will explore a future Global Initiative for Investment Risk Sharing: one that builds on what already works, identifies the gaps no single actor can close alone and defines where closer cooperation can make a difference.
Excellencies,
Predictable policy remains the first line of defence, because it reduces risk at its source. But no policy can prevent every drought, every regional conflict or every currency shock. Those are the risks we need to share. The more widely we share them, the further investment can reach. And the better the future we build.
I thank you.