Does the thought of investing in a small, unlisted biofuels company in Sierra Leone (or any similar emerging market) excite you? Would risks like civil war, currency devaluation and corruption keep you up at night - or keep you away? If you or anyone you know would consider investing in these places and companies, or wants to see more of this kind of investment happen for the benefit of the billion people at the "bottom of the pyramid," read on. VantagePoint Global and the Global Exchange for Social Investment (GEXSI) have a solution to make it easier and more secure: development investment insurance.

We are delighted to send you the final report "SIRIF Investment Risk Study" that we have conducted over the last 12 months. The SIRIF study - an analysis of development investment risks and risk mitigation mechanisms - identified and tested risk mitigation mechanisms that could catalyze an increase in private sector capital in small and medium size enterprises and social enterprises (SMEs) in emerging markets. To download the report visit our website: http://www.vantagep.org/our.html or click on the direct link:
http://www.vantagep.org/documents/SIRIFInvestmentRiskStudy_Oct06.pdf

GEXSI and VantagePoint Global are grateful to the many investors, foundations, international development agencies and risk mitigation experts who contributed their insight and time. Their continuous support and openness has been critical in completing this study.

The main conclusions from the study are:

a.. More effective mitigation of a limited number of risk categories would enable an  increase in private sector capital flows to emerging market small and medium  size enterprises and social enterprises.   

b.. There is a gap (demand-driven from investors) in the "risk mitigation market" for  coverage that is cost-effective, timely, efficient and flexible   

c.. New investments have a greater need for risk mitigation than existing investments.   

d.. Risk disaggregation can enable more effective risk mitigation.   

e.. A streamlined "portfolio approach" to mitigating risks is required in order to utilize currently available mechanisms more effectively.   

f.. Political Risk Insurance (PRI) has the potential to fill a segment of the gap in development investment risk mitigation.    

g.. Effective commercially oriented mechanisms covering currency risk and credit risk would go even further in closing the gap in the  risk mitigation market.   

h.. Enhancement of risk mitigation mechanisms with international development aid would increase their availability to a larger segment of SME investors.   

i.. The effort and cost required to arrange comprehensive risk coverage from applicable risk mitigation service providers is too great for most SME investors.

We hope that these findings encourage you and your organization to consider risk mitigation as a factor in increasing development investment. If you're directly involved with development investment, we would welcome the opportunity to discuss this further with you. In addition, we would appreciate if you could forward the study to other interested parties.

We are using three specific development investment opportunities as pilots for further risk mitigation mechanism development. We are actively seeking additional SME investment portfolios to that end.

Building on the results we are also seeking to set-up of a "one-stop" risk mitigation facilitator, offering comprehensive risk coverage of political, market and business risks. This would go even further towards effectively fulfilling the identified "mechanism gap" requiring coverage that is inexpensive, timely, disaggregated and widely applicable.