What is the Multilateral Investment Guarantee Agency (MIGA)?
The Multilateral Investment Guarantee Agency, abbreviated as MIGA, is an international agency constituted to promote large scale foreign investment projects in developing countries. MIGA specializes in facilitating high-risk investments in low-income countries and supports projects that are socially, economically, and environmentally sustainable.
Headquartered in Washington DC, U.S., MIGA is a part of the World Bank Group, with 25 industrialized and 157 developing countries as its members as of May 2020. It is operated by a Council of Governors and headed by the Executive Vice President (Hiroshi Matano as of December 2019). With a capital stock of more than two billion dollars, the agency’s adopted the following strategy moving forward:
A focus on the world’s poorest developing countries through support for projects
An emphasis on fragile and conflict-affected countries, where private players in the insurance industry are reluctant to go
A commitment to the 17 Sustainable Development Goals and climate change mitigation
The Multilateral Investment Guarantee Agency, abbreviated as MIGA, is an international agency established to promote large scale high-risk foreign investment projects in developing countries.
MIGA is a part of the World Bank Group with 25 industrialized and 157 developing countries as its members as of May 2020.
It primarily offers political risk insurance, which secures an investment against threats of political instability, civil wars, terrorism, etc.
Services Offered by the Multilateral Investment Guarantee Agency
The Multilateral Investment Guarantee Agency primarily offers political risk insurance, which secures an investment against threats of political instability, civil wars, terrorism, etc. It provides guarantees against non-commercial risks to foreign direct investment projects in various sectors, including agribusiness, banking, financial markets, infrastructure, power and renewable energy, solid waste management, telecommunication, tourism, and transportation. it boosts the confidence of both investors and lenders concerning the safety and return of their investment. MIGA charges investors an insurance premium like any other insurance agency.
The agency also advises governments on the best ways to attract and retain private investment, thus enabling rapid and sustained growth of their economies. Its services include licensing, franchising, and technology support. Additionally, it strives to add value to its clients by offering them extensive knowledge of emerging markets across the globe.
The Four Pillars of MIGA
1. Growing Core Business
2. Innovative Applications
3. Maximizing Project Impact
4. Creating Markets
History of MIGA
The need for a multilateral political risk insurance provider was first felt in 1948. In September 1985, the idea started to materialize when the World Bank’s Board of Governors endorsed the MIGA Convention with the core mission of enhancing the flow of capital and technology to developing countries.
MIGA was established as a member of the World Bank Group in April 1988. It commenced its operations with a capital stock of $1 billion and 29 original member countries. The agency derived strength from its multilateral character and joint sponsorship by developed and developing countries.
By 2010, MIGA’s successfully issued 922 guarantees worth $18.8 billion.
Examples of MIGA Projects
In 2019, MIGA issued guarantees to support the development, construction, and operation of a new solar photovoltaic plant in Salima, a province in the central region of Malawi, Africa. Malawi’s electrification rate relative to global standards was dismally low, with its installed generation capacity majorly dependent on hydropower and vulnerable to the impacts of climate change. The project insured one of the first Independent Power Producers (IPP) in Malawi for adding a new source of energy supply in a country.
In 2018, MIGA provided insurance to foreign investors for the construction and operation of a new waste management facility with electricity and heat generation components in Belgrade, Serbia. The project aimed to reduce the burden on Belgrade for the processing of municipal waste, thereby freeing up landfill capacity in the city.
In 2010, MIGA supported investors in the construction of a new airport to serve the capital of Ecuador – Quito – to improve and expand economic development and trade. The Mariscal Sucre International Airport ultimately opened in February 2013 and soon became one of the busiest airports in South America.