At a Glance · The Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group, promotes foreign direct investment (FDI) in emerging economies to support economic growth, reduce poverty, and improve people’s lives. · MIGA encourages developmentally beneficial investment by insuring against the risks of currency inconvertibility and transfer restriction; expropriation; war, terrorism, and civil disturbance; breach of contract; and non-honoring of sovereign financial obligations. · Since its inception, MIGA has provided more than US$20 billion in guarantees (political risk insurance) for 600 projects in 100 developing countries. MIGA currently has an outstanding guarantees portfolio of US$7.3 billion. · Projects supported by MIGA create jobs; provide water, electricity, and other basic infrastructure; rebuild collapsed financial systems; generate tax revenues; transfer skills and technological know-how; and help countries tap natural resources in an environmentally sustainable way. Response to Financial Crisis In the current climate, MIGA is focusing on supporting countries affected by the financial crisis, particularly in collaboration with other World Bank Group members. · As a result of the deepening financial crisis, MIGA has launched an initiative to support financial flows from banks to their subsidiaries in countries that have been hit by the global financial crisis. The initiative will provide extended support to financial institutions seeking political risk insurance on cross-border investments for recapitalization or liquidity support to their subsidiaries in such markets. · Under the initiative, MIGA will be able to provide such guarantee support globally, of which up to US$3 billion will be available for investments into the heavily impacted economies of Europe and Central Asia (ECA). This follows and builds on the commitment made by MIGA in February 2009, as part of the coordinated effort of support to the countries of Eastern Europe by the member agencies of the World Bank Group and other multilateral investors and lenders. · MIGA has already issued guarantees worth more than US$1.2 billion in support of shareholder loans made by parent banks to their subsidiaries in ECA. This will help banks in these countries provide credit to small and medium-size enterprises (SMEs) at a time when financing is scarce for business growth. · MIGA has entered into an innovative contract with the African Development Corporation (ADC), a business development company capitalized by German investors, to facilitate up to US$100 million of investments to SMEs in Sub-Saharan Africa—which account for most of the continent’s jobs. An important element of MIGA’s ongoing response to the global financial crisis, this contract provides ADC with a blanket commitment of guarantee capacity from MIGA. · MIGA joined the African Financial Partnership initiative under which the region’s largest multilateral investors and lenders will support the private sector in Africa and fund lending to the real economy. MIGA will make available up to US$2 billion of guarantees to support investment in infrastructure, SMEs, and the financial sector. · MIGA is also part of a joint donor initiative to spur economic growth in Latin American and Caribbean countries. · MIGA’s Board of Directors approved substantial changes to the agency’s Operational Regulations in order to increase flexibility, meet changing circumstances, and respond to market conditions. What We Do Concerns about uncertain political environments and perceptions of political risk often inhibit investment, especially in times of the crisis. As a result, most FDI—a key driver of economic growth—drops substantially or goes to just a handful of countries. MIGA’s guarantees act as a catalyst to restore market confidence for investors. The agency also helps resolve disputes between investors and host governments, to keep MIGA-supported projects and their benefits on track. MIGA has supported 600 projects since 1988 and has been able to resolve disputes that would have led to claims in all but two cases. The agency has paid three claims related to war and civil disturbance events. In order to maximize the insurance capacity that MIGA can bring to a project, the agency also works closely with its private and public sector reinsurance partners. By fronting transactions, MIGA has provided access to insurance capacity that otherwise would not have been available to clients and host countries. MIGA’s technical assistance and online investment information and knowledge services help developing countries define and implement strategies to attract FDI, and disseminate information on investment opportunities, business operating conditions, and political risk insurance. Why We Do It Investment needs today are greater than ever, and developing country governments are often not able to shoulder the burden—financially or technically—of addressing these needs on their own. The private sector can help economies rebuild and grow and avert the need for governments to use funds better spent on acute social needs, while taking advantage of the opportunity to make profitable investments. But global businesses also have to manage the noncommercial and political risks associated with cross- border investment. As a member of the World Bank Group, MIGA is able to support these businesses by providing a unique umbrella of deterrence against political risks related to government actions that may have negative impacts on projects. Other Priorities and Impact MIGA’s strategy is to focus on specific areas where it can make the greatest difference: · Investments in IDA-eligible countries. These markets typically have the most need and stand to benefit the most from foreign investment, but are not well served by the private insurance market. · Investment in conflict-affected countries. While these countries tend to attract considerable donor goodwill once conflict ends, aid flows eventually decline. With many investors wary of potential risks, political risk insurance becomes essential to bring in investment. · Investment in complex projects, mostly in infrastructure and the extractive industries. Given that 1.6 billion people still do not have electricity, and 2.3 billion depend on traditional biomass fuels, investments in these sectors are critical for the world’s poorest nations. · Support for South-South investments. Investments between developing countries are contributing an ever-increasing proportion of FDI flows. But private insurers or national export credit agencies in these countries, if they exist at all, are often not sufficiently developed, lacking the ability and capacity to provide political risk insurance. Related Links What is the investment guarantees program? Why does MIGA provide investment guarantees? How does MIGA help investors find out about opportunities? MIGA investor newsletter The Small Investment Program The Afghanistan Investment Guarantee Facility (PDF) The West Bank and Gaza Investment Guarantee Trust Fund Environmental and Social Challenges Fund for Africa Media Contacts: Mallory Saleson, (202) 473-0844, msaleson@worldbank.org Rebecca Post, (202) 473-1964, rpost@worldbank.org Dmitro Derkatch, (202) 458-2097, dderkatch@worldbank.org Investor Contact: Michael Durr, (202) 458-4798, mdurr@worldbank.org Updated August 2009 | 
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