MIGA A Multilateral Risk Mitigator Insuring Investments, Ensuring Opportunities

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MIGA A Multilateral Risk MitigatorInsuring
Investments, Ensuring Opportunities
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MIGAs Role

• MIGA is the entity within the World Bank Group
  that promotes developmentally sound foreign
  direct investment. It does this through the
  provision of political risk insurance
  (guarantees) to the private sector.

• Established in 1988
• 172 member countries
• Approximately 100 staff

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Why Promote FDI?

• Foreign direct investment can play a critical
  role in reducing poverty by creating jobs, and
  providing basic infrastructure
• It frees up government resources that can be
  redirected from infrastructure spending, for
  example, to social sectors
• But the majority of flows go to just a handful of
  countriesleaving the world's poorest economies
  largely ignored.

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MIGAs strategic priorities

• Insuring investments.
• In IDA-eligible countries
• In conflict-affected environments
• In complex projects, particularly in
  infrastructure and project finance deals
• From one developing country to another
  (South-South)

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What political risks does MIGA cover?

• Currency inconvertibility and transfer
  restrictions
• Expropriation (including partial and creeping)
• War and Civil Disturbance (including revolution,
  insurrection, coups d'état, sabotage, and
  terrorism)
• Breach of Contract
• Breach or repudiation of a contract between the
  investor and the Host Country authorities
  (particularly relevant in infrastructure)

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Investment types covered

• Equity
• Shareholder loans
• Loan guarantees
• Loans from financial institutions
• Non-shareholder loans
• Non-equity direct investment

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What does MIGA offer investors and host
countries?

• MIGA cover can help investors obtain project
  finance and/or lower borrowing costs
• Access to World Bank Groups collective knowledge
  and expertise
• Best practice in environmental and social
  management
• WBG umbrella provides leverage in dispute
  resolution, allowing projects to stay on track
• Ability to mobilize and complement insurance
  capacity from public and private insurers through
  coinsurance and reinsurance

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MIGAs work with World Bank Group

• Alignment with six strategic themes to help
  achieve an inclusive and sustainable
  globalization
• Contribution to Country Assistance/Partnership
  Strategy
• Participation in specific projects with other
  Bank group entities
• Specific initiatives (example Sustainable
  Infrastructure Action Plan)
• Environmental and social standards, information
  disclosure

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Project examples

• Bujagali Hydropower Project in Uganda
• Address Ugandas acute electricity shortage
• 115m guarantee from MIGA, 115m partial risk
  guarantee from IDA, 130m in IFC financing
• Doraleh Container Terminal in Djibouti
• Contribute to economic growth by helping country
  strengthen its position as the gateway to the
  African hinterland
• 427m guarantee from MIGA
• 50m reinsured with Islamic Corporation for the
  Insurance of Investment and Export Credit (ICIEC)
• Shariah friendly

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Project examples

• I.C.S. Raiffeisen Leasing S.R.L. in Moldova
• Covers Raiffeisen Bank SA Romanias shareholder
  loan to its subsidiary I.C.S. Raiffeisen Leasing
  S.R.L. (RLM) (7.34 m)
• Supports start-up phase of Raiffeisen Zentralbank
  (RZB) Groups leasing operations in Moldova
• Meet demand for equipment (trucks, trailers, and
  industrial equipment) by start-ups and SMEs
• Support to nascent financial sectors helps
• Improve access to finance for under-served
  markets
• Strengthen standards by establishing best
  practices, developing new products, and fostering
  competition among financial institutions

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Gross Exposureas of June 30, 2008 in US B
US 19.5B issued in 95 developing countries
since 1988
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Outstanding Guarantees Portfolio by sector, as of
July 2008
Outstanding Guarantees Portfolioby host region,
as of July 2008
41 Infrastructure 37 Financial 9 Agribusiness
and Manufacturing 9 Oil, Gas and Mining
45 Europe and Central Asia 20 Latin American
and the Caribbean 16 Sub-Saharan Africa 11 Asia
and the Pacific 11 Middle East and North Africa
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Top Investors and Host Countries as of July 2008

• Investor Country Gross Exposure ()
• Austria 19.3
• France 14.3
• Belgium 10.1
• Spain 7.1
• United Arab Emirates 6.1
• South Africa 4.7
• Finland 4.6
• United Kingdom 4.2
• Switzerland 2.9
• Luxembourg 2.6
• Total 75.9

• Host Country Gross Exposure
  
  () M
• Russian Federation 13.6 880.4
• Turkey 10.4 671.8
• Ukraine 9.6 623.1
• Djibouti 6.3 407.4
• Uruguay 4.6 300.6
• Mozambique 3.7 237.3
• Brazil 3.6 235.4
• Costa Rica 3.0 192.3
• Bosnia and Herzegovina 2.9 189.1
• China 2.6 169.0
• Total 60.3 3,906.4

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MIGA and the Knowledge Agenda

• Lack of knowledge and information about
  investment environments and perceptions of
  political risk often inhibit FDI, with the
  majority of flows going to just a handful of
  countries.

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Online Investment Information and Knowledge
Services

• FDI.net Promoting foreign direct investment in
  emerging markets
• Specific investment opportunities
• Investment information on business and legal
  environments
• PRI-Center.com Risk management information
  service for investors and practitioners
• Country analysis and risk ratings
• Research and tools from public and private PRI
  providers

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Thank you!
For more information, visit www.miga.org Or
for business inquiries, write to
migainquiry_at_worldbank.org or call 202-458-2538