Multilateral Investment Guarantee Agency

26/08/2020 0 By indiafreenotes

The Multilateral Investment Guarantee Agency (MIGA) is an international financial institution which offers political risk insurance and credit enhancement guarantees. These guarantees help investors protect foreign direct investments against political and non-commercial risks in developing countries. MIGA is a member of the World Bank Group and is headquartered in Washington, D.C. in the United States.

MIGA was established in 1988 as an investment insurance facility to encourage confident investment in developing countries. MIGA is owned and governed by its member states, but has its own executive leadership and staff which carry out its daily operations. Its shareholders are member governments that provide paid-in capital and have the right to vote on its matters. It insures long-term debt and equity investments as well as other assets and contracts with long-term periods. The agency is assessed by the World Bank’s Independent Evaluation Group each year.

A Brief History of MIGA

The agency was created to complement both public and private investment insurance sources against non-commercial risks in developing countries. Its multilateral character and sponsorship by advanced and developing nations were seen as bolstering confidence among people going across borders to invest their money.

In September 1985, the World Bank endorsed the idea of a multilateral political risk insurance provider and established MIGA in April 1988. The agency started out with $1 billion worth of capital among its initial 29 member states. These nations included Bahrain, Bangladesh, Barbados, Canada, Chile, Cyprus, Denmark, Ecuador, Egypt, Germany, Grenada, Indonesia, Jamaica, Japan, Jordan, Korea, Kuwait, Lesotho, Malawi, Netherlands, Nigeria, Pakistan, Samoa, Saudi Arabia, Senegal, Sweden, Switzerland, United Kingdom, and the United States.

In 1991, the number of member states of MIGA topped 100. Eight years later, guarantees issued by the agency reached a total of $1.3 billion, topping the $1 billion dollar mark for the first time ever. The agency also provided guarantees worth $1.2 billion in 2009 to support the economies in Europe and Central Asia following the global financial crisis.

MIGA offers a variety of services in order to encourage foreign direct investment. These include risk insurance against foreign exchange restrictions, an outbreak of conflicts or wars, imposed spending limits, and related restrictions on company assets.

In addition to providing political risk insurance to corporations that want to invest in developing countries, MIGA offers advisory services to developing country governments. The organization advises on the policies and procedures these governments should follow and the best ways these countries can attract foreign investment. Other services by MIGA include licensing arrangements, franchising, and technology support.

To help ease the flow of foreign investment dollars into certain regions, the agency supports and runs a number of international projects. One of those is the Afghanistan Investment Guarantee Facility, launched in 2005. The agency’s aim was to help the country in its reconstruction efforts while the country was embroiled in the war by opening up the doors to direct foreign investment.

MIGA’s Current Leadership Team

According to MIGA, the people in its group have experience in political risk insurance and are well versed in banking and capital markets, environmental and social sustainability, project finance and sector specialties, and international law and dispute settlement.

The group’s current management team consists of Hiroshi Matano, executive vice president and CEO, and S. Vijay Iyer, senior vice president and COO.

  • The Multilateral Investment Guarantee Agency (MIGA) is an international institution that promotes investment in developing countries by offering political and economic risk insurance.
  • The agency aims to support economic growth, reduce poverty, and improve people’s lives through foreign direct investment into developing countries.
  • MIGA is a member of the World Bank Group and has 181 member states as of March 2020.