Miga

Miga

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  MIGA MULTILATERAL INVESTMENT GUARANTEE AGENCY
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  ABOUT MIGA  Purpose:political risk insurance, foreign direct investment  Parent Organization: World Bank Group  Establishment: April 12, 1988  Headquarters: Washington, D. C., United States  Members: 181 members government consisting 156 developing and 25 industrialized countries  Executive Vice President: Keiko Honda
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  SOME OTHER FACTS The Board of Directors consists of 25 directors and votes on matters brought before MIGA.  Each director's vote is weighted in accordance with the total share capital of the member nations that director represents.  Membership in MIGA is available only to countries who are members of the World Bank, particularly the International Bank for Reconstruction and Development.  MIGA is owned and governed by its member states, but has its own executive leadership and staff which carry out its daily operations.  Fifth member institution of the World Bank Group.
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  MISSION STATEMENT: “to promoteforeign direct investment into developing countries to support economic growth, reduce poverty, and improve people's lives.”
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  OBJECTIVES OF MIGA: To promote flow of direct foreign investment into the less developed member nations.  To give insurance cover to investors against political hazards.  To offer assurance against noncommercial hazards such as risks involved in currency transfer, war and civil conflicts and violation.  To insure new investments, expansion of present investments, privatization and financial restructuring.  To offer promotional and advisory services.  To set up reliability.
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  RISKS COVERED BYMIGA  Currency Transfer Restriction and Inconvertibility Protects against losses arising from: Inability to convert local currency into foreign exchange within the host country Inability to transfer funds out of the host country Currency depreciation not covered
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   Expropriation Protects againstlosses arising from:  Nationalization and confiscation  Creeping expropriation (i.e. a series of acts that in themselves are not expropriatory, but taken in sum are, e.g., changes in tax regime relating specifically to the foreign investor, govt representation imposed on Board of project, changing terms of license)  Partial expropriation (expropriation of funds) Non-discriminatory measures not covered, unless such measures have a confiscatory effect
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   War andCivil Disturbance Protects against losses arising from:  Damage/disappearance of tangible assets (including revolution, insurrection, coups d'état, sabotage, and terrorism)  Business interruption  Acts must have a primary intent of achieving a political objective
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   Breach ofContract Protects against losses arising from  Breach or repudiation of a contract between the investor/project company and the host country authorities  Non-enforcement of an arbitration/judicial award, or no recourse to judicial/arbitral forum, or decision by forum not rendered in reasonable time  May cover sub-sovereign obligations and obligations from SOEs  Non-Honoring of Sovereign Obligations  For unconditional financial payment obligations  No arbitration required
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  PERFORMANCE OF MIGAGUARANTEES  Sixty nine percent of a sample of 26 MIGA guarantee projects evaluated in FYO6-11 (underwritten between FY01 and FY09) were rated satisfactory or higher on development outcome. Successful MIGA guarantee projects were associated with providing products or services unavailable in the local market, efficiency and high productivity and experienced and financially strong sponsors.
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  ROLE IN SUPPORTINGWBG GOALS MIGA aspires to contribute to achieving the WBG twin goals;  1. to end extreme poverty by bringing the percentage of people living below $1.25 a day down to 3% by 2030 (from today’s level of 18%)  2. to boost shared prosperity by striving to improve the income levels of the bottom 40% of the population in every country by facilitating private investment into developing member countries and supporting projects that bring broad developmental impact and possibly transform their economies. While there is potential to reap higher returns in less developed countries, investors are often hesitant to invest in frontier markets with which they are unfamiliar and whose risks they cannot confidently gauge, such as political and sovereign risks which can impede realization of returns on investment. MIGA’s additionality stems from the Agency’s ability to support the private sector in their investments by mitigating risks they are not willing to take on their own. By facilitating much-needed investment, MIGA helps create jobs and promote innovation, technology and skills transfer to countries where most needed.
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  ENERGY EFFICIENCY ANDCLIMATE CHANGE:  MIGA’s unique profile allows it greater capacity to support complex energy and infrastructure projects which improve not only energy capacity within countries, but those such as improved transport networks which often require large investment and which when implemented successfully can directly and positively impact upon pollution control, including in MICs. In addition, MIGA’s strong track record shows the continued emphasis placed on supporting renewable energy projects, including wind and hydropower.
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  KEY PERFORMANCE INDICATORSAND CORPORATE SCORECARD:  MIGA currently monitors five KPIs on an ongoing basis to measure performance and productivity: gross new issuance, number of new projects, guarantees for IDA( International Development Association) countries, return on utilized capital, and ratio of administrative expenses to net premium income.  MIGA has started to develop its own Corporate Scorecard (CSC), alongside work currently being undertaken by the WBG. MIGA’s CSC expands on the KPIs and reports on development impact, financial sustainability, client satisfaction and workplace. Consultations with the Board and other relevant stakeholders in the WBG will take place before MIGA finalizes its CSC.
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   MIGA willmeasure its success in meeting its objectives against the performance indicators focusing on development impact, operational performance and resource efficiency. Mindful of the need to manage growth while controlling costs, MIGA aims to keep the ratio of administrative expenses to net premium income below 75%, assuming its expenses grow by no more than 10% annually. It is expected that increased activity in higher risk markets and a prudent yet flexible investment management strategy will translate into higher income levels over the long-term. In addition, MIGA will increasingly rely on other parts of the WBG for such shared services as it is already doing, notably in information technology, human resource management, and treasury execution and back office functions, to optimize the use of resources.
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  In order todeliver on its objectives to provide additionality in the context of the WBG’s development goals, MIGA is positioning itself to fully leverage the resources of both the WBG and the private sector through effective partnerships. MIGA’s position will be further strengthened by a number of strategic initiatives, which are designed to improve its ability to serve countries, and key market segments and clients in a comprehensive and holistic manner, while maintaining a sound financial profile.