Multilateral Investment Guarantee Agency
Multilateral Investment Guarantee Agency

MIGA was created in 1988 to provide risk-balancing insurance services to foreign direct investment projects in developing countries. The typical service offered by MIGA is political risk insurance, which insulates investors against government expropriations, consequences of conflict, terrorism, and similar threats. This allows both investors and lenders to undertake commitments to such projects without the overwhelming downside risk that would otherwise exist. It also enables developing countries to attract and maintain private investment in their countries, which is essential to sustained development.

Membership in MIGA is offered to all member countries of the World Bank Group and currently numbers 175 countries. MIGA is operated by a Council of Governors, with a capital stock of more than two billion dollars.

Since it was established in 1988, MIGA has insured more than $24 billion of foreign direct investment in over more than 100 developing countries—investment that may not have otherwise happened. The result of all of MIGA’s activities is that, with the potential reduction of risks through insurance, developing countries are encouraged to adopt policies that promote investment. This combination of reform at the domestic level and insurance coverage for investors is another important tool in the drive to reduce poverty by the World Bank Group.

Examples of MIGA projects include the following:

  • In Azerbaijan, MIGAs provided insurance to protect Turkish investors in a project to expand and modernize a flourmill to produce and distribute flour sold in Azerbaijan and Georgia (Europe and Central Asia, 2010).
  • In Ecuador, MIGA is supporting investors in the construction of a new airport to serve the capital of Quito to improve and expand economic development and trade(Latin America and the Caribbean, 2010).
  • In the West Bank and Gaza, MIGA is guaranteeing a private equity firm that is helping a local agricultural company expand its operations (Summary of proposed guarantee, 2012).

 

 

Next: International Center for Settlement of Investment Disputes