Multilateral Investment Guarantee Agency facts for kids
MIGA logo
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| Formation | 12 April 1988 |
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| Type | Development finance institution |
| Legal status | Treaty |
| Purpose | Political risk insurance, foreign direct investment |
| Headquarters | 12th floor, 1800 G Street NW, Washington, D.C., U.S. |
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Membership
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182 countries |
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Executive Vice President
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Hiroshi Matano |
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Parent organization
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World Bank Group |
| Website | MIGA.org |
The Multilateral Investment Guarantee Agency (MIGA) is an international organization that helps protect investments. It offers special insurance called "political risk insurance." This insurance helps people or companies who invest money in developing countries. It protects their investments from unexpected problems like political changes or other non-business risks. MIGA is part of the World Bank Group and has its main office in Washington, D.C., United States.
MIGA was created in 1988. Its goal was to encourage people to invest confidently in developing countries. MIGA is owned by its member countries. These countries provide money and vote on important decisions. MIGA has its own leaders and staff who manage its daily work. It insures long-term investments, like money put into a business or loans. The World Bank checks MIGA's work every year.
Contents
History of MIGA
In September 1985, the World Bank decided to create MIGA. MIGA officially started on April 12, 1988. It became the fifth member of the World Bank Group. When it began, MIGA had about $1 billion in funds. It also had 29 member countries.
Any country that was a member of the International Bank for Reconstruction and Development (IBRD) could join MIGA. MIGA was set up to add to other ways of insuring investments. It helps reduce problems between the country where an investor is from and the country where they are investing.
MIGA gave its first investment insurance in 1990. This covered four projects worth over $1 billion. MIGA also started working with other insurance groups. These included Export Development Canada and the United States' Overseas Private Investment Corporation (OPIC).
In 1994, MIGA joined the Berne Union. This is a group of international organizations that provide export credit and investment insurance.
In 1997, MIGA issued its first contract under a special program. This program helped an energy project in Indonesia. MIGA also helped set up funds for investment insurance in Bosnia and Herzegovina and the West Bank and Gaza.
In 1998, MIGA's leaders decided to increase its funds by $850 million. They also received a gift of $150 million from the IBRD. In 1999, MIGA insured over $1 billion in investments in a single year for the first time.
MIGA paid its first insurance claim in 2000. This happened since the agency was founded.
In 2001, MIGA's new investment insurance grew to $2 billion. In 2005, MIGA started its Small Investment Program. This program helps small and medium-sized businesses invest. That same year, MIGA also created a special facility to encourage investment in Afghanistan.
In 2007, MIGA insured a port project in Djibouti. This was its first project using Islamic finance rules. MIGA also launched a website called PRI-Center.com. This site offered information about managing political risks and investment insurance.
In 2009, MIGA changed some of its rules. It started covering situations where governments might not pay their financial debts. MIGA also began publishing a yearly report. This report talks about global investment trends and how companies view risks.
Over time, private insurance companies started offering more political risk insurance. Because of this, MIGA began focusing on very risky countries. These are countries that other investors might not be interested in. MIGA also started insuring projects between developing countries.
In 2010, MIGA did a survey. It showed that political risk was the biggest worry for long-term foreign investment in developing countries. It was even more concerning than economic problems or poor public services.
MIGA's leaders also changed its rules in 2010. This was to make the organization more effective. They expanded the types of investments that could get political risk insurance.
How MIGA is Governed
MIGA is run by its Council of Governors. This council represents all the member countries. The Council of Governors has the main power. However, they usually let MIGA's Board of Directors handle most decisions. The Board of Directors has 25 members. They vote on matters that come before MIGA. Each director's vote depends on how much money their countries have put into MIGA. The board meets regularly at MIGA's main office in Washington, D.C. They oversee all of MIGA's activities. The Executive Vice President leads MIGA's overall plan and manages its daily work. As of 2019, Hiroshi Matano is the Executive Vice President of MIGA.
MIGA Membership
MIGA is owned by its 182 member governments. This includes 156 developing countries and 25 industrialized countries. Most of these are UN member states, plus Kosovo. To join MIGA, a country must first be a member of the World Bank. Specifically, they need to be a member of the International Bank for Reconstruction and Development.
As of 2022, six World Bank member countries are not part of MIGA. These are Brunei, Kiribati, the Marshall Islands, San Marino, Tonga, and Tuvalu. Some UN member states are not part of the World Bank, so they are not MIGA members either. These include Andorra, Cuba, Liechtenstein, Monaco, and North Korea. The Holy See and Palestine are also not MIGA members.
Somalia was the most recent country to join MIGA, in March 2020.
Investment Protection from MIGA
MIGA offers insurance to cover five main types of non-business risks. These include:
- Problems with changing money from one currency to another.
- When a government takes over a business.
- War, terrorism, and civil unrest.
- When a contract is broken by a government.
- When a government does not honor its financial promises.
MIGA can insure different types of investments. This includes money put directly into a company (equity) and loans. It can also cover other agreements like management contracts or leasing activities. MIGA usually offers insurance for up to 15 years. This can sometimes be extended for another five years.
If a problem happens that is covered by the insurance, MIGA can step in. MIGA can take over the investor's rights against the host country. This helps MIGA get back the money it paid out for the claim. However, MIGA's rules do not force member governments to treat foreign investments in any special way. As a large international organization, MIGA also tries to solve problems before they become insurance claims. MIGA asks investors it insures to talk with local communities. They also need to have ways for people to share their concerns.
MIGA's Small Investment Program helps encourage foreign investment in small and medium-sized businesses. This program offers most of MIGA's usual insurance types. However, it does not cover broken contracts. Small and medium businesses in this program get lower insurance costs. They also do not have to pay application fees. These benefits are not available to larger investors.
To qualify for the Small Investment Program, a business must have 300 or fewer employees. Its total assets and yearly income should not be more than $15 million each. MIGA limits the insurance amount for these projects to $10 million. It will insure them for up to 10 years, with a possible 5-year extension.
You can find more information about MIGA's work in its annual reports.
See also
- International Finance Corporation
- List of countries by FDI abroad
- List of countries by received FDI
- Overseas Private Investment Corporation (OPIC)
