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 a special international group. It helps businesses invest safely in developing countries. MIGA offers a type of insurance called "political risk insurance." This insurance protects big investments from unexpected problems. These problems can include political changes or other non-business risks.
MIGA is part of the World Bank Group. Its main office is in Washington, D.C., in the United States. MIGA started in 1988. Its goal was to encourage people to invest in countries that are still developing. MIGA is owned by its member countries. These countries are like its shareholders. They provide money and vote on important decisions. MIGA helps protect long-term investments like loans and ownership stakes.
Contents
MIGA's Story: A Quick History
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 $1 billion in capital. 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 created to add to other types of investment insurance. It helps reduce problems between the investing country and the country receiving the investment.
First Steps and Growth
MIGA issued its first investment guarantees in 1990. These covered four projects worth $1.04 billion. The agency also signed its first agreements to share risk with other insurance groups. These included Export Development Canada and the Overseas Private Investment Corporation (OPIC).
In 1994, MIGA joined the Berne Union. This is an international group of export credit and investment insurance providers.
By 1997, MIGA started new programs. It helped support an energy project in Indonesia. MIGA also set up special funds. One was for Bosnia and Herzegovina ($12 million). Another was for the West Bank and Gaza ($20 million).
In 1998, MIGA's leaders approved a large increase in its capital. This was $850 million. The IBRD also gave MIGA a grant of $150 million. In 1999, MIGA's investment guarantees went over $1 billion in a single year for the first time.
New Challenges and Programs
MIGA paid its first insurance claim in 2000. This was the first time since the agency started.
By 2001, MIGA's new investment guarantees grew to $2 billion. In 2005, MIGA launched its Small Investment Program. This program helps smaller businesses invest in developing countries. That same year, MIGA also set up a special facility for investments in Afghanistan.
In 2007, MIGA supported a port project in Djibouti. This was its first project using Islamic finance rules. The agency also launched a website called PRI-Center.com. This site offered information on managing political risks.
In 2009, MIGA changed some of its rules. It started covering situations where governments might not pay their financial debts. MIGA also began publishing an annual report. This report, called "World Investment and Political Risk," looks at global investment trends. It also shares what companies think about risks.
MIGA has focused on very risky countries. These are places that other investors might avoid. It also insures projects between countries in the global south. This means developing countries investing in other developing countries.
In 2010, MIGA did a survey. It showed that political risk is the biggest worry for long-term foreign investment. It was even more concerning than economic uncertainty. MIGA's leaders also updated the agency's rules in 2010. This was to make it more effective. They expanded the types of investments MIGA could insure.
How MIGA is Managed
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 all important matters for MIGA. Each director's vote depends on how much money their represented countries have put into MIGA. The board meets regularly at MIGA's headquarters in Washington, D.C. They oversee all of MIGA's activities.
MIGA's Executive Vice President leads the overall strategy. This person also manages the daily operations. As of 2019, Hiroshi Matano is the Executive Vice President of MIGA.
Who Can Join MIGA?
MIGA is owned by its 182 member governments. This includes 156 developing countries and 25 industrialized countries. The members are 181 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 MIGA members. These are Brunei, Kiribati, the Marshall Islands, San Marino, Tonga, and Tuvalu. Some UN member states are not members of the World Bank or MIGA. These include Andorra, Cuba, Liechtenstein, Monaco, Nauru, and North Korea. The Holy See and Palestine are also not MIGA members.
Somalia is the newest country to join MIGA. It became a member in March 2020.
What MIGA's Guarantees Cover
MIGA offers insurance to protect against five main types of non-business risks:
- Currency problems: When investors can't change their money into other currencies or send it out of the country.
- Government takeover: When a government takes control of an investment.
- War, terrorism, and civil unrest: Damage or problems caused by conflict.
- Broken contracts: When a government doesn't follow an agreement.
- Unpaid debts: When a government doesn't pay its financial obligations.
MIGA can cover many types of investments. These include ownership stakes, loans, and guarantees for loans. It can also insure management agreements, bonds, leasing, and franchise deals. 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. It can take over the investor's rights against the host country. This helps MIGA get back the money it paid out. As an international group, MIGA also tries to solve problems before they become insurance claims.
Small Investment Program
MIGA's Small Investment Program helps smaller businesses. It encourages them to invest in developing countries. This program offers the same types of coverage as regular MIGA insurance. However, it does not cover broken contracts.
Smaller businesses in this program get lower insurance fees. They also don't have to pay application fees. To qualify, a project must have 300 or fewer employees. Its total assets and yearly income must not be more than $15 million each. MIGA limits the guarantee amount to $10 million. It will guarantee these investments for up to 10 years, with a possible 5-year extension.
You can find more details 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)
