Overview
Outline MIGA Overview • Within the WBG • History • Products • Development Impact • Sustainability MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 1
WBG Institutions IBRD IDA IFC MIGA International Bank International International Multilateral for Reconstruction Development Finance Investment and Development Association Corporation Guarantee Agency Est. 1988 Est. 1956 Est. 1960 Est. 1945 Promote cross-border Promote private sector Support countries’ Support countries’ investment and lending Role: economic and development economic and institutional development institutional development Debt and equity investors in Investors in member Governments of member Governments of member member countries countries with annual per countries countries with annual per Clients: capita income of less than capita income between $1,025 $1,025 and $6,055 - Political Risk Insurance - Equity/Quasi-Equity - Technical Assistance - Technical Assistance Products: - Credit Enhancement - Long-Term Loans - Loans - Interest-Free Loans - Advisory Services - Policy Advice - Policy Advice Shared Mission: “End extreme poverty and build shared prosperity” MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 2
MIGA History: Dr. Ibrahim Shihata – Founder “When I joined the Bank on August 1, 1983, as general counsel, I was convinced that the need for an international agency to encourage foreign investment was greater than ever. Such investment not only was concentrated in a few countries; its volume had started an historical decline. An agency supported by the World Bank and receiving the full confidence of both capital exporting and importing countries could, in my view at the time, reverse that trend to the benefit of both sides. In particular, it could play a significant role by rebuilding confidence in investing in developing countries and by breaking the psychological barrier that magnified political risks … The basic objective of the newly projected agency, to which I gave the name of the Multilateral Investment Guarantee Agency was described in terms of encouraging and promoting the flow of private resources among members for productive purposes .” MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 3
MIGA’s Products MIGA’s mandate is to facilitate FDI into developing countries As WBG’s provider of investment insurance, MIGA secures investment flows against political and sovereign risks Transfer restriction & currency inconvertibility Political Risk Expropriation Insurance War & civil disturbance (PRI) Breach of contract Non-honoring of a sovereign financial obligation Non-honoring (Credit Non-honoring of a sovereign financial obligation – Enhancement sub-sovereign - NHFO) Non-honoring of a financial obligation of SOE MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 4
MIGA’s Value Added • Management of risks at pre-claim level (100+ pre- claims among Strong pre-claim over 800 projects. Two claims paid for expropriation, six for war management and civil disturbance) • Leveraging the World Bank network • Highly rated multilateral by Basel Committee Highly rated • Reduce risk weighting and capital provisioning • Strong capital base Financially stable • Mobilize reinsurance capacity • Strong Risk Operates in challenging markets • Appetite Longer tenors (15 years) Environmental • and social risk Best practices in environmental and social standards mitigation MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 5
MIGA’s Growth 1990 – 2016 (New Guarantees Issued, $ million, FY) 4,500 Aspire to grow new NHFO Issued by FY guarantees issued by 4,000 PRI Issued by FY 50% from FY13 to FY17 3,500 3,000 2,500 2,000 1,500 1,000 500 - 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Decoupling Agency NHSFO NH for SOE of debt and Established introduced obligors equity in 1988 in 2009 Introduced introduced in 2013 in 2010 MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 6
MIGA’s Portfolio 1990 – 2016 (Gross Exposure, $ million, FY) 16,000 June 30, 2016 NHFO Portfolio Gross Exposure: $14.2B 14,000 PRI Portfolio PRI: $8.8B; NH: $5.4B 12,000 10,000 8,000 6,000 4,000 2,000 0 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Decoupling Agency NHSFO NH for SOE of debt and Established introduced obligors equity in 1988 in 2009 Introduced introduced in 2013 in 2010 MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 7
MIGA has continued to increase its development impact through its stimulation of private investment USD billions Gross issuance Private co-financing 27.3 1 No co-financing data available for FY04-FY10 5.6 9.9 8.8 3.4 5.9 2.1 1.3 1.4 1.4 1.5 1.1 1.2 4.3 2.1 2.7 2.8 3.2 2.8 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Development impact (FY13-16) 3+ million 50+ million 177+ million metric tons of people provided people provided greenhouse gases access to power access to transport avoided SOURCE: MIGA development impact estimates
MIGA-supported projects have advanced the Sustainable Development Goals in powerful ways over the last 4 years Core areas of development impact, FY13 - FY16 Power Jobs 50+ million people 65k+ direct, full- with access time jobs created Access to Transport Finance 177+ million $6.0 billion dollars people with access in finance enabled for SMEs Growing Clean Water economies 18.2 million cubic $1.7 billion in meters flowing/yr locally procured goods Greenhouse Tax revenue Gas Reduction $1.8 billion in local 3+ million metric taxes and fees tns prevented SOURCE: MIGA development impact estimates
Underwriting – Process and Timeline Origination, Contract Contract Investment Due Diligence Structuring, Investments Due Diligence Monitoring Engaging MIGA Negotiation & (Underwriting) Negotiations Issuance Application Disclosure period Environmental 30/60 days and Social Due Diligence Technical and Commercial Due Diligence Management Initial Contract & Board Management Execution Approvals Approval MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 10
MIGA’S Sustainability Framework Implementation Tools Responsibilities Access to E&S Sustainability E&S Review Procedures Information Policy Policy Guidance notes Client 8 Performance Standards WBG EHS Guideline Good Practice Material MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 11
Performance Standards PS1: Assessment and PS4: Community Health, PS2: Labor and Working PS3: Resource Efficiency Management of E&S Safety and Security Conditions and Pollution Prevention Risks and Impacts PS5: Land Acquisition PS6: Biodiversity PS8: Cultural Heritage PS7: Indigenous Peoples and Involuntary Conservation and Resettlement Sustainable Management of Living Natural Resources MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 12
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