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a study onMIGA (Multilateral
Investment GuaranteeAgency)
Presented To: Presented By:Dr Y C Joshi Ashwini Yadav (10M05)
Kaushil Shah (10M16)Manan Buch (10M19)
Pallavi Agrawal (10M26)
G.H.Patel Postgraduate Institute ofBusiness Management, V V Nagar
Sardar Patel University
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MISSION
To promote foreign direct investment intodeveloping countries to supporteconomic growth, reduce poverty and
improve peoples lives.
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HISTORY
On April 12, 1988 an international convention
established MIGA as the newest member of theWorld Bank Group
The agency opened for business as a legally
separate and financially independent entity
Membership was open to all IBRD members, andthe agency began with capital stock of $1 billion.There were 29 members at the initial phase
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ConT
MIGA convention defined its core mission: "to
enhance the flow to developing countries of capitaland technology for productive purposes underconditions consistent with their developmentalneeds, policies and objectives, on the basis of fair
and stable standards to the treatment of foreigninvestment."
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OBJECTIVES OF THE STUDY
To study organization and structure of MIGA
To study how MIGA selects areas of its operations
To understand different non commercial risks that
MIGA guarantees
To study procedure of providing guarantees
To study MIGAs operation in India and its future
vision
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METHODOLOGY OF THE STUDY
Secondary information was accessed from the
following sources:
Journals
MIGAS website
Other authenticated websites
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INTRODUCTION
MIGA is a member of the World Bank Group. Like
IBRD,IFC,IDA and ICSID
IBRD and IDA provide loans at preferential rates tomember countries, as well as grants to the poorest
countries while IFC and MIGA include investment inthe private sector and providing insurancerespectively
MIGA provides guarantees against noncommercial
risks to protect cross-border investment indeveloping member countries
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ConT
Over the years, the organization has provided more
than $24 billion in political risk insurance for over600 projects in more than 100 developing countries
MIGA's task is also to provide water, electricity and
other basic infrastructure, in addition to generatingtax revenues and creating training programs
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ConT
There are 175 member countries in MIGA
MIGAs team has extensive experience in politicalrisk insurance, with backgrounds including bankingand capital markets, environmental and social
sustainability, project finance and sector specialties,and international law and dispute settlement.
MIGAs strength lies of it being the member ofWorld Bank Group and an international structure
made of shareholders forming of internationalcountries.
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OBJECTIVES OF MIGA
The objective of the Agency is to:
Encourage the flow of investments for productivepurposes among member countries, and inparticular to developing member countries
Supplementing the activities of the InternationalBank for Reconstruction and Development(hereinafter referred to as the Bank), theInternational Finance Corporation and other
international development finance institutions.
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ConT
To serve its objective, the Agency shall:
Issue guarantees, including coinsurance andreinsurance, against non-commercial risks inrespect of investments in a member country whichflow from other member countries;
Carry out appropriate complementary activities topromote the flow of investments to and amongdeveloping member countries; and
Exercise such other incidental powers as shall benecessary or desirable in the furtherance of itsobjective.
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MIGAS STRATEGY
Its strategy is to attract investors and private
insurers into difficult operating environments It insures investments in the areas where they can
make the greatest differenceo Countries eligible for assistance from the
International Development Association (theworlds poorest countries)o Conflict-affected environmentso Complex deals in infrastructure and extractive
industries, especially those involving project
finance and environmental and socialconsiderations
o South-South investments
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Types of Non Commercial Risks
Currency inconvertibility and transfer restriction
Expropriation
War, terrorism, and civil disturbance
Breach of contract
Non-honoring of sovereign financial obligations
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INSURANCE COVERAGE
Benefits that investors and lenders have:
Deterring harmful actions
Resolving disputes
Accessing funding
Lowering borrowing costs
Increasing tenors
Providing environmental and social expertise
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Eligibility
Criteria for corporations and financial institutions
Criteria for state-owned company
Criteria for non-profit organization
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Terms & Conditions
Pricing
Duration of guarantee
Coverage
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Underwriting Process
Definitive Application and Client Documentation
Underwriting Fees
Review, Disclosure, and Due Diligence by MIGA
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Accountability
Environmental and Social Safeguards
o Derived from our extensive experience insuringinvestments around the world Category A if it may have potentially significant
adverse social or environmental impacts that arediverse, irreversible, or unprecedented
Category B if it may have potentially limited adversesocial or environmental impacts that are few innumber, generally site specific, largely reversible, andreadily addressed through mitigation measures
Category C if the project has minimal or no adversesocial or environmental impacts, including certain
financial intermediary projects with minimal or noadverse risks
Category FI is assigned to all financial intermediaryprojects excluding those that are Category C projects
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Accountability
Institutional Integrity
o Combating Fraud and Corruption in MIGA-Supported Projects Checks of involved parties Clients safeguards for dealing with fraud
and corruption The project structure and contractualarrangement.
o MIGAs objective is to ensure a fair, transparent,
and rational way to evaluate allegations of
misconduct in any MIGA project
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Accountability
Information disclosure
o Project Informationo Summaries of proposed guarantees
(SPGs)o Environmental and Social Review
Summarieso Institutional information
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Accountability
Independent Evaluation Group
o IEG is charged with evaluating the guaranteeprojects and services
o The Director-General of IEG reports directly tothe World Bank Group's Board of Directors
o
The goals of evaluation are to provide anobjective assessment of the results of the BankGroups work and to identify and disseminate
lessons learned from experience
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Accountability
Compliance advisor
o As the independent recourse mechanism forIFC and MIGA, CAO helps address theconcerns of communities who believe they areaffected by IFC/MIGA projects with the aim of
improving social and environmental outcomeson the ground..
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MIGA and India
India joined MIGA in 1993
MIGA offers insurance product for SMEs in India MIGA helps Indian investors in expanding their
business abroad Projects invested by MIGA in India are:
o
Motorola, Inc.o Aarti Steel Nigeria Ltd.
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MIGAs future plans
Constant endeavor towards the expansion,
modernization and financial restructuring of itsexisting projects
Be innovative and flexible in mobilizing its partnersto increase the availability of political risk insurance
for countries and clients To increase capital in its future activities Face challenges ahead of them in terms of
investment promotion
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Be Insured!!!
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