What is the Multilateral Investment Guarantee Agency (MIGA)? Definition, How It Works, and Benefits

The multilateral investment guarantee agency (MIGA) functions as a specialized agency within the World Bank Group, headquartered in Washington, D.C. With a membership roster encompassing 182 member governments as of October 2023, including 154 developing nations and 28 industrialized countries, MIGA plays a crucial role in promoting investment in emerging markets.

MIGA was established in April 1988 with the objective of complementing both public and private investment insurance sources to mitigate non-commercial risks in developing countries. The impetus for its creation came from the World Bank’s endorsement in September 1985, which recognized the need for a multilateral political risk insurance provider. Initially capitalized at $1 billion with 29 member states, MIGA’s membership expanded rapidly, surpassing 100 member states in 1991.

MIGA offers a suite of services aimed at encouraging FDI in developing countries. These services include risk insurance against foreign exchange restrictions, conflict, spending limits, and asset restrictions. Additionally, MIGA provides advisory services to assist developing country governments in formulating policies conducive to attracting foreign investment. The agency also supports international projects to facilitate investment flows into specific regions.

MIGA’s leadership team comprises individuals with extensive experience in political risk insurance, banking, capital markets, sustainability, project finance, sector specialties, and international law. Notable members of the leadership team include Hiroshi Matano, Executive Vice President, and Junaid Kamal Ahmad, Vice President of Operations.

Corporations, financial institutions, state-owned companies, and non-profit organizations are eligible for MIGA coverage, provided they meet certain criteria. Eligible entities must be incorporated in a member country or majority-owned by nationals of a member country, and investments must be made on a commercial basis.

Yes, MIGA operates as an integral part of the World Bank Group, which comprises five institutions dedicated to eradicating extreme poverty and promoting prosperity globally. Alongside MIGA, the other institutions include the International Bank for Reconstruction and Development, the International Development Association, the International Finance Corporation, and the International Centre for Settlement of Investment Disputes.

As a guarantee agency, MIGA provides coverage against political risks such as war, currency inconvertibility, expropriation, and sovereign non-honoring of obligations. By mitigating these risks, MIGA facilitates cross-border investment and contributes to poverty reduction globally.

MIGA contributes to poverty reduction by facilitating foreign direct investment (FDI) in developing countries, which stimulates economic growth, creates job opportunities, and fosters infrastructure development.

While MIGA provides coverage against a range of political risks such as war, currency inconvertibility, and expropriation, it may not cover all potential risks. Investors should carefully assess their specific risk exposure and consider additional risk mitigation measures as necessary.

MIGA supports a wide range of projects aimed at promoting economic development and sustainability in developing countries. These projects may include infrastructure development, renewable energy initiatives, and initiatives focused on social impact and community development.

MIGA assesses the eligibility of applicants based on criteria such as incorporation in a member country, commercial viability of investments, and compliance with MIGA’s environmental and social standards. Applicants must undergo a thorough due diligence process before receiving coverage.