MIGA—Multilateral Investment Guarantee Agency
Created in 1988 MIGA aims to encourage foreign direct investment by providing guarantees, known as political risk insurance, to foreign investors against loss caused by non-commercial risks in developing countries. MIGA, which is part of the World Bank Group, also provides technical assistance such as capacity building and advisory services to help countries attract foreign investment. In addition MIGA provides dispute mediation services to reduce future obstacles to investment. Since its creation MIGA has issued nearly $14.7 billion in guarantees for projects in 91 countries. 42 per cent of its activity is concentrated within areas considered to be high-risk and low-income, many of which are in Africa. MIGA's current vice president is Yukiko Omura.
MIGA's political insurance role is provided in four areas to cover against loses to investors and lenders involved in any project originating in a MIGA member state. Currency transfer restrictions relate to the inability of an investor to convert local currency, e.g. from investment profits, into foreign exchange for transfer out of the country due to actions of the host country's government. Coverage against expropriation relates to losses of an insured investment due to a host governmentís actions that reduce or eliminate ownership of, control over or rights to an insured investment, although does not cover actions taken by host government when exercising its role as a legitimate regulatory body. Insurance against war and civil disturbance protects an investor against destruction, disappearance or physical damage to tangible assets and the associated losses due to acts of war, terrorism or civil disturbance. These include revolution, coups or insurrections. An investor may also seek damages due to losses associated with a state breaching its contract.
MIGA provides insurance for new investment projects; additional contributions to existing investment associated with the expansion, modernisation or financial restructuring; and investments involving the privatisation of state-owned enterprises; additionally other investments are considered on a case-by-case basis. Equity investments, shareholder loans and shareholder loan guarantees (with a minimum three year maturity) are eligible. Application for insurance must be made by the investor before a binding commitment is made to invest. MIGA claims that insurance is only provided if a project is judged to be: economically and financially viable; in line with a host countryís development objectives and labour standards; and is "environmentally sound." For each project MIGA identifies applicable policies and guidelines; each project must also adhere to international and national laws. An environmental and social impact assessment is produced for projects expected to have significant environmental impacts and are available on the MIGA website.
However earlier this year the Compliance Advisor Ombudsman (CAO) criticised the due diligence of MIGA with respect to investment in the copper-silver mining project in Katanga, in the Democratic Republic of Congo. The audit concluded that risks to local communities and human rights were not adequately considered. A MIGA backed paper mill in Fray Bentos, Uruguay, has also been the centre of some controversy. The Center for Human Rights and Environment has filed complaints with the CAO and the Inter-American Commission on Human Rights (an organisation to ensure adherence of international human rights law in the Americas). Allegations centre on the violation of MIGA's environmental and social safeguards, the abuse of the human rights of local stakeholders, which includes violations of the rights to: participation; access to information; development; health; a healthy environment; and the right to water.
The current vice president Yukiko Omura, a Japanese national, was appointed in May 2004. She was educated in the UK, Switzerland and the US and a master degree in development economics and one in political economy from the University of Boston. She has more than 20 years experience in the international financial service sector. She started her career at the Inter-American Development Bank, Washington D.C. She then spent ten years at J.P. Morgan working primarily on emerging markets. She has also held been a senior vice-president at Lehman Brothers, a managing director at UBS and a managing director at Dresdner investment banks. Before her job at MIGA she was the head of the Aids Prevention fund for two years.
Published: Saturday 27th May 2006, last edited: Thursday 25th January 2007
Climate Investment Funds Monitor 7: April 2013 25 April 2013
Working paper: The private sector and climate change adaptation: International Finance Corporation investments under the Pilot Program for Climate Resilience 24 April 2013
The UK's role in the World Bank and IMF: Department for International Development and HM Treasury 13 March 2013
The World Bank and industrial policy: Hands off or hands on? 6 December 2012
Climate Investment Funds Monitor 6: October 2012 26 October 2012