The Multilateral Investment Guarantee Agency is an international institution that promotes investment in developing countries by offering political and economic risk insurance. By promoting foreign direct investment into developing countries, the agency aims to support economic growth, reduce poverty and improve people’s lives.
The Multilateral Investment Guarantee Agency (MIGA) is a member of the World Bank Group and is headquartered in Washington, D.C. As of August 2016, 181 member governments make up MIGA — 156 nations that are developing and another 25 industrialized countries.
The agency was created to complement both public and private investment insurance sources against non-commercial risks in developing countries. Its multilateral character and sponsorship by advanced and developing nations were seen as bolstering confidence among people who were going across borders to invest their money.
In September 1985, the World Bank endorsed the idea of a multilateral political risk insurance provider, and established MIGA in April 1988. The agency started out with $1 billion worth of capital among its initial 29 member states. These nations included Bahrain, Bangladesh, Barbados, Canada, Chile, Cyprus, Denmark, Ecuador, Egypt, Germany, Grenada, Indonesia, Jamaica, Japan, Jordan, Korea, Kuwait, Lesotho, Malawi, Netherlands, Nigeria, Pakistan, Samoa, Saudi Arabia, Senegal, Sweden, Switzerland, United Kingdom, and United States.
In 1991, the number of member states of MIGA topped the 100-mark. Eight years later, guarantees issued by the agency reached a total of $1.3 billion, topping the $1 billion dollar-mark for the first time ever. The agency also provided guarantees worth $1.2 billion in 2009 to support the economies in Europe and Central Asia following the global financial crisis.
What Does MIGA Do?
MIGA offers a variety of services in order to encourage foreign direct investment. These include risk insurance against foreign exchange restrictions, outbreak of conflicts or wars, imposed spending limits and related restrictions on company assets.
In addition to providing political risk insurance to corporations that want to invest in developing countries, MIGA offers advisory services to developing country governments. The organization advises on the policies and procedures these governments should follow and the best ways these countries can attract foreign investment. Other services by MIGA include licensing arrangements, franchising and technology support.
In order to help ease the flow of foreign investment dollars into certain regions, the agency supports and runs a number of international projects. One of those is the Afghanistan Investment Guarantee Facility, launched in 2005. The agency’s aim was to help the country in its reconstruction efforts while the country was embroiled in the war by opening up the doors to direct foreign investment.