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a study on MIGA (Multilateral Investment Guarantee Agency)

Presented To: Dr Y C Joshi Presented By: Ashwini Yadav (10M05) Kaushil Shah (10M16) Manan Buch (10M19) Pallavi Agrawal (10M26) G.H.Patel Postgraduate Institute of Business Management, V V Nagar Sardar Patel University

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MISSION To promote foreign direct investment into developing countries to support economic 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 the World Bank Group
The agency opened for business as a legally separate and financially independent entity Membership was open to all IBRD members, and the 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 capital and technology for productive purposes under conditions consistent with their developmental needs, policies and objectives, on the basis of fair and stable standards to the treatment of foreign investment."

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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 to member countries, as well as grants to the poorest countries while IFC and MIGA include investment in the private sector and providing insurance respectively MIGA provides guarantees against noncommercial risks to protect cross-border investment in developing member countries

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ConT
Over the years, the organization has provided more than $24 billion in political risk insurance for over 600 projects in more than 100 developing countries
MIGA's task is also to provide water, electricity and other basic infrastructure, in addition to generating tax revenues and creating training programs

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ConT
There are 175 member countries in MIGA
MIGAs team has extensive experience in political risk insurance, with backgrounds including banking and 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 of World Bank Group and an international structure made of shareholders forming of international countries.

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OBJECTIVES OF MIGA
The objective of the Agency is to:
Encourage the flow of investments for productive purposes among member countries, and in particular to developing member countries Supplementing the activities of the International Bank for Reconstruction and Development (hereinafter referred to as the Bank), the International Finance Corporation and other international development finance institutions.

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ConT
To serve its objective, the Agency shall: Issue guarantees, including coinsurance and reinsurance, against non-commercial risks in respect of investments in a member country which flow from other member countries;
Carry out appropriate complementary activities to promote the flow of investments to and among developing member countries; and Exercise such other incidental powers as shall be necessary or desirable in the furtherance of its objective.
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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 difference o Countries eligible for assistance from the International Development Association (the worlds poorest countries) o Conflict-affected environments o Complex deals in infrastructure and extractive industries, especially those involving project finance and environmental and social considerations 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 insuring investments around the world Category A if it may have potentially significant adverse social or environmental impacts that are diverse, irreversible, or unprecedented Category B if it may have potentially limited adverse social or environmental impacts that are few in number, generally site specific, largely reversible, and readily addressed through mitigation measures Category C if the project has minimal or no adverse social or environmental impacts, including certain financial intermediary projects with minimal or no adverse risks Category FI is assigned to all financial intermediary projects excluding those that are Category C projects
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Accountability
Institutional Integrity o Combating Fraud and Corruption in MIGASupported Projects Checks of involved parties Clients safeguards for dealing with fraud and corruption The project structure and contractual arrangement. 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 Information o Summaries of proposed guarantees (SPGs) o Environmental and Social Review Summaries o Institutional information

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Accountability
Independent Evaluation Group o IEG is charged with evaluating the guarantee projects and services o The Director-General of IEG reports directly to the World Bank Group's Board of Directors o The goals of evaluation are to provide an objective assessment of the results of the Bank Groups work and to identify and disseminate lessons learned from experience

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Accountability
Compliance advisor o As the independent recourse mechanism for IFC and MIGA, CAO helps address the concerns of communities who believe they are affected by IFC/MIGA projects with the aim of improving social and environmental outcomes on 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 its existing projects Be innovative and flexible in mobilizing its partners to 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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