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Overview of MIGA’s Products ‐ part IOverview of MIGA s Products part I
Ileana BozaGlobal Head Business Strategy and Client DevelopmentMarch, 2011
MULTILATERAL INVESTMENT GUARANTEE AGENCYWORLD BANK GROUP
The World Bank GroupThe World Bank Group
1944 IBRD International Bank forReconstruction and Development
1960 IDA International Development Agency
1956 IFC International Finance Corporation
1966 ICSID International Center for the Settlement of
1988 MIGA Multilateral Investment Guarantee Agency
Investment Disputes
Promote FDI with the use of guarantees and technical assistance
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 2
What We DoWhat We Do
Noncommercial risk insurance (guarantees) for investors and lenders
Proven success in supporting resolution of investment disputes
T h i l i t t h l t i tt t d t i FDITechnical assistance to help countries attract and retain FDI through FIAS (Foreign Investment Advisory Services)
Online information on investment opportunities andOnline information on investment opportunities and operating conditions in developing countries
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 3
Our Development PrioritiesOur Development Priorities
Focusing on sustainable development
Opening up difficult or frontier markets, especially in conflict‐ff d iaffected countries
Supporting investments in Africa and the world’s poorest countries
Supporting infrastructure projects, at both the sovereign and sub‐sovereign levels
P ti b d i t t b t d l i t iPromoting cross‐border investments between developing countries
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 4
Why Investors Choose MIGA
• Umbrella of deterrence
– MIGA is a member of the World Bank Group
– MIGA’s shareholders are the countries who are also Host Countries of investments
– Only a small proportion of MIGA‐supported projects encounter difficulties• Facilitation of settlement of disputesp
– Host Country tends to be motivated to find a solution, otherwise its reputation in the international investment community might be damaged
– Project sponsors and financiers have a vested interest in continuing success of j p gproject
– 5 claims paid out of 556 projects supported (Indonesia, Argentina, Nepal)• Extensive resources and in‐depth knowledge of emerging economies from all parts of
the World Bank Group• Environmental and social expertise, particularly for extractive industries where a
company’s reputation is at stake• May facilitate financing
– Lower costs of borrowing
– Longer tenor of loans
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 55
HowMIGA Differs from Other MultilateralsHow MIGA Differs from Other Multilaterals
• Multilaterals that provide funding for projects benefit from the multilateral umbrella, but do not explicitly insure or protect the project itselfproject itself
• Use of MIGA can facilitate private sector financing without the need to approach other multilaterals for additional financingneed to approach other multilaterals for additional financing
‐MIGA can therefore be the low‐cost option to obtain
multilateral support for emerging market investments
• MIGA has a specific expertise in being able to hammer out compromises when there are disputes between governments and investors
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 66
Organizational structureOrganizational structure
Legal Affairs & Claims
Eligibility & deal structureContract negotiation & draftingM di ti i
Operations
Executive Office
Board relationsCommunicationsM di d NGO l tiMediation services
ClaimsAgribusiness, Manufacturing, ServicesFinancial Sector
Media and NGO relationsOnline Information Services
Oil & Gas, Mining, Chemicals and PowerInfrastructureBusiness Strategy and PartnershipsPartnerships
Economics & Policy
Country conditionsEnvironment/socialReputational risk
Finance & RiskManagement
Risk‐based pricing Risk based provisioning Reputational risk
Sector policyWBG CAS
Risk‐based provisioningEconomic capital model
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 77
MIGA’s PartnersMIGA s Partners
How MIGA leverages its limited resources to achieve its objectives
Access to new markets and clients; long term relationships Agents and
Finders
On‐the‐ground knowledge of local private sector, contacts with companies, good knowledge of WBG
Business Intermediaries (e g
Finders
Source for transactions (maintain relationship with clients, knowledge of local markets and WBG).
Access to large corporations (mainly in
Business Intermediaries (e.g. IFI members) and banks
Insurance BrokersAccess to large corporations (mainly in EU and US)
Provide platform for joint marketing events and access to local markets;
Private and public insurers
seek insurance for themselves
Strengthening linkages for joint marketing, esp. part II countries
World Bank Group
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 88 8
ANNEX: Key Statistics about MIGA
MIGA’s Financial Highlights
Key Figures
Issued 980 guarantees for 616 projects
for a total of US$22.4 billion during
1990‐20108
Gross Exposure in US$ Billions
Portfolio: US$7.7 billion in FY10
Issued US$1.5 billion during July 2009‐
June 2010 fiscal year5
6
7
s
MIGA’s Strengths
Total subscribed capital: $1.91 billion
as of June 20103
4
5
US$
Billion
as of June 2010
Strong capital base and ability to pay
compensation in the event of large‐
scale losses
1
2
scale losses
Implied AAA by major credit rating
agencies
0
FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 10
Gross Exposure by Region and Sector
Sector %, June 2010 Region %, June 2010
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 11
Gross Exposure by Region and SectorGross Exposure by Region and Sector Issued in FY10
11% Asia and the Pacific $24M
26% Sub‐Saharan Africa $337M26% Sub Saharan Africa $337M
11% Latin America and the Caribbean $18M
52% Europe and Central Asia $1,085M
Oil, Gas and Mining $225 M
Infrastructure $178 M
Agribusiness, manufacturing and Services $124 M
Financial $937 M
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 12
Top Investors and Host Countries pas of June 30, 2009
Investor Country Exposure % Host Country Exposure % $MInvestor Country Exposure % Host Country Exposure % $M
Austria 30.0Russian Federation
14.3 1,044.0Federation
France 12.8 Ukraine 13.9 1,012.9
Belgium 10.2 Turkey 8.4 611.8
Spain 6.4 Djibouti 5.6 407.4
United Arab Emirates 5.4 Uruguay 4.1 301.2
Finland 4.1 China 3.4 248.2
South Africa 3.7 Brazil 3.4 244.2
United Kingdom 2.8 Kazakhstan 3.1 224.7
Netherlands 2.6 Mozambique 2.7 196.4
Switzerland 2.6 Costa Rica 2.2 158.5
Total 80.6 Total 61.1 4,449.3
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 13
,
MIGA’s Claims HistoryMIGA s Claims History
From 1990 to 2010 MIGA has issued 980 guarantees for 616 projects moreFrom 1990 to 2010 MIGA has issued 980 guarantees for 616 projects, more than 90 cases treated as possible claims
MIGA h f ll f ilit t d th ttl t f di t i llMIGA has successfully facilitated the settlement of disputes in all currency transfer/inconvertibility issues
Since its inception MIGA has paid claims in 5 cases:Indonesia for expropriation in FY00
Nepal for war and civil disturbance in FY05
A ti f i ti i FY06Argentina for expropriation in FY06
Kenya for war and civil disturbance in FY09
Madagascar for war and civil disturbance in FY09
All other cases have been resolved (before or after the claim was filed) or the claim was withdrawn
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 14
Selected Examples of World Bank Group’s Joint Projects
Country / Project Bank Group Support to the Project
Uganda (April 2007)
Bujagali Power
IDA – US$ 115 m PRG
MIGA – US$ 115 m guarantee
IFC US$ 100 m “A” loan US$ 30 m “C” loanIFC – US$ 100 m A loan, US$ 30 m C loan
Uganda (December 2007)
Umeme Power Project
IDA – US$ 5 m PRG
MIGA – US$ 40 m guarantee
$Lao PDR (March 2005)
Nam Theun 2 Hydropower (1,070MW)
IDA – US$ 42 m PRG
IDA ‐ US$ 20 m grant
MIGA – US$ 91 m guarantee
$West Africa (Nov. 2004)
West African Gas Pipeline
IDA – US$ 50m PRG
MIGA – US$ 75 m guarantee
Mozambique (Nov. 2003) IBRD – US$ 20 m & US $10 m “enclave” PRG
S. African Regional Gas Project (SASOL)
MIGA – US$ 72 m guarantee
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 15 1