Overview of MIGAMIGA s’s Products ‐ I - economy.gov.lb of MIGAMIGA s’s Products ‐part I...

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


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


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


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


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


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


Gross Exposure by Region and Sector

Sector %, June 2010 Region %, June 2010


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


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


,

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


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


$Lao PDR (March 2005)

Nam Theun 2 Hydropower (1,070MW)

IDA – US$ 42 m PRG

IDA ‐ US$ 20 m grant


$West Africa (Nov. 2004)

West African Gas Pipeline

IDA – US$ 50m PRG


Mozambique (Nov. 2003) IBRD – US$ 20 m & US $10 m “enclave” PRG

S. African Regional Gas Project (SASOL)


MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 15 1

Overview of MIGAMIGA s’s Products ‐ I - economy.gov.lb of MIGAMIGA s’s Products ‐part I...

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