Since 1990, MIGA has issued guarantees totaling $19.5 billion and insured up to 922 guarantees for projects from over 91 developing countries. IDA eligible countries are top MIGA clients making up 63 percent of MIGA’s gross outstanding portfolio. In 2008, MIGA issued 38 guarantees to 24 projects totaling $2.1 billion with Gross Exposure at $6.5 billion.
MIGA encourages development by insuring new cross-border investments from any MIGA member countries. MIGA insured investment includes: expansion, modernization, or financial restructuring of existing projects, privatization of state-owned enterprises. MIGA also insures investments involving equity, shareholder loans, and shareholder loan guarantees with minimum maturity of three years; unrelated borrowers with shareholder investment already insured; technical assistance, management contracts, franchising.
In FY 2008, 60 percent of MIGA guarantees were issued to Europe and Central Asia while the Middle East and North Africa region received 21 percent of MIGA's overall guarantees. This was followed by Sub-Saharan Africa at 10 percent and Latin America and the Caribbean at 8 percent. Asia and the Pacific only made up 2 percent of guarantees issued by MIGA. By sectors, MIGA’s coverage of the infrastructure is largest and stands at 44 percent. FInance is next at 30 percent, manufacturing and services at 15 percent, and extractive industries at 12 percent.
Lending products
Pricing for MIGA guarantee premiums is calculated based on both country and project risk with duration up to 15 years. MIGA can terminate the contract only when the guarantee holder default on its contractual obligation to MIGA, but after three years of coverage, the guarantee holder may cancel or reduce coverage on any contract anniversary. Four types of coverage are transfer restriction, expropriation, war and civil disturbance, breach of contract, and investors may select one or a combination for MIGA coverage. Equity investments can be insured limit is 90 percent and debt up to 95 percent. MIGA is allowed to insure up to $200 million, with further coverage arranged through syndication of insurance.
Requirements to receive lending
Eligibility for coverage is considered case-by-case. Nationals from MIGA member countries may be eligible for MIGA provided the nationality of the investor and the investment are not the same. MIGA makes for exception under certain conditions. Coverage for corporations requires the company to be incorporated with its principal place of business in a member country, or with majority-ownership by nationals of member countries. A state-owned corporation’s eligibility depends on its commercial basis.
To qualify for MIGA coverage, preliminary applications must be submitted before an investment commitment. MIGA only covers new investments. With the submission of the preliminary application, MIGA staff will decide within three business days on the project merit. Further process requires a confirmation letter and a definitive application with request for further details on the project. MIGA can usually process a guarantee within three to four months after receiving a definitive application. The application process fee of $5000 could be waived under special circumstances for Small and Medium Investors and Enterprises.
Technical assistance
Technical assistance from MIGA helps government and other intermediaries to respond to investor needs. In March 2007, MIGA’s technical assistance services were integrated into the Foreign Investment Advisory Service (FIAS), a World Bank Group entity. Established 20 years ago, FIAS works to increase the level and impact of private investments. The FIAS strategy for fiscal years 2008 to 2011 centers around regulatory simplification to make investment less costly, less risky, and more attractive; and investment generation, including investment policy and promotion, and industry-specific approaches to investment.