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Japanese Grant Enables MIGA to Help Investors Address Environmental and Social Challenges in Africa

MIGA recently announced that the Japanese government is providing a $1 million grant that will permit the agency to launch a pilot facility to help foreign investors address environmental and social challenges in Africa. The program will later be expanded if the model proves successful.

 

MIGA shares the World Bank Group’s strong commitment to tackle the challenges of achieving growth and reducing poverty in Africa. Despite global growth and declining poverty rates, the number of people living in extreme poverty in sub-Saharan Africa continues to rise—doubling from 164 million to 303 million between 1981 and 2002. The poor often live in particularly difficult environmental and social conditions.

MIGA’s priority in Africa is to reduce poverty and improve people’s lives by spurring economic growth through socially and environmentally friendly, and developmentally sound, foreign direct investment.   Foreign investment has played a critical role in the development of many countries, by introducing modern technology and management methods, and by linking the countries to the world.  In the 2006 fiscal year, MIGA supported 13 new projects in Africa by providing $180 million in political risk insurance to firms investing in a variety of sectors.

All MIGA-supported projects have to comply with the agency’s strict environmental and social standards, reflecting international best practice. This may be difficult for some firms, especially the smaller and less experienced ones, who may lack the expertise and resources needed to ensure that their investments are consistent with MIGA’s strict standards. But with expert assistance on what needs to be done to address the environmental and social issues, these investments can proceed and contribute to the country’s development in an environmentally and socially sustainable manner.

 

MIGA will use the grant to provide advice to the firms on the development and implementation of plans and programs to address the possible environmental and social issues.  The aim will be to arrive at practical solutions to enable the investments to proceed. And with MIGA’s strict environmental and social standards being met, MIGA will then also be able to provide its political risk insurance guarantees.

“The grant provided by the government of Japan will allow MIGA to provide specialist expertise to assist investors in African countries,” says MIGA’s Executive Vice President, Yukiko Omura. “By guaranteeing projects that are in line with international environmental and social best practice, MIGA can support sustainable growth in Africa. We greatly appreciate the government of Japan’s efforts to make these much-needed resources available to us.”

This grant is in addition to previous support by the government of Japan, which has provided funding for MIGA’s technical assistance work in support of investment promotion in Africa, as well as for the agency’s online information services, including IPAnet  and FDI Xchange.

 

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