MIGA Breaks New Ground During 10th Anniversary Year
Washington, D.C., September 23, 1998 — The Multilateral Investment Guarantee Agency (MIGA) today released its 1998 Annual Report. The tenth anniversary of its establishment, fiscal 1998, was a year of change and innovation for the Agency, bringing new leadership, growing membership, and rising demand for MIGA's guarantees and technical services. Notable developments reported by Management include:
New Management Team
In July 1998, Mr. Motomichi Ikawa assumed the post of Executive Vice President of MIGA, succeeding Mr. Akira Iida, who had completed his second term in this position. Mr. Ikawa joined MIGA after 29 years with the Ministry of Finance of Japan, where he most recently served as Senior Deputy Director-General of the International Finance Bureau. Other new members of the Management team joining MIGA in 1998 were Mr. Roger Pruneau, Vice President, Guarantees, and Mr. Angus Scrimgeour, Vice President and Chief Financial Officer.
Facilitating Foreign Direct Investment and Economic Development
Two new countries signed the MIGA Convention in 1998, with total signatories now numbering 162. Four additional countries completed membership requirements -- Austria, Burundi, Palau, and Singapore; the number of member countries stands at 145.
In fiscal 1998, the Agency issued US$830.9 million in new guarantee coverage for 55 projects in 26 developing member countries, and broadened its portfolio by writing coverage for investments in 10 new countries -- Angola, Bolivia, Cape Verde, Dominican Republic, Equatorial Guinea, India, Kenya, Mozambique, Ukraine, and Uruguay. The development impact of MIGA's fiscal 1998 projects includes approximately 8,000 jobs created and some US$6.1 billion in foreign direct investments facilitated in the developing countries in which they were located. MIGA's portfolio at the end of the year was US$2.9 billion.
The 348 guarantee contracts already issued by MIGA since its inception have facilitated an estimated US$25 billion in foreign direct investment in 62 developing and transition economies. During fiscal 1998, MIGA covered new projects in 13 IDA-eligible member countries. Overall, MIGA guarantees have facilitated investments in 26 IDA-eligible member countries, and total issued coverage in these countries is approximately US$1.0 billion. Guarantees outstanding in 22 IDA-eligible countries in fiscal 1998 total US$800 million, which represents more than 28 percent of MIGA's current guarantees portfolio.
Strengthening Financial Basis
In April 1998, agreement was reached on a doubling of MIGA's capital base to enable the Agency to expand its future activities. As part of the package, a US$150 million grant was transferred from the World Bank to MIGA in April 1998. The one-year voting period on the capital increase (US$700 million of callable capital and US$150 million of paid in capital) by MIGA Governors commenced on April 5, 1998. Also in 1998, MIGA adopted a new risk-based provisioning methodology; the increase in general reserves for claims from US$55 million to US$220 million was a reflection of the new methodology, rather than any marked change in the risk profile of MIGA's guarantee portfolio. MIGA continued its claim-free record.
MIGA further expanded its efforts to collaborate with other insurers. The Cooperative Underwriting Program (CUP) is a form of coinsurance designed to encourage private insurers to enter markets. As part of this effort, the agency signed a coinsurance agreement with Brockbank Syndicate Management Ltd., of Lloyd's of London, to provide up to US$100 million in additional insurance per project on an ad hoc basis. MIGA also signed its first contract with Zurich-American Political Risk under the CUP.
Through a reinsurance agreement, which has been promoted by MIGA recently, the agency was able to issue its largest guarantee to date. The US$90 million guarantee covers a shareholder loan by Banque Nationale de Paris for expansion of its branch in St. Petersburg. The guarantee was also MIGA's first reinsurance contract with the Compagnie Française d'Assurance pour le Commerce Extérieur (COFACE) of France.
MIGA also set up its first mobile offices overseas, in the Caribbean, India, and London, to facilitate individual meetings with prospective investors and offer seminars on Agency services. In addition, in late 1997, MIGA hosted a symposium on International Risk Management Techniques and the Role of Political Risk Insurance, and a seminar on Safeguarding Investments in the West Bank and Gaza, both in Washington, D.C. MIGA also sponsored a seminar for insurance brokers at Lloyd's of London.
Investment Marketing and State-of-the-Art Information Services
In the 10 years to 1998, MIGA provided specific government ministries and national investment promotion agencies (IPAs) in 70 host countries with technical assistance. This assistance was provided in three main areas -- information products, institutional capacity building, and investment facilitation.
The AFRI-IPA support program opened the Agency's first field function in Namibia, with plans to establish two additional African offices in the upcoming year. AFRI-IPA provides hands-on technical assistance to public and private sector bodies serving as investment intermediaries in the region.
International investors also benefited from innovations in MIGA's technical services in 1998. IPAnet (www.ipanet.net), the investment promotion network, MIGA's on-line clearinghouse for investment information, was selected as the Website of the Week by the Financial Times. In its third year of operation, IPAnet's directories exceed 8,000 registered individuals from 170 countries, and its databases contain documents and information from 300 sources.
In 1998, MIGA launched an on-line service to provide information on privatization to investors through a specialized window in IPAnet, PrivatizationLink (http://www.privatizationlink.org). This site carries profiles of state-owned enterprises being privatized, background information on privatization agencies and their programs. Working closely with the Africa and Europe and Central Asia regions of the World Bank, MIGA has entered into partnerships with the privatization agencies in these regions to collect and disseminate relevant information.
New Strategies for Attracting Foreign Investment
In 1998, MIGA conducted intensive country-specific investment promotion skills training programs for two countries, Mongolia and Saudi Arabia; as well as more general sessions on Strategies and Techniques for Investment Promotion for Bahrain, the Kyrgyz Republic, and Uzbekistan. On a regional level, similar programs were held for participants from approximately a dozen transition economies in the Europe and Central Asia region.
MIGA's 1998 sector-specific investment facilitation activities focused on mining and tourism, capitalizing on its excellent existing network of international investors. MIGA organized its first Global Mining Investment Opportunities Symposium in conjunction with the 100th anniversary celebration of the Canadian Institute of Mining, Metallurgy, and Petroleum in Montreal. Other sectoral events organized by MIGA included the symposium on Mining Investment and Business Opportunities in Asian, Balkan, and Caucasus countries in Istanbul, and a SADC Region Strategy Workshop for Tourism Development.
In addition to assisting with the formulation of investment-promotion strategies, MIGA also developed the legal framework and provided legal advisory services to two regional trust funds to stimulate investment in developing areas with special needs: Bosnia and Herzegovina and the West Bank and Gaza.