Fragile and Conflict-Affected Settings (FCS)
Foreign Investors and FCV
Foreign investors have become willing to commit capital beyond their borders in recent years. But investment remains scarce in countries affected by fragility, conflict and violence (FCV). These FCV countries struggle to attract foreign capital because investors fear the worst: civil war, expropriation of assets, breach of contract, and currency restrictions.
MIGA’s mission is to get investment capital flowing into FCV countries so they, too, can benefit from the local industries that spring up when investors look abroad. MIGA does that by providing insurance against risks that are unique to FCV countries. Like investors, many private sector insurers are unwilling to underwrite projects in unstable places. Guided by expert, experienced staff, MIGA can cover these risks at reasonable cost.
MIGA at Work
MIGA’s underwriters are at work all over the globe. As of 2019, MIGA had $2.7 billion of insurance outstanding to FCV nations—12 percent of the Agency’s gross guarantee portfolio. Some snapshots of the Agency supporting investments in FCV countries include:
- Côte d’Ivoire – Azito Thermal Power Plant: MIGA backed an investment by Globeleq, an independent power producer, to build new high-efficiency turbines that will increase output by 55 percent at the Azito power station.
- Djibouti – Ghoubet Windfarm: $91.6 million in guarantees will help develop a 60-megawatt wind farm, replacing old, fossil-fuel powered generators with clean energy.
- Myanmar – Fiber Optic Cable: MIGA issued $336.78 million guarantees for three fiber optic cable network projects in Myanmar which help connect cities and towns across the country. The backing for this came from the International Development Association (IDA) IFC-MIGA Private Sector Window.
Leveraging a Unique Role Within the World Bank Group
MIGA is stepping up its focus on FCV countries, guided by the World Bank Group Strategy for Fragility, Conflict and Violence 2020-2025. This extensive strategy, created through an inclusive stakeholder process, systematically brings a full suite of financing and expertise to address challenges in both low- and middle-income FCV countries.
The Agency’s efforts have been further boosted by the introduction of the $2.5 billion International Development Association (IDA) IFC-MIGA Private Sector Window (PSW) in IDA18. The IDA’s Private Sector Window extends credit to private companies that want to invest in fragile nations. MIGA provides insurance to the investors through the Private Sector Window, bolstering the IDA’s offering there.
The World Bank’s aim is to make the window a one-stop shop for investors in fragile, conflict-affected nations, and it’s just one of the ways that MIGA is helping the World Bank Group do more each year to eliminate global poverty.
Together with the IFC, MIGA plays an important role in the Private Sector Window Facility.