MIGA Issues Record $4.8b in Guarantees to Private Investors in FY17
Nearly half of all MIGA-supported projects in IDA countries, while 21 percent were in fragile and conflict-affected states.
WASHINGTON DC, July 18, 2017—MIGA, a member of the World Bank Group, issued a record $4.8b in guarantees in FY17, helping draw in some $15.9b in foreign private capital to developing countries. Close to half of all MIGA-supported projects were in IDA countries, while 21 percent were in fragile and conflict-affected states. $1.04b worth of guarantees were issued for projects in Sub-Saharan Africa.
Among the top investors MIGA worked with in FY17 were Standard Chartered Bank, Blackstone Group, Unicredit, and Sumitomo Corporation. Guarantees supported projects ranging from large infrastructure enterprises to those backed through the Small Investment Program. Key projects included:
Development and operation of Ghana's Sankofa Gas Project, an integrated offshore oil and natural gas project that will provide a source of reliable, affordable energy
Investments in coffee operating companies in Burundi that will enable smallholder farmers to compete and participate in the global coffee supply chain
Rolling out of 4,500km of fiber optic cable in Myanmar. When completed later this year, the Project will have connected 66 cities and towns in 10 states and 6 metropolitan areas across the central and southern parts of the country
Construction and operation of multiple hospitals in Turkey in support of an ambitious national 'Health Public-Private Partnership program. Key among these, a 20-year MIGA guarantee and an EBRD liquidity facility contributed to an investment grade rating of an infrastructure bond issued to finance a hospital in Elazig, Eastern Turkey
MIGA's support for some 33 projects will collectively help avoid an estimated 1.1m tons of CO2e in greenhouse gas emissions, increase delivery or improve quality of electricity for 8.5m people, and deliver healthcare to 8.7m patients.
The increased issuance takes place against a backdrop of declining global flows in foreign direct investment. Foreign Direct Investment remains the largest and most constant external source of financing for developing economies, yet FDI inflows dropped by 14 percent, to $646b, in 2016, as compared to the year before.
In an effort to draw-in more private capital, the World Bank Group has called for a fundamental rethink of development finance, with an emphasis on reducing risk for private investors and lenders. The institutional focus is now on identifying win-win scenarios where capital earns a higher return and developing countries receive much-needed investment and expertise. As a first priority, the aim is to draw-in private sector finance for development projects on commercial terms. Second, is to encourage upstream reforms that will help establish a strong investment climate. And third, is using public or concessional finance in innovative ways to mitigate risk, as well as blended finance, to support private sector investment.
"At a time of increasing global political uncertainty, investors are seeking assurances on their long-term commitments in developing countries," said MIGA Executive Vice President and CEO Keiko Honda said. "MIGA plays an essential role in alleviating such concerns, and in helping channel private capital to where it's needed most."
MIGA's total gross outstanding exposure at the end of FY17 was a record high $17.8b in support of 144 projects across the world, representing an increase by 25% from FY16.
MIGA was created in 1988 as a member of the World Bank Group to promote foreign direct investment in emerging economies by helping mitigate the risks of restrictions on currency conversion and transfer, breach of contract by governments, expropriation, and war & civil disturbance; and offering credit enhancement to private investors and lenders. For more information, visit www.miga.org
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