WASHINGTON DC, January 12, 2022 — MIGA launched today the Fund for Advancing Sustainability (FAS), aimed at supporting investors in boosting their impact in priority areas such as climate and gender and achieving enhanced standards on ESG, corporate governance & integrity. FAS also seeks to help investors with navigating the challenges of backing projects in Fragile and Conflict settings. In short, FAS will be an additional form of risk mitigation and management support that MIGA will provide to its investor clients.
“While cross-border investors have extensive commercial and technical expertise, they often need additional support with structuring projects focused on climate, gender and fragile economies,” Ethiopis Tafara, MIGA’s Vice President and Chief Risk, Legal and Administrative Officer said. “FAS will augment client capacity in these areas, thereby mobilizing private sector financing to deliver development impact.”
From a business standpoint, FAS assistance through provision of financing for third-party consultants and experts in the form of cost-shared advisory services will enable clients to design and execute more robust, sustainable and impactful projects.
Vijay Iyer, MIGA’s Chief Operating Officer said, “The FAS enhances MIGA’s suite of products and services offered to investors, particularly for projects seeking to deliver higher impacts and being better prepared to understand and manage risks.”
Between 40-50 projects are expected to be supported when FAS is operating at full capacity.
The Republic of Korea, through its Ministry of Economy and Finance, is the first among several expected to support FAS over the coming years. As the anchor donor of the FAS, Korea has contributed US$3 million. With support from additional donors, FAS is expected to reach a target size of $10 million.
“Small and medium-sized companies serve as the backbone of a vibrant economy and their roles have never been more important,” Chong Hwa Lee, Director General for Development Finance Bureau at the Ministry of Economy and Finance of Korea said. “We believe that this new partnership with MIGA in supporting small and medium-sized investors in low-income and fragile economies will strengthen our national commitment to achieving climate change and gender goals, thereby further cementing Korea’s status as a leading contributor to the sustainable development.”
MIGA established a similar trust fund on a pilot basis during 2006-16 that provided technical assistance to clients in Africa on issues of environmental and social compliance. That trust fund helped establish a Social and Environment Management System in Rwanda, facilitated training on restoration of livelihoods in Togo and Benin, and helped provide training for creation of a fair-trade body in Ethiopia. FAS has benefited from these past experiences.
FAS is part of MIGA’s Strategic Priorities Program, which aims to significantly increase the share of low-income and fragile economy-based projects, as well as its guarantees in support of climate change projects in MIGA’s portfolio. MIGA has established a climate finance target of 35 percent for new guarantees issued during 2021-25 and has also committed to aligning 85 percent of new direct operations with the Paris Agreement by July 1, 2023 and 100 percent by July 1, 2025. Furthermore, MIGA has established a Gender Strategy Implementation Plan (GSIP) and is part of gender initiatives such as the ‘2X Collaborative.’
MIGA will be administrator and trustee of the Fund and authorize disbursement of funds.
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.
Since its creation, MIGA has issued over US$65 billion in guarantees across 120 developing countries.
In Washington: Vamsee Krishna Kanchi, (202) 458-9771, firstname.lastname@example.org
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