Meet Maya and Max...

International investors face all sorts of risks. A state-owned company running a subway system, for example, may stop paying on a loan or equity investment. A national government may restrict the movement of capital out of the country. Local currencies can collapse, developers can breach contracts with lenders, and civil war can interrupt operations. If everything goes well and the project is a money-maker, a government may decide to take it over.

People in business know that political risk insurance can help manage those risks. In the development world, insurance is often a key ingredient for bringing private capital into critical development projects, such as lighting up villages in the DRC, building hospitals in Turkey, or helping women buy houses in Panama.

In the fiscal year that ended in June, MIGA issued $5.2 billion in new guarantees to 40 projects that are expected to provide 784,000 people with new or improved electricity service, create over 14,000 jobs, and support $1.3 billion in loans to businesses, including small and medium enterprises.

To explain the power of insurance in these projects, MIGA produced a series of five animated videos that explain just how they work. Follow Maya, an international investor, and Max, a lender, looking to invest in green-power systems, bottling plants and other job-creating projects.

The bottom line on political risk insurance is that many private investors like Maya and Max won't make a move without it, and many insurers won't do business in places that need private investment because of the high risk.

Just having a MIGA guarantee can reduce financing costs. It can also make a project more attractive to risk-averse investors and help them commit to projects that span decades. The longer the project takes, the riskier it becomes.

Many times, a project wouldn't have happened without a guarantee. MIGA cover was crucial, for example, in helping an investor modernize wireless networks in Sierra Leone and Liberia to improve service and cut emissions from dirty diesel generators.

MIGA guarantees can fill the chasm created by higher capital requirements for financial institutions following the 2008 financial crisis. ProCredit, a German bank used MIGA's capital optimization product to make space on its balance sheet for climate-friendly projects in Ukraine, North Macedonia, Albania, and Ukraine.

So, the next time a government client, investor or even an innocent bystander asks what political risk insurance is, be sure to tell them there's a video for that!