MIGA Celebrates 35 Years and 1,000 Projects
Last month brought an impressive accomplishment for the Multilateral Investment Guarantee Agency – it issued a guarantee on its 1,000th project.
It wasn’t a particularly flashy transaction. In fact, it was rather low-key by international finance standards.
But it was exactly the type of critical support MIGA has been providing since its founding 35 years ago this month.
In early March MIGA issued guarantees to three international lenders to cover loans they’re making to the government of Senegal, which in turn will help the West Africa nation refinance debt it accrued investing in its Dakar Port.
The transaction aligns perfectly with MIGA’s central mission – facilitating foreign direct investment into the emerging markets and developing economies that rely on it to grow, decrease poverty, and raise living standards.
The MIGA-covered loan facility – for about $681 million – will allow the government of Senegal to reduce its total debt by $48 million and decrease its short-term debt service obligations. It will also give the government more financial flexibility in a world of suddenly tighter financial conditions and help it to generate additional investment returns.
The guarantee issued last month is just the latest support MIGA has provided to Senegal and its critical Atlantic Ocean port. After the 2008 financial crisis, MIGA issued $99 million in political risk guarantees to attract investment to modernize the facility. Those guarantees delivered the capital needed to double the port’s container-handling capacity via new investments in equipment like high-tech cranes, as well as operational and management efficiencies.
Dakar Port now connects Senegal and the entire region to the global economy, increases imports and exports and makes them more efficient, creates jobs for the local population, and supports income and economic growth.
While the earlier deal was a political risk guarantee, this year’s transaction involves a non-honoring guarantee on loans to the government. So MIGA has deployed several different tools from its arsenal of investment guarantee products to assist Senegal.
Using a variety of guarantee products over more than a decade is emblematic of the long-term commitment and patience MIGA brings to development projects around the world.
“We’re proud that the 1,000th project happened in Africa,” says Nkemjika Onwuamaegbu, MIGA’s regional head in Africa. “This project is a very good example of successful engagement with government counterparts to understand what their most critical needs are, and a step forward to provide MIGA solutions.”
In its 35 years, MIGA has provided some $73 billion in gross issuance in 122 countries. In the past decade alone, it has created more than 195,000 jobs.
And MIGA has never stood still. Over its 35 years the agency has evolved its product line by supplementing its traditional political risk products – which mitigate non-commercial risks like adverse government actions, war and civil strife, and terrorism – with a product to insure against governments failing to honor obligations, a capital optimization product that unlocks additional funds for investment, and last year a trade finance guarantee to help financial institutions like export/import banks access financing.
MIGA’s evolving priorities reflect those of the broader World Bank Group, as well as changing global needs and the Sustainable Development Goals. In recent years MIGA has increased its focus on:
- The poorest countries – MIGA’s gross portfolio in low-income countries exceeds $9 billion and has created some 62,000 jobs; 50 percent of recent guarantees were in IDA-eligible countries.
- Countries suffering from fragility, conflict, and violence – over the past six years MIGA has issued over $3 billion in guarantees in fragile and conflict-affected countries and created more than 17,000 jobs.
- Gender equality – including multiple projects targeting women-owned small businesses.
- Climate mitigation and adaptation projects, which MIGA continues to incorporate into its portfolio.
By facilitating investments that often wouldn’t happen without them, MIGA guarantees have created jobs, boosted growth, and alleviated poverty in developing nations around the world.
Senegal’s world-class port is just the latest example, and it surely won’t be the last.
“I witnessed firsthand the impact that MIGA guarantees can have on a project like this when I visited the Port of Dakar last year,” says MIGA Executive Vice President Hiroshi Matano. "I’m proud that MIGA is continuing its support for this critical infrastructure and that it is our 1,000th project.”