MIGA Strategic Priorities Facility (MSP Facility)
MIGA Strategic Priorities Facility is a programmatic approach that integrates and manages MIGA’s various trust funds under a common framework and governance structure. Its broad objective is to streamline trust fund operations and enhance administrative efficiencies for MIGA’s trust funds. MIGA’s special guarantee facilities and trust funds are established to encourage investment and build capacity in targeted areas. The MSP Facility provides a consistent approach for strategy formulation, review, direction, and monitoring of all constituent trust funds. Within this broader program objective, each of the constituent trust funds functions to deliver its respective development objectives.
Currently, MIGA administers four trust funds, which are described below.
Conflict-Affected and Fragile Economies Facility (CAFEF)
To encourage private capital investment into conflict-affected and fragile economies, MIGA has established a multi-country, donor-funded facility that allows the Agency to expand its business in conflict-affected and fragile economies. The objective of CAFEF is to catalyze investments into conflict-affected countries not covered by IDA-PSW and non-member countries. CAFEF funds are used to provide an initial loss layer to insure investment projects in conflict-affected and fragile economies. MIGA complements the initial loss layer by providing first loss coverage and excess loss guarantees. Through CAFEF, MIGA anticipates providing an additional $400 million of gross guarantees in conflict-affected and fragile economies during its initial years, over MIGA’s normal operations. CAFEF’s impact is expected to be substantially more than this amount over its twenty-year life because as guarantees mature, capacity can be reused to support new projects.
West Bank and Gaza Investment Guarantee Trust Fund
The West Bank and Gaza Investment Guarantee Trust Fund was established by MIGA in 1997 with the Palestinian Authority, the Japanese Ministry of Finance and the European Investment Bank as its original sponsors. It was created to assist the West Bank and Gaza in attracting foreign direct investments (FDI), and in turn to promote local private sector investments and contribute to the reconstruction and economic growth of the West Bank and Gaza in a variety of sectors including, but not limited to, manufacturing, agribusiness, banking, and small-scale infrastructure. The Trust Fund offers both foreign and local private sector investors with an insurance instrument that allows them to manage the non-commercial risks inherent to their investments. The initial Trust Fund size was $15 million and has since grown to over US$ 28 million from interest income, investment income and premiums. This fund aims to encourage investors to increase investment in the West Bank and MIGA expects to mobilize reinsurance capacity for the trust fund by partnering with regional providers such as ICIEC and bilateral export credit agencies. MIGA administers the trust fund on behalf of its current sponsors—the Palestinian Authority and the Government of Japan.
Fund for Advancing Sustainability (FAS)
FAS is a technical assistance trust fund that enables MIGA to enhance the development impacts of its projects. The Fund will be deployed to support MIGA’s clients on its strategic focus areas such as climate, gender, fragility and on other vital areas such as environmental and social standards, and corporate governance. Through FAS, MIGA can address specific challenges for projects across all sectors, including agriculture, manufacturing, telecom, and infrastructure, to achieve sustained development outcomes. FAS seeks to enhance investors’ internal capacity on a broad range of issues such as managing challenges of investing in FCV, enhancing the environmental and social benefits of guaranteed projects, and developing gender-related opportunities in MIGA’s projects, among other benefits. FAS will also enhance legal capacity of local practitioners and reinforce governance to promote efficient outcomes in project preparation and dispute resolution. The Fund can be deployed to provide support in member countries and territories where MIGA is authorized to operate. FAS is intended to complement MIGA’s existing capacity and make its product offerings more accessible, particularly for small and medium-sized investors. The anchor donor for this trust fund is the Government of Korea.
Renewable Energy Catalyst Multi-Donor Trust Fund (RECTF)
RECTF is a trust fund that aims to enhance MIGA’s ability to catalyze private sector investment into renewable energy projects. RECTF will directly support climate finance investment by supporting additional renewable energy projects that will assist host governments in their transition to a climate-friendly, green energy sector. The Fund will be available for use in all MIGA member countries, however there will be an emphasis on supporting projects in the poorest countries (IDA) and particularly those in Sub-Saharan Africa. RECTF offers a variety of risk sharing and technical assistance solutions that provides flexibility and supports innovative problem solving. The intended uses include first loss layer, reinsurance, liquidity support, project development and business origination, all as relate to renewable energy projects. The trust fund will provide risk mitigation or reinsurance for projects that are not eligible for CAFEF and IDA-PSW support, or where it is complementary to the use of the CAFEF or IDA-PSW facilities. RECTF will also provide liquidity support to address financial and cash flow risks for renewable energy projects in all MIGA member countries, covering both foreign and local investments. In addition to supporting the climate agenda, these projects will bring other important developmental benefits including increasing electricity access and promoting economic growth. The anchor donor for this trust fund is the Government of Norway, through the Norwegian Agency for Development Cooperation (Norad).