MIGA to Support Investments into Small Businesses in Sierra Leone

The Multilateral Investment Guarantee Agency (MIGA), the political risk insurance arm of the World Bank Group, recently signed two contracts with private equity funds. The funds, Sierra Investment Fund LLC and ManoCap Soros Fund LLC of Mauritius, are raising capital to invest in a number of small-scale companies in Sierra Leone.

These “master contracts of guarantee” reserve MIGA’s capacity to provide political risk insurance for up to 12 of the funds’ individual investments totaling an estimated $16.2 million. MIGA’s commitment to underwrite the political risks for the planned investments is facilitating the investor’s fundraising efforts in the private market and providing assurance to limited partners that MIGA is making a strong commitment to the funds.

The risks covered by MIGA would be currency inconvertibility and transfer restriction, expropriation, and war and civil disturbance. Each individual investment would follow MIGA’s regular underwriting procedures under the Small Investment Program. This contract structure replicates an earlier contract issued to the African Development Corporation.

The investments would be focused primarily in agribusiness and related services and help strengthen the country’s agriculture sector. Agriculture employs up to 67 percent of Sierra Leone’s population and most are subsistence farmers without sustainable employment.  “This new instrument is facilitating the raising of capital for investments in frontier markets and is providing MIGA with another channel to help bring jobs and growth to the countries that need it most,” explains Hal Bosher, MIGA’s underwriter for the transaction.

MIGA issued guarantees in 2009 for two of Sierra Investment Fund’s existing projects: Ice Ice Baby Limited and Sierra Fishing Company Limited.