MIGA Sees Strong Demand in Frontier Markets

Strong Demand for MIGA’s Political Risk Insurance in Frontier Markets

Washington, September 27, 2012—The Multilateral Investment Guarantee Agency (MIGA), the political risk insurance arm of the World Bank Group, announced today that its support for investments in developing countries increased substantially this year, particularly in high-priority areas such as sub-Saharan Africa and infrastructure. The agency issued $2.7 billion in investment guarantees (political risk insurance) for 52 projects during the fiscal year ending June 30, 2012. MIGA’s gross exposure reached a record high of $10.3 billion. These results continue recent trends of historic levels in the Agency’s new issuance and gross exposure. (See MIGA's 2012 Annual Report.)

"Investors are seeking new markets as growth in traditional markets continues to stagnate," said MIGA’s Executive Vice President Izumi Kobayashi. "This year’s high demand for our political risk insurance stems from investors’ caution as they enter more frontier markets in an environment of generally increased risk perception." She continued, "In these uncertain times, MIGA’s guarantees are helping developing countries secure private investment in critical infrastructure and other job-creating enterprises."

Infrastructure investments accounted for 58 percent of the Agency’s new volume this year. They included power and transport investments in Albania, Côte d’Ivoire, Ghana, Kenya, Pakistan, Panama, Rwanda, Tunisia, and Senegal. These investments represent important milestones in host countries’ development strategies. For example, the MIGA-backed Henri Konan Bedie toll bridge in Côte d’Ivoire is the country’s first public-private partnership since the civil conflict began.  In Kenya, MIGA collaborated with the World Bank and International Finance Corporation to support the country’s Least Cost Power Development Plan, which includes the construction of independent power plants using a diversified energy mix.

Investments in the Middle East and North Africa region featured prominently in MIGA’s portfolio. The Agency recently launched an initiative to mobilize $1 billion in insurance capacity to retain and encourage foreign direct investment in the region. This year MIGA  issued guarantees of $442 million for investments in Jordan, Morocco, and Tunisia, as well as two projects in the West Bank and Gaza insured through the MIGA-administered West Bank and Gaza Investment Guarantee Fund.

MIGA also continued its support for emerging European countries, particularly the poorest in Central and Southeastern Europe. As part of a World Bank Group effort to mitigate the impact of the euro zone crisis, MIGA committed to increasing its exposure in the region and issued $928 million in guarantees this year. In Uzbekistan, MIGA participated in the country’s first project finance transaction through its guarantees for the LUKOIL gas development project.

“We’re pleased that we supported a number of transformational infrastructure projects in developing countries across regions, while half of the investments we supported this year are in the world’s poorest countries, including some emerging from conflict. This is where MIGA can add the most value—insuring investments in environments where risk perceptions remain high.”

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MULTILATERAL INVESTMENT GUARANTEE AGENCY
A Member of the World Bank Group
1818 H Street, NW, Washington, DC 20433

MIGA Contact:
Mallory Saleson, MIGA
Tel: +1 202 473-0844
E-mail: msaleson@worldbank.org

Rebecca Post, MIGA
Tel: +1 202-473-1964
E-mail: rpost@worldbank.org

Cara Santos Pianesi
Tel: +1.202.458.2097
E-mail: csantospianesi@worldbank.org