MIGA Should Follow ‘Multi-Niche’ Path, Study Finds: Progress reviewed, strategic directions identified

MIGA Should Follow ‘Multi-Niche’ Path, Study Finds: Progress reviewed, strategic directions identified

Washington, DC, September 28, 2000 — A new review finds that the Multilateral Investment Guarantee Agency needs to follow a "multi-niche" path to achieve the greatest developmental impact and continue to grow in an effective manner, the agency announced today. The finding came out of MIGA Review 2000, a report on the agency’s progress and future directions.

Between fiscal 1994 and 1999, MIGA grew and expanded significantly in almost every aspect of its work, the report says. Its guarantee program deepened substantially, characterized by financial growth, portfolio diversification, and an increased focus on developmental effectiveness. Technical assistance activities also shifted during the review period, with a strategic reorientation toward hands-on capacity building and cutting-edge use of the Internet to disseminate information. Legal advice and guidance proved key to resolving a number of potential disputes. And the number of member countries increased from 121 to 149.

"The political risk insurance market today recognizes MIGA as a unique and indispensable player," said the agency’s chief Motomichi Ikawa. "The review clearly shows that we are making important inroads in helping our member countries develop the capacity to attract and retain foreign direct investment. Together, these activities have put us on a solid path toward developmental effectiveness."

MIGA used the review as a springboard to gauge emerging challenges in the areas of foreign direct investment and political risk insurance. It found, for example, that the political risk insurance industry has been growing at a rate of 20-40 percent a year, and that private insurers serve about 50-60 percent of the market. Despite this growth, there is still considerable unmet demand for political risk insurance. Other issues include the varying capacity of investment promotion agencies and the increasing importance of capital markets.

Given these challenges, the review concluded that the agency follow a "multi-niche" strategy that focuses on investments not usually supported by other insurers, namely investments in IDA-eligible countries, particularly Africa, between developing countries, in small- and medium-sized enterprises, and in complex infrastructure. It also calls for broader partnership with public agencies and other insurers.

MIGA’s Council of Governors approved the review at the World Bank/IMF Annual Meetings in Prague. "With this approval, MIGA looks forward to continuing to expand its operations in both guarantees and technical assistance," said Ikawa. "MIGA will continue to build on its cutting-edge technology and on collaborative relations, especially with private insurers, to ensure it complements their activities in the years to come."
 

• MIGA REVIEW 2000 (in PDF format)
   

For information:
Moina Varkie,
mvarkie@worldbank.org,
t. 202-473-6170