MIGA & its Operation (Multilateral Investment Guarantee Agency)

Abstract

Considering the need to strengthen international cooperation for economic development to foster the contributing to such development of foreign investment in general end private foreign investment in particular: Recognizing that the flow of foreign investment to developing countries would be facilitated and further encouraged by alleviating concerns related to non-commercial risks.Desiring to enhance the flow to developing countries of capital and technology for productive purposes under conditions consistent with their development needs, policies and objectives on the basis of fair and stable standards for the treatment of foreign investment: The Multilateral In vestment Guarantee Agency (MIGA) was established as the smallest and youngest member of the World Bank Group in 1988 to improve people‘s lives and reduce poverty. MIGA contributes to development by offering political risk insurance (guarantees) to investors and tenders, and by helping developing countries attract and retain private investment. MLGA’s creation was in direct response to the debt crisis of 1980 s, and the subsequent realization among political Leaders that sustainable economic growth in many developing and transitional countries required the stimulation of private enterprise and flow of foreign capital for this to happen, The creation of such an agency was discussed in many international fora, particularly the World Bank.Many investors and Lenders needed comfort their respective investments would be protected against certain types of political risks. MIGA’s establishment was an attempt to address shortcomings in the investment insurance (guarantee) industry, and provide a risk mitigation service that was not readily available elsewhere. The Multilateral Investment Guarantee Agency (“MIGA”) has played an essential role in the provision of political risk insurance during its existence. On October 11, 1985, after formal approval by the Executive Directors of the World Bank, the Board of Governors adopted a resolution opening the MIGA Convention for signature.As previously stated, MIGA began operations in 1988.Since its birth, MIGA matured as an effective institution in assisting the developmental goals of lesser-developed countries by facilitating capital investment by developed nations into emerging economies.