INSURING INVESTMENTS, ENSURING OPPORTUNITIES MIGA’s mission is to end extreme poverty and boost shared prosperity by promoting foreign direct investment into developing countries. World Bank Group 2016 Summary Results Message from the President In recent years, historic progress has been made to end extreme poverty around the globe. More than 1 billion people lifted themselves out of poverty in the past of the World Bank Group 15 years alone. In 2015, for the first time ever, the World Bank Group forecast that and Chairman of the Board the global percentage of people living in extreme poverty fell under 10 percent. of Executive Directors This is a remarkable milestone. Yet the world today faces challenges that are as complex and vexing as at any time in recent memory. Strong economic headwinds have slowed global growth; fragility and conflict have displaced tens of millions of people from their homes; countries and their economies are vulnerable to natural disasters and climate change–related shocks; and a pandemic can spread quickly without warning. We are all affected by these challenges, but the stark truth is that people living in extreme poverty are hit first and hardest. “ Our mission at the World Bank Group is defined by two goals—to end extreme poverty by 2030 and to boost prosperity among the poorest 40 percent in low- and middle- ” income countries. To achieve them, we are focusing on broad-based, inclusive growth, and we remain vigilant against shocks that can reverse hard-won gains in development. We know that business as usual won’t be enough. The World Bank Group is collaborating in new ways with an increasingly diverse array of partners. For example, we partnered with the United Nations and the Islamic Development Bank Group last year to launch an innovative financing facility in support of Syrian refugees and host communities in Jordan and Lebanon. Based on the initial contributions provided by eight nations and the European Commission, the facility will be able to immediately generate up to $800 million in concessional loans for Jordan and Lebanon. This will allow the scaling up of programs to expand vital services, such as health and education, to meet the combined demand from refugees and citizens. This is one of the many groundbreaking solutions we are implementing to address today’s global challenges. The talented and dedicated staff of our main financing institutions—the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA)— work together to mobilize the innovative solutions and investments necessary to support inclusive economic growth. This year the World Bank Group committed nearly $64.2 billion in loans, grants, equity investments, and guarantees to its members and private businesses. Client demand for IBRD’s services continues to be strong, and this year it made commitments totaling $29.7 billion—the highest amount ever outside of a financial MIGA 2016 ANNUAL REPORT crisis. And IDA, the World Bank’s fund for the poorest, committed $16.2 billion to support countries most in need to face their toughest challenges. Working with the private sector will become increasingly important to meet the scale of financing needs for our development goals. IFC and MIGA, our two institutions focused on private sector development, are strengthening their efforts in this regard. IFC delivered a record amount of financing for private sector development—about $18.8 billion, including $7.7 billion mobilized from investment partners. IFC’s investments in fragile and conflict-affected areas climbed to nearly $1 billion, an increase of more than 50 percent over the previous year. MIGA Dr. Jim Yong Kim issued a record $4.3 billion in political risk and credit enhancement guarantees 1 underpinning various investments, with 45 percent of its active portfolio in IDA- President of the World Bank Group and Chairman of the Board of Executive Directors eligible countries and 10 percent in countries affected by conflict and fragility. The progress we’ve made in recent decades shows that we are the first generation in human history that can end extreme poverty. This is our great challenge, and our great opportunity. With the collective determination of the World Bank Group, our member countries, and global partners, I remain optimistic that we can tackle these challenges—one region, one country, and one person at a time—and create a more prosperous and inclusive world for all. TOTAL in lo ns, r nts, quit $64.2 inv stm nts, nd u r nt s to p rtn r countri s nd priv t busin ss s. BILLION Tot l includ s multir nd lob l proj cts. ion l MIDDLE EAST AND NORTH AFRICA $6.3 GLOBAL COMMITMENTS The World Bank Group maintained strong support for BILLION developing countries over the past year as the organization focused on delivering results more quickly, increasing its relevance for its clients and partners, and bringing global solutions to local challenges. Insuring Investments | Ensuring Opportunities LATIN AMERICA & THE CARIBBEAN $11.4 BILLION 2 The numbers may not add up due to rounding. Regional breakdowns reflect World Bank Group country classifications. EUROPE AND CENTRAL ASIA $10.3 BILLION EAST ASIA AND PACIFIC $11.4 BILLION SOUTH ASIA $11.3 BILLION MIGA 2016 ANNUAL REPORT SUB-SAHARAN AFRICA $13.3 3 BILLION The Institutions of the World Bank Group The World Bank Group is one of the world’s largest sources of funding and knowledge for developing countries, consisting of five institutions with a common commitment to reducing poverty, increasing shared prosperity, and promoting sustainable development. International Bank for Reconstruction and Multilateral Investment Guarantee Agency (MIGA) Development (IBRD) provides political risk insurance and credit enhancement to lends to governments of middle-income and creditworthy low- investors and lenders to facilitate foreign direct investment in income countries emerging economies International Development Association (IDA) International Centre for Settlement of Investment provides interest-free loans, or credits, and grants to Disputes (ICSID) governments of the poorest countries provides international facilities for conciliation and arbitration of investment disputes International Finance Corporation (IFC) provides loans, equity, and advisory services to stimulate private sector investment in developing countries World Bank Group Financing for Partner Countries by fiscal year, millions of dollars 2012 2013 2014 2015 2016 World Bank Group Commitmentsa 51,221 50,232 58,190 59,776 64,185 Disbursements b 42,390 40,570 44,398 44,582 49,039 IBRD Commitments 20,582 15,249 18,604 23,528 29,729 Disbursements 19,777 16,030 18,761 19,012 22,532 Insuring Investments | Ensuring Opportunities IDA Commitments 14,753 16,298 22,239 18,966 16,171 Disbursements 11,061 11,228 13,432 12,905 13,191 IFC Commitmentsc 9,241 11,008 9,967 10,539 11,117 Disbursementsd 7,981 9,971 8,904 9,264 9,953 MIGA Gross Issuance 2,657 2,781 3,155 2,828 4,258 4 Recipient Executed Trust Funds Commitments 3,988 4,897 4,225 3,914 2,910 Disbursements 3,571 3,341 3,301 3,401 3,363 ncludes IBRD, IDA, IFC, Recipient Executed Trust Fund (RETF) commitments, and MIGA gross issuance. RETF commitments include all recipient a. I executed grants, and therefore total WBG commitments differ from the amount reported in the WBG Corporate Scorecard, which includes only a subset of trust funded activities. b. Includes IBRD, IDA, IFC, and RETF disbursements. c. Long-term commitments for IFC’s own account. Does not include short-term finance or funds mobilized from other investors. d. For IFC’s own account. Does not include short-term finance or funds mobilized from other investors. Message from Keiko Honda MIGA Executive Vice President and CEO In fiscal year 2016, despite a period of This year, we implemented two new initiatives to celebrate the increased uncertainty over the state success of our clients and projects. Prime Minister Daniel Kablan of our global economy, MIGA played Duncan of Côte d’Ivoire came to MIGA to discuss the importance a significant role in catalyzing private of having corporations, financial institutions and governments sector investments into countries most work together to increase cross-border investments. MIGA also vulnerable to external shocks through launched its first Gender CEO Award to recognize a woman leader our political risk insurance and credit among its clients and to highlight the importance women have in enhancement products. leading and spurring private sector activity in developing countries. Of the record $4.3 billion in guarantees issued, 53 percent of the Lastly, we welcomed Sarvesh Suri, our Director of Operations, and investments were insured in poverty-afflicted areas. We continued Muhamet B. Fall, our Associate Director of Operations. To be closer to work tirelessly to ensure that we supported investments in to our clients, we announced the opening of our first Africa regional fragile and conflict-affected countries, which make up 10 percent hub in Dakar, Senegal. We look forward to working with our new of our portfolio. team to continue to fulfill our mission of reducing poverty, supporting economic growth and improving people’s lives worldwide. MIGA continued to collaborate closely with the rest of the World Bank Group to leverage our expertise and knowledge to solve the most pressing development challenges. Along with the World Bank and IFC, MIGA facilitated a crucial investment needed to build a new power plant in Nigeria to provide electricity to 13 million homes, showcasing the power of the “One WBG” model. In Mongolia, we supported one of the largest underground copper KEIKO HONDA mines to generate thousands of jobs for decades. MIGA also provided guarantees to Turkey’s official state export credit agency Executive Vice President and Chief Executive Officer to help small and medium-sized Turkish companies access affordable financing to build and grow their businesses. MIGA MANAGEMENT MIGA 2016 ANNUAL REPORT 5 Yasser Mohamed Santiago Assalini Ana-Mita KEIKO HONDA Karin Finkelston Dan Biller Muhamet Bamba Ibrahim Director, Corporate Betancourt Executive Vice Vice President and Co-Acting Director, Fall Co-Acting Director, Risk Director and General President and Chief Chief Operating Economics and Associate Director Economics and Counsel, Legal Affairs Executive Officer Officer Sustainability and Chief Underwriter, Sustainability Operations MIGA BUSINESS AND OPERATIONAL OVERVIEW In fiscal year 2016, MIGA facilitated private sector investments into its four priority areas—IDA, FCS, climate change and innovation—and focused on increasing our development impact footprint by helping provide millions with electricity, generating new jobs and skills transfer and bridging the infrastructure gap. In FY16 Projects spanned across all regions and sectors, MIGA issued with 59 percent of projects falling into at least a record one of MIGA’s four priority areas. At the end of the year, MIGA’s outstanding gross exposure was $4.3 billion $14.2 billion, of which 45 percent was in IDA-eligible in guarantees countries and 10 percent in FCS countries. Of this, $7.5 billion was ceded to our reinsurance partners. GROSS ISSUANCE VOLUME 4.3 Insuring Investments | Ensuring Opportunities in US$ billions 3.2 2.7 2.8 2.8 6 FY12 FY13 FY14 FY15 FY16 GROSS OUTSTANDING EXPOSURE in US$ billions 12.4 12.5 14.2 10.3 10.8 FY12 FY13 FY14 FY15 FY16 Of MIGA’s Active Portfolio in IDA-eligible countries in FCS countries GROSS ISSUANCE* Project Count FY12 FY13 FY14 FY15 FY16 IDA-Eligible Countries 48% 70% 50% 43% 53% Fragile and Conflict-Affected Countries 18% 23% 29% 15% 6% MIGA 2016 ANNUAL REPORT * Some projects address more than one area. GROSS ISSUANCE (in $US millions) Sub-S h r n Afric 1,758 E st Asi And P cific 1,250 7 Europ nd C ntr l Asi 727 L tin Am ric nd th C ribb n 439 South Asi 69 Middl E st nd North Afric 15 Development Impact Highlights Nigeria World Bank Group Backs Gas-Fired Power Plant to Bring Affordable and Reliable Energy Azura Edo $492 million 459MW 13 million power plant project in guarantees capacity residential consumers reached MIGA issued $492 million in guarantees to support the Azura Edo power plant project, the first wholly project-financed greenfield independent power producer (IPP) in Nigeria. While Nigeria is abundant in energy resources, 65 percent of the population does not have access to electricity. This 459MW open-cycle gas-fired project is expected to deliver reliable and affordable energy to the country’s grid and reach 13 million residential consumers. Azura, with support from the World Bank and IFC, is setting a precedent for future private sector investments in the gas-to-power value chain, which are much needed for the successful implementation of the Nigerian government’s energy sector reforms. Mauritania MIGA Helps Create Local Jobs, Improve Hotel Services in IDA Country Insuring Investments | Ensuring Opportunities Marhaba $2.5 million 115 900 64-room hotel in guarantees direct jobs indirect jobs to be created to be created MIGA guarantees of $2.5 million are supporting the renovation of the existing 64-room Hotel Marhaba in Mauritania. As a four-star hotel of international quality standard, the project will address the need for better hotel services for both regional and international business clients in a dynamic and emerging market economy. The investment will generate approximately 115 direct 8 jobs and encourage more inclusive and sustainable economic growth in the country. Local businesses, such as farmers, taxi drivers and clothes designers, will also benefit through the creation of approximately 900 indirect jobs. Mongolia MIGA and IFC Support Largest Mining Project to Generate Employment Oyu Tolgoi $1 billion Thousands $ Billions of direct jobs to be in government mining project in guarantees revenues to be created for decades generated MIGA provided guarantees totaling $1 billion for the Oyu Tolgoi mining project in Mongolia. It is one of the largest underground copper mines in the world, with an expected mine life of at least 40 years. Its development is set to create thousands of jobs and generate billions of dollars in government revenues for decades. In addition to contributing significantly to economic growth and employment opportunities, MIGA’s backing of the Oyu Tolgoi mine, with IFC support, will foster community development programs, skills transfer and improve infrastructure in Mongolia. Turkey MIGA’s Backing of Turk Eximbank Helps Turkish SMEs Access Affordable Financing Türkiye İhracat $616 million Help boost Job creation Kredi Bankası economy in the export sector MIGA 2016 ANNUAL REPORT in guarantees bank MIGA provided guarantees of $616 million, the first tranche of a $1 billion guarantee package to support a second round of financing for the Türkiye İhracat Kredi Bankası A.Ş (Türk Eximbank) of Turkey. Türk Eximbank is the official state export credit agency of Turkey, with a mandate to support Turkish exporters, investors and contractors operating abroad through credit, guarantees and insurance programs. The project facilitates Turkish 9 exporters’ access to financing, particularly for small and medium-sized enterprises (SMEs). In addition to helping boost the Turkish economy, MIGA’s support of Türk Eximbank through its credit enhancement product will contribute to the creation of new jobs in the export sector. Expected Development Results SMEs ACCESS TO AFFORDABLE FINANCING $ 787 million PROVIDED WITH POWER 24.2 million people INVESTMENTS GROSS LOCALLY CATALIZED PROCURED ISSUED 27.3 4.3 GOODS $ $ billion billion $ 484 million DIRECT EMPLOYMENT 24,207 Insuring Investments | Ensuring Opportunities people YEARLY TAXES AND FEES $ 339 million 10 Visit miga.org/development-results for more information. MIGA’s aim is to support economic Governance growth, reduce MIGA’s Board poverty and improve A Council of Governors and a Board of Directors, people’s lives. representing 181 member countries, guide the programs and activities of MIGA. Each country appoints one governor and one alternate. MIGA’s corporate powers are vested in the Council of Governors, which delegates most of its powers to a Board of 25 Directors. Voting power is weighted according to the share of capital each director represents. The Directors meet regularly at the World Bank Group headquarters in Washington, DC, where they review and decide on investment projects and oversee general management policies. To achieve this, the agency needs a Visit the Board’s website for more information: clear understanding of the development http://www.worldbank.org/en/about/leadership/ governors outcomes of the projects it supports. MIGA’s Development Effectiveness Indicator System (DEIS) collects a common set of indicators from clients to demonstrate results across all projects: volume of total project financing, ACCOUNTABILITY direct employment, taxes paid and value of locally procured goods. It also measures Independent Evaluation sector-specific indicators. Group The Independent Evaluation Group (IEG) assesses MIGA’s strategies, policies and projects to improve the Agency’s development MIGA’s $4.3 billion issuance in results. IEG is independent of MIGA management and reports its findings to MIGA’s fiscal year 2016 is expected to Board of Directors and the Committee on Development Effectiveness. support total project financing of Visit IEG’s website for more information: $27.3 billion http://ieg.worldbankgroup.org/ in public and MIGA 2016 ANNUAL REPORT Compliance Advisor private investments. Ombudsman The Office of the Compliance Advisor Ombudsman (CAO) is the independent accountability mechanism for MIGA and IFC Found here are highlights of the development and reports directly to the President of the World results expected from projects supported by Bank Group. The CAO responds to complaints from people affected by MIGA- and IFC- MIGA guarantees signed in fiscal year 2016. supported business activities, with the goal of 11 enhancing social and environmental outcomes on the ground and fostering greater public accountability of both institutions. Visit the CAO’s website for more information: http://www.cao-ombudsman.org/ FINANCIAL HIGHLIGHTS in $ millions FY2012 FY2013 FY2014 FY2015 FY2016 Income Gross Premium Income 89.2 97.2 115.6 128.1 139.8 Net Premium Income*(1) 61.7 66.3 72.5 79.0 86.4 Investment Income 36.9 33.6 53.4 24.1 22.9 Administrative Expenses*(2) 43.9 47.1 45.6 44.9 48.1 Operating Income*(3) 17.8 19.2 26.9 34.1 38.3 Administrative Expenses/ Net Premium Income Ratio 71% 71% 63% 57% 56% *(1) Net premium income equals gross premium income and ceding commissions less premium ceded to reinsurers and brokerage costs. *(2) Administrative expenses include expenses from pension and other post-retirement benefit plans. *(3) Operating income equals net premium income minus administrative expenses. GROSS PREMIUM INCOME in $ millions 89.2 97.2 115.6 128.1 139.8 FY2012 FY2013 FY2014 FY2015 FY2016 in $ millions FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Total Economic Capital (EC)* 508 572 620 705 663 Shareholder's Equity 905 911 974 971 989 Operating Capital 1,125 1,178 1,262 1,312 1,329 Insuring Investments | Ensuring Opportunities Portfolio Gross Exposure 10,346 10,758 12,409 12,538 14,187 Gross Exposure/Operating Capital Ratio 9.2 9.1 9.8 9.6 10.7 *Total economic capital equals capital consumption from the guarantee portfolio, plus capital required for operational risk and investment risk. SHAREHOLDERS’ EQUITY TO GROSS EXPOSURE GROSS 12 NET EXPOSURE 1:14 Shareholders’ EXPOSURE 14.2 SHAREHOLDERS’ equity to gross $ 6.7 $ EQUITY exposure $ .99 BILLION BILLION BILLION MIGA Highlights In fiscal year 2016, MIGA implemented two new initiatives to celebrate projects that successfully attracted private sector investors to some of the most challenging markets and generated high development impact. Spring Meetings: Attracting Investors to Emerging Markets in Uncertain Times MIGA hosted Prime Minister Daniel Kablan Duncan of Côte d’Ivoire, Helen Tarnoy (Aldwych International) and Yves Jacob (Société Générale) for the World Bank Group’s Spring Meetings event on risk, hedging and investing in uncertain times. The Financial Times’ John Authers moderated the panel, which included EVP & CEO, Keiko Honda, and focused on how corporates, financial institutions and governments could work together to encourage the continuation of foreign direct investment in emerging markets, even in times of heightened uncertainty. MIGA Gender CEO Award MIGA launched its first Gender CEO Award, in honor of International Women’s Day, to recognize a woman leader among the Agency’s clients. Nourah Mehyar, CEO of NAFITH Logistics (NAFITH) and a Jordanian national, won MIGA’s 2016 Gender CEO Award for bringing jobs to Iraq and modernizing the logistics network in the Middle East. MIGA provided guarantees to NAFITH’s investment in Iraq in 2014 to help build and manage a system in charge of regulating the entry and flow of trucks entering the Basra region. MIGA 2016 ANNUAL REPORT 13 MULTILATERAL INVESTMENT GUARANTEE AGENCY 1818 H Street, NW World Bank Group miga.org Contact Information Senior Keiko Honda Sarvesh Suri Management Executive Vice President and Chief Director, Operations Executive officer ssuri1@worldbank.org khonda@worldbank.org Muhamet Bamba Fall Karin Finkelston Associate Director and Chief Underwriter, Vice President and Chief Operating Officer Operations kfinkelston@worldbank.org mfall3@worldbank.org Santiago Assalini Dan Biller, Yasser Mohamed Ibrahim Director, Corporate Risk Co-Acting Directors, sassalini@worldbank.org Economics and Sustainability dbiller@worldbank.org; Aradhana Kumar-Capoor yibrahim@worldbank.org Acting Director and General Counsel, Legal Affairs akumarcapoor@worldbank.org Regional Jae Hyung Kwon Timothy Histed Head, North Asia Head, South and Southeast Asia jkwon@worldbank.org thisted@worldbank.org Christopher Millward Hoda Atia Moustafa Acting Head, Europe Head, Africa cmillward@worldbank.org hmoustafa@worldbank.org Sectors Carlo Bongianni Olga Sclovscaia Sector Manager, Infrastructure Sector Manager, cbongianni@worldbank.org Finance and Capital Markets osclovscaia@worldbank.org Nabil Fawaz Sector Manager, Agribusiness Marcus Williams and General Services Acting Sector Manager, nfawaz@worldbank.org Energy and Extractive Industries mwilliams5@worldbank.org Reinsurance Marc Roex Head, Reinsurance mroex@worldbank.org Business migainquiry@worldbank.org Inquiries