Report Year
1st MAR Year

RECOMMENDATION 5: MIGA should reform its Small Investment Program by radically rethinking its approach to providing guarantees for investments in SMEs through the SIP program, considering either a merger with its regular program or a fundamental redesign to improve performance.

If MIGA decides to eliminate SIP as a separate window, it can maintain its relevance to the frontier and continue to guarantee small investments under its regular procedures; processing qualifying projects under its expedited "no objection" procedure where eligible. MIGA could maintain its SIP brand by establishing an SIP trust fund or a MIGA-funded, SIP-branded transparent subsidy mechanism to reduce the cost for the premium and underwriting for high value-added SME projects that reflect highly additional new investments into small companies in frontier regions or markets. If SIP is to be retained as a separate window, then the current weaknesses need to be squarely addressed, including through improved selectivity and screening, greater quality control of the preparation process, better targeting to SMEs rather than small investments, and improved monitoring and evaluation. Cost and revenue accounting should be improved to permit informed management decisions about SIP program resources in the context of overall MIGA strategic priorities.

In order to strengthen capacity of less experienced SME guarantee holders, MIGA should provide stronger capacity-building and technical assistance to implement and manage E&S requirements for small projects.

Recommenation Adoption
IEG Level of Adoption by Year: mar-rating-popup SHNTNT Management Adoption by Year: mar-rating-mng-popup HCNTNT
NANot Accepted
NRNot Rated
Findings Conclusions

While SIP has extended MIGA's engagement in frontier countries, the program has fallen short in meeting its objectives of offering streamlined and efficient underwriting of SME projects, had weak development outcomes, and suffered from inconsistent work quality. The viability of SIP projects has proved challenging due to the location of most SIP projects in high risk countries and the inherently riskier nature of smaller firms, and many guarantees for SIP projects are cancelled early. Despite increased efforts by MIGA to undertake monitoring visits to follow up with projects on their compliance with environmental and social requirements, E&S compliance of most SIP projects are not known while some are higher risk Category B projects. A couple of SIP projects did not meet E&S requirements in the course of project implementation. SIP's streamlined processing of guarantees has not produced anticipated efficiency gains and times savings, and an IEG file review showed work quality shortcomings. The limited performance data available from 15 SIP projects suggests a disappointing record in terms of development outcomes and delivering results. Prior to the inception of the SIP, MIGA guaranteed small investments through its mainstream program. MIGA also currently reaches SMEs through guarantees of intermediary financial institutions and, in one case, backward linkages to a larger firm.

Original Management Response

MIGA: Agree. MIGA will use the findings from the SME evaluation for reforming SIP, as part of its ongoing internal review, within the broader context of MIGA Strategic Directions formulation for FY14-16.

Action Plans
Action 1
Action 1 Number:
Action 1 Title:
MIGA is reviewing options and will revert by FY15-end
Action 1 Plan:

MIGA is reviewing options and will revert by FY15-end

Action 2
Action 2 Number:
Action 2 Title:
Reforming the Small Investment Program (SIP)
Action 2 Plan:

Action 5a: [MIGA]: Reforming the Small Investment Program (SIP)
Indicator: Update SIP policy (including premium rates)
Baseline: Preferential pricing, with SIPs placed in a fixed price bucket
Target: Update and distribute SIP policy to all MIGA Staff. Implement new policy for SIP. Eliminate preferential pricing for SIPs and follow the standards for projects under $40 million.
Timeline: FY16

Action 3
Action 3 Number:
Action 3 Title:
Reforming the Small Investment Program (SIP)
Action 4
Action 5
Action 6
Action 7
Action 8
IEG Update:
No Updates
Management Update:
No Updates
IEG Update:
No Updates
Management Update:
No Updates
IEG Update:
No Updates
Management Update:

The reforms to the Small Investment Program (SIP) has progressed well. In particular, MIGA charges Application ; Processing Fees for SIP projects and applies the same pricing standards as for projects under $40 million. MIGA has also focused on SIP Projects with manageable reputational and E;S risks as well as Projects benefitting from IFC or WB financial/technical support.

IEG Update:

Based on the presentation received and a discussion with MIGA counterparts, IEG notes that MIGA has substantially changed the SIP program in ways that reflect a rethinking of the program. IEG will monitor portfolio evidence as it becomes available to understand implementation. IEG requests that MIGA provide portfolio information documenting implementation of the new SIP policy.

Management Update:

MIGA has adopted a series of measures to reform the Small Investment Program (SIP). MIGA has begun charging Application ; Processing Fees for all investments, including SIP projects. MIGA has eliminated preferential pricing for SIP (SIP Bucket Pricing”) and follow the standards for projects under $40 million. Overall, there has been a reduction in the SIP subsidy through higher premiums, addition of fees and potentially fewer projects <$40 million. Going forward, MIGA would focus on SIP Projects with manageable reputational and E;S risks (category A projects will be limited). The focus of SIP will also be on Investments benefitting from either IFC or IBRD financial or technical support. In addition, MIGA will consider SIP projects with investments support from other multilaterals, i.e. where MIGA could benefit from their due diligence and/or effective risk mitigants. MIGA's SIP Policy has been updated and distributed to MIGA Staff. The new SIP Policy is being implemented currently.