Context:
The Multilateral Investment Guarantee Agency (MIGA) and the International Solar Alliance (ISA) announced the establishment of the MIGA-ISA Solar Facility.
MIGA-ISA Solar Facility
- The Facility, a multi-donor trust fund, will combine ISA’s technical expertise and MIGA’s capacity to mobilise financing, create an innovative mechanism to accelerate the global adoption of solar energy.
- It will offer concessional financing tools, which include first-loss instruments and reinsurance capacity, to improve project bankability and lower the cost of MIGA guarantees.
- MIGA will administer the facility, and ISA has committed seed funding of $2 million, with a target to raise $10 million for the facility.
- ISA is excited to collaborate with MIGA for providing cost-effective guarantee solutions for decentralized solar projects in Africa.
- The facility will also attract private investment by providing risk mitigation and concessional financing, and lower costs and close the energy gap in underserved regions.
- This initiative is the first program under the guarantee component of ISA’s Global Solar Facility (GSF), which targets $200 million for Africa, encompassing guarantee, insurance, and investment components.
- Initially, it will focus on supporting projects in Sub-Saharan Africa, with plans for global expansion in the future.
Other collaboration
- ISA and MIGA have previously collaborated on a solar project in the Democratic Republic of Congo, where MIGA guarantees and ISA financing are expected to reduce operating costs by approximately 20 per cent, resulting in lower tariffs for customers.
International Solar Alliance (ISA)
- It was conceptualized by India and France on the sidelines of the 21st Conference of Parties (COP21) to the United Nations Framework Convention on Climate Change (UNFCCC) held in Paris in 2015.
- ISA is headquartered in Gurugram, Haryana, India.
- At present, 119 countries are signatories to the ISA Framework Agreement, of which 99 countries have submitted the necessary instruments of ratification to become full members of the ISA.
Multilateral Investment Guarantee Agency (MIGA)
- It is a member of the World Bank Group and established in April 1988.
- To promotes cross-border investment in developing countries by providing guarantees (political risk insurance and credit enhancement) to investors and lenders.
- MIGA offers a variety of services to encourage foreign direct investment, support economic growth, reduce poverty, and improve people’s lives in developing countries.