World Bank’s guarantee platform is a pilot for broader shifts underway

Last year, the World Bank Group launched a single guarantee platform, bringing together what had been separate operations under its guarantee arm, the Multilateral Investment Guarantee Agency. It was a pilot for broader changes now rolling out across the bank, aimed at better integrating its public and private sector arms to mobilize private capital. The platform — a one-stop shop offering guarantees that protect against political, project, and nonpayment risks — provided $12.3 billion worth of guarantees supporting 77 projects in its first year, according to MIGA. These guarantees primarily target potential foreign investors, aiming to de-risk projects that might otherwise struggle to attract private financing. Additionally, the platform offers guarantees to governments, making it easier for them to access financial markets. “There is an inflection point that is happening inside the World Bank Group, and that inflection point is a recognition that we need to move from being solely or primarily a lending bank to becoming a leveraging bank,” Junaid Ahmad, MIGA’s vice president of operations, told Devex. Guarantees, he added, are at “the vanguard of the change that’s happening systematically across the World Bank Group.” The shift will require the World Bank Group to work together and break out of its silos, he said. To that end, World Bank President Ajay Banga announced plans earlier this month to merge large parts of the operations across the World Bank Group’s institutions to improve efficiency and better leverage the private sector. The guarantee platform experiment seems to be working — MIGA had a record year last year — but reaching Banga’s pledge to triple its annual guarantee issuance to $20 billion by 2030 will take more. And that may be a moving target. Banga and Shriti Vadera, who chairs the bank’s Private Sector Investment Lab, which recommended the creation of the platform, said they believe it can be done faster. New models To hit those targets and transition to a “leveraging bank,” MIGA is going “wholesale,” and expanding its work through new models and products, Ahmad said. Instead of working project by project, the bank is exploring creating platforms to guarantee many deals at once, including with global banks such as Santander and Deutsche Bank, and with national finance institutions originating infrastructure projects. It could also mean guaranteeing the portfolio of a private equity firm, he added. “These examples are not merely shifting boxes around in our organogram. They are changes in the way we do business and represent important cultural changes in terms of how we look at development, away from retail to wholesale, away from lending to leveraging, moving away from the silos of representing MIGA, [the International Finance Corporation], or [the International Bank for Reconstruction and Development/the International Development Association] separately to representing the World Bank Group as an integrated organization,” Ahmad said. Several projects this year illustrate those changes. Using a MIGA guarantee, the State Bank of India was able to swap its World Bank loans for cheaper commercial funding. The World Bank is now embedding similar off-ramps in new loan agreements to incentivize borrowers to turn to the private sector as a project matures. Ahmad, who previously served as the country director of India, said that if he knew then what he knows now, one-third of his portfolio back then would have been structured differently. The bank also did its first portfolio guarantee this year, protecting CrossBoundary Energy’s portfolio of about 100 energy projects across Africa from currency risk. “We commend MIGA for being quite forward-leaning over the last few years and coming up with innovative structures,” said Jake Cusack, the co-founder and managing partner at CrossBoundary. The guarantee allows CrossBoundary Energy “to access capital much more easily and not have to go through that process and worry in every single jurisdiction in Africa,” he said. A World Bank guarantee was also used for the first time to support a debt-for-development swap in Côte d’Ivoire, allowing the government to swap commercial loans for lower rates, freeing up about €330 million over five years, with the money saved on debt repayment used to support education, including the construction of more than 30 new schools. The bank looking to use guarantees to support debt swaps is a “really good benefit coming out of the merger of the guarantee facilities at the bank,” said Kalpana Kochhar, the director of development policy and finance at the Gates Foundation. Behind the scenes Beyond new instruments, work continues behind the scenes to improve the platform, bolster team integration, and create an in-country sales force to help educate and provide more guarantees. Internal work is also reshaping how guarantees operate. Safeguards across the International Bank for Reconstruction and Development, MIGA, the International Finance Corporation, and the International Development Association — the bank’s fund for the poorest countries — have been harmonized, and MIGA is reviewing its risk framework. One way to take on more risk is combining IBRD first-loss coverage with MIGA second-loss guarantees to support riskier projects. This type of guarantee “stacking” is attractive to the private sector, which can now get about 95% of the project risk guaranteed, Stephanie von Friedeburg, managing director and global head of public sector at Citi, said at a recent Devex event. Previously, the World Bank only guaranteed 60% of a project, which wasn’t enough for investors, but Citi can now sell those projects “and really bring new and interesting investors to the table,” she said. MIGA also reinsures about 70% of its portfolio through private insurance companies and manages risk with donor trust funds but still relies on its original 1988 paid-in capital of $366 million. Protecting that limited capital is part of MIGA’s “conservative” start but the guarantee platform is changing things, Ahmad said. “There are practical reasons to be careful, while adopting financing structures that enable us to take more risk, and we hope that this will continue,” he said. Since its founding, MIGA has issued $94 billion of guarantees supporting 1,060 projects in 124 countries. Last year’s $9.5 billion of guarantees to 44 projects was a record, with 75% targeting fragile states, low-income countries, conflict-affected situations, and climate finance, Ahmad said. Looking ahead, Ahmad said reaching $20 billion annually won’t hinge on new donor money but on innovation and cultural change. “At some point the shareholders should look at what has happened and will happen in the next few years, and then come to a conclusion, whether it's time to put some investment in what I think is a fundamental inflection point — creating a leveraging bank,” he said. Update, Oct. 30, 2025: This article has been updated to clarify that the debt-for-development swap in Côte d’Ivoire was supported by a World Bank guarantee.