Africa: Three nations to join African Trade Insurance
Source: Middle East Insurance Review | Nov 2015
The African Development Bank (AfDB) Group has approved a combined US$30 million soft loan to Benin, Côte d’Ivoire and Ethiopia to be utilised for membership subscriptions in the African Trade Insurance Agency (ATI).
This is a critical step and a prerequisite for ATI to commence its operations within these countries. Under the approvals, Benin and Ethiopia will each receive $7.5 million, while Côte d’Ivoire will receive U$15 million.
The ATI provides medium- to long-term credit and political risk insurance, as well as other risk mitigation products to the Bank’s Regional Member Countries (RMCs) and related public- and private-sector actors. These products directly encourage and facilitate FDI and both intra- and extra-African trade through Trade Finance Facilitation. ATI catalyses private sector investment in infrastructure projects, thereby promoting the economic integration of participating RMCs into regional markets.
ATI estimates that the combined facility will unlock up to $1.8 billion of commercial, trade credit and political risk underwriting cover at any one time in the countries. The effect of using limited Bank resources this way is huge, sometimes at up to 60 times the amounts of the original investments, said AfDB.
This facility is fully aligned with the Bank’s strategy for 2013-2022, and a number of its sectoral strategies aimed at supporting regional integration, private sector and infrastructure development for sustainable and inclusive growth in Africa. The project also aligns with strategies of the respective RMCs on improving the financial sector so that it can support the expansion of productive activities (especially for SMEs) and development of export capacity, through access to risk capital and credit.