AfDB supports Nigeria's membership in African Trade Insurance Agency
AfDB said joining ATI will enable Nigeria to leverage its position to mobilize additional resources to finance trade, especially importation of essential goods such as medicines and communications equipment.
The African Development Bank Group has approved a $14.12 million facility to support the entry of African Trade Insurance Agency (ATI), one of the largest providers of trade and investment risk insurance, into the Nigerian market. The commencement of ATI’s operations in Nigeria also entails the country’s membership of the export credit agency.
Founded in 2001 by African States, ATI provides cover for trade and investment risks of companies doing business in Africa. It also provides political risk, surety bonds, trade credit insurance and political violence and terrorism and sabotage cover.
According to a statement released by the AfDB on Tuesday, Nigeria will join 14 other African countries that have already signed up to ATI membership. Upon formalization of Nigeria’s membership, AfDB said the country stands to benefit from gross political and commercial risk insurance cover on total investments and trade amounting to over $5 billion by 2020.
“The approved facility complements ongoing and planned interventions geared at building institutional capacity and improving the resilience of the Nigerian economy,” AfDB said. “Joining ATI will enable Nigeria to leverage its position to mobilize additional resources to finance trade, especially importation of essential goods such as medicines and communications equipment, to rehabilitate basic infrastructure and strengthen the country’s productive sector.”
ATI’s mandate is to provide medium to long-term credit and political risk insurance, as well as other risk mitigation products to its member-countries and related public and private sector actors, the multilateral bank stated.
In an article published in the November 2018 edition of Financial Nigeria, Ifeanyi Ugwuadu, an insurance analyst, said "Nigeria needs the right partnerships and risk management tools to mobilise substantial investments into the country across all sectors."
He said a specialized African underwriting brand such as ATI can support Nigerian insurance professionals to acquire the expertise to develop best practice in risk management to deepen the country’s insurance penetration and also mitigate investment risk in the country. He added that ATI can help in issuing guarantees that would boost investor confidence.
The AfDB reiterated this sentiment, saying, “ATI catalyzes private sector investments in infrastructure projects, thereby promoting economic integration of participating countries into regional markets.”
The bank said the financing aligns with four of its High 5 priorities, namely: Light Up and Power Africa, Industrialize Africa, Feed Africa and Integrate Africa. This means ATI will support operations that will have an impact on agribusiness, infrastructure development, electricity generation, telecommunications and manufacturing.
“The Bank seeks to achieve its ambitious development mandate by working with and through other strategic partners, and where possible, by supporting the development of strong and viable African institutions such as ATI,” said Stefan Nalletamby, AfDB’s Director of the Financial Sector Department.
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