Latest News

Africa needs to tackle investment and credit risks to spur growth – ATI

10 May 2017, 04:22 pm
Financial Nigeria
Africa needs to tackle investment and credit risks to spur growth – ATI

News Highlight

ATI said it is imperative for African governments to focus on economic diversity to maintain growth while addressing risks to investors.

Skyline of Marina, Lagos

The African Trade Insurance Agency (ATI) has said foreign direct investment (FDI) flows into Africa are threatened by current global economic uncertainties at a time when African governments need investments and access to affordable financing for development.

ATI – which is Africa’s export credit agency – met today with investors and ministers from across Africa to discuss possible solutions to address the investment and credit risk hurdles to make African risks bankable. The occasion was the 4th Roundtable on Political and Credit Risks in Africa, which held during the Annual General Meeting of ATI in Nairobi, Kenya.

With the need to close an estimated $900 billion infrastructure gap, ATI said it has become more imperative than ever for African governments to focus on economic diversity to maintain growth while addressing risks to investors. The agency also said the private sector stands to lose billions of dollars in lost opportunities if the requirements for a favourable investment environment are not adequately addressed.

Investors are not immune to political and social developments in emerging regions such as Africa, according to ATI. In this current climate of uncertainty, investors are also tracking social indicators such as corruption rankings, gender parity and the extent that the rule of law is respected within emerging markets.

As an institution providing political risk and trade credit risk insurance, ATI insured close to $2 billion worth of trade and investments in 2016. The agency backed a $159 million loan from the African Development Bank (AfDB) to fund Ethiopian Airlines' fleet expansion earlier in February of this year. It also supported the $660 million investment in Lake Turkana, Africa’s largest wind farm.

George Otieno, ATI’s CEO, said despite the current challenges, it would be a mistake to bet against the continent's resilience.

“Africa is in a period of realignment in this new global order but I don’t think anyone should bet against its resilience," he said. "We are still home to some of the fastest growing economies in the world – as of 2017, the World Economic Forum ranks Côte d’Ivoire, Tanzania and Senegal on the list of the top ten fastest growing economies in the world.”

As an investment insurer of last resort, ATI said its products are valuable tools to enable lenders take sub-investment grade risk in Africa, thus allowing governments and corporates to access more affordable financing.

The agency's 12 member-countries include Benin, Burundi, Democratic Republic of Congo, Ethiopia and Kenya. AfDB and African Reinsurance Corporation are among its institutional members.

The Nairobi forum was reportedly opened with remarks from the Beninois President Patrice Talon. Other participants included Zimbabwean Minister of Finance and Economic Development, Patrick Chinamasa; Zambian Minister of Finance, Felix Mutati; Director of Government Affairs and Market Development at Boeing International, Chamsou Andjorin; Sub-Saharan Africa’s Syndication Lead at GE Capital, Helen Mtshali; and Head of Africa Desk at Japan’s Sumitomo Mitsui Banking Corporation, Nisrin Hala.


Related News