African Trade Insurance Agency (ATI) Announces the Democratic Republic of Congo as a new member state in the Agency
NAIROBI, Kenya, 22 July 2004:
The African Trade Insurance Agency (ATI), Africa's only multilateral import & export credit and political risk agency ("ECA"), today announced that the Democratic Republic of Congo ("DRC") had joined the Agency as its newest, the eleventh, member state.
The announcement is a major development for the African continent given that the DRC is a unique post-conflict country with a huge natural resource base giving it a significant potential economic edge over most other countries in the world. The country will be strategic to the growth of ATI in its efforts to support trade and investment flows throughout Africa by means of a comprehensive portfolio of credit and political risk insurance and other financial instruments.
Bernard de Haldevang, ATI's Chief Executive, welcomed the news. "The DRC is one of the most geopolitically challenged and yet most economically viable countries in the world. By joining ATI, the government is signaling its willingness to be accountable for its politico-economic situation to foreign investors and to originators and financiers of inward and outward trade flows. It does this by empowering ATI under a Treaty with us to ensure that potential investors will be compensated using the DRC's own funds committed to ATI for that purpose, should their insured projects or investments suffer losses as a result of political or economic upheaval."
He continued: "ATI is the official export credit agency ("ECA") of its member states. This means that in its capacity as a multilateral development financial institution, unlike normal national ECAs, it can cover both the import risk for a foreign seller and the export risk for a seller in a member state. In addition, it can cover foreign direct investors against a broad range of war, terrorism, economic and political risks. These products are also available to financiers of such projects. The agency syndicates risks it assumes among first class international insurers worldwide and its products enable member states to export more effectively and also to expand and diversify their economies".
Once the DRC has officially ratified the sovereign Treaty Establishing the African Trade Insurance Agency,, ATI's products should begin to assist the country by contributing to the diversification, through increased foreign investment appetite, of the private sector, away from the more traditional mining activities. Given that that economic growth is critical to political and social stability, ATI will also play a micro-economic part in helping to stabilise the carrying out of day to day business in the country.
D.R.Congo's Minister of Finance signed the Treaty on behalf of His Excellency President Joseph Kabila at a signing ceremony in Kinshasa. The signing of the agreement is a strong boost to the economy of the country due to the country's strategic location and status.
With ATI'S support, the DRC will be able to better access international private finance for its economic development and especially its mining sector and related industry. This will in turn have the effect over time of decreasing its dependence on foreign assistance and short term investments on which it both relies heavily.
Note to Editors
ATI was established at the Common Market for Eastern and Southern Africa (COMESA) Summit of Heads of State in May 2000 and launched by President Museveni of Uganda in Kampala in August 2001 in the presence of ten Heads of State and Government. Start-up funds of $105 million were provided by the International Development Association (IDA), the lending arm of the World Bank. It began underwriting a broadened portfolio of risks in April 2003. It is a member of the Berne Union Prague Club on behalf of its member states.
World Bank funds, being the bilateral loans between the member state and IDA, are held in London based trust accounts and are leveraged to provide additional insurance capacity from private insurers through international risk syndications. These are committed to ATI for the sole purpose of paying ATI insured losses. The ratio of ATI assumed risk to internationally syndicated risk can exceed 1:10. ATI's partners include certain syndicates at Lloyd's of London, Atradius group, Zurich Financial Services group, American International Group, OPIC of the US, MIGA, Office National du Ducroire of Belgium and others. ATI is able to reinsure other insurance companies and ECAs who have assumed risk in ATI member states.
Risks eligible for cover include financial losses due to Non payment by State-owned Enterprises; Embargos; Confiscation, Expropriation and Nationalisation of fixed and tangible assets; Government interference with entities owing insured obligations; Inability to convert or transfer currency; Imposition or increase of import or export taxes of a discriminatory nature; Interference with the transportation of goods; Seizure of Goods; Prevention of Sale; Prevention of Export; Political Force Majeure cover for Lenders to or stakeholders in Projects; Private Buyer Insolvency and Default for exports from Africa; War or Civil Disturbance as well as physical damage and consequential losses due to events of War or Terrorism.
Eligible transactions to be insured include: Sale of goods, usually on credit terms; Letter of credit confirmation; Financial lease; Operational lease; Import/export of capital equipment for use by an insured in carrying on its business; Loans by foreign lenders; Loans by local lenders; Foreign Direct Investments; Contract/performance bonds; Import/export of goods to stock for sale; Import/export of goods for processing; and Services.