Germany Africa trade ties expected to grow under Euler Hermes-ATI agreement
NAIROBI, 23 August, 2011-Riding the momentum set by German Chancellor Angela Merkel’s recent three-country African tour, the Managing Director representing Germany’s Official Export Credit Agency and Investment Guarantees formalised a partnership with the African Trade Insurance Agency (ATI) today. The partnership between Euler Hermes Kreditversicherungs-AG (Euler Hermes), PricewaterhouseCoopers AG WPG (PwC) and ATI is expected to strengthen trade ties between Africa and Germany.
Under the agreement, one of the key features will be risk sharing on joint transactions and an exchange of credit information on international buyers. This will help expand the trading on open terms between German and African companies as well as fill an existing information gap in the African credit market. African exporters can use this information to make more sound business decisions. And for German traders, both companies hope to facilitate increased flow of capital goods into African markets.
“International trade contributes considerably to the sustainable development of the global economy. Export Credit Agencies play a crucial role in strengthening economic recovery as a non-debt-creating source of growth. This partnership with ATI ultimately benefits African and German exporters. The improved cooperation with multinational African institutions is part of our strategy to intensify the engagement with Africa on multiple levels”, commented Managing Director Andreas Klasen.
The partnership stems from the current shift in Africa’s engagement with traditional economic and trade partners. This shift is reflected in Germany’s new policy on Africa, which envisions ‘partnerships of equals with Africa and increased trade ties. To signal Germany’s renewed commitment to Africa, policy makers noted that this is the first policy on Africa devised by several government departments working together including foreign, economics and environmental ministries.
“This agreement supports what ATI has been witnessing for the past decade - aid without trade is not sustainable. The statistics confirm this. Although trade with Africa accounts for just 1% of Germany’s total trade volumes this is equivalent to 15 times the volume of Germany’s bilateral aid to Africa,” notes ATI’s CEO, George Otieno.
ATI provides trade credit insurance that protects exporters against non-payment risks from their buyers. The organisation is aggressively marketing this product to exporters in countries across the continent. ATI is building a track record with exporters in countries such as the Democratic Republic of Congo, Kenya, Madagascar, Malawi, Tanzania, Uganda and Zambia. In 2010, ATI provided insurance to cover trades valued at over $39 million.
For Kenyan exporters the relationship with Germany is important. Germany is the second largest export destination for Kenyan goods – mostly coffee and horticultural products. And for Germany, Kenya represents an important export destination. Kenya imports an estimated $13 billion annually of German oil and other goods.
This partnership with Euler Hermes and PwC extends ATI’s global credit insurance network, which also includes Atradius. With these expanding global links, the Pan African insurer hopes to cover a larger portion of African exports.