African Trade Insurance Agency’s Chief points to ‘silver lining’ in trade & credit crisis, at Uganda office launch
KAMPALA, 6 May, 2009
Africa's only credit and political risk insurance agency officially opened its doors in Kampala today with a series of events that included a press conference, a briefing about its products and services to the heads of business in Uganda and a gala cocktail. Though the launch events took place today, the Agency had already been working with Ugandan exporters, investors and other partners over the past year, in offices hosted by the Private Sector Foundation.
Ugandans are expected to benefit from ATI's presence because it will make available more flexible insurance options that will cover risks faced by exporters, investors, projects and anyone doing business in Uganda. To support Ugandan exporters in the Floricultural sector against export credit risks, for example, ATI is working with the flower exporters industry to create a specialised insurance product expected to launch later this year. The Agency also plans to roll out a ground breaking product it developed for Kenya in 2008 covering Political Violence, Civil Disturbance, Terrorism and Sabotage.
"We know there is significant demand here in Uganda. We have received enquiries from Ugandan companies worth over US$1.7 billion and during the past year we developed a new pipeline of projects in Uganda estimated at US$250 million. In view of the global credit crunch, we expect the demand for our products to grow further. Our main message today is directed at Ugandan companies and institutions that would like to enter the Ugandan market. We want them to know that ATI is her as well as foreign investors interested in entering the Ugandan market. We want them to know that ATI is here to protect them against everything from insuring their exports against buyer non-payment to protecting their investments against currency exchange risks", commented Jones.
The main challenge that the Nairobi-based ATI identifies is that demand across Africa in the coming months for insurance cover is likely to intensify to levels never seen before by the industry. To balance African demand, the Agency predicted that the risk appetite in developed countries would likely increase in the coming months as more and better deals become available. This prediction is in line with recent stock market rallies. The Economist's tracking poll indicates that two-thirds of the 42 biggest stock markets have risen in the past two months by more than 20% as investors begin to seek new investments around the world.
ATI hopes to leverage its reputation and strong financial standing as the Agency was assigned a long term 'A' rating by Standard & Poor's last year committing it to structure the best deals possible for African companies. Having issued insurance policies for political and commercial risks supporting trade and investments worth some US$769 million last year, the Agency is confident that its position as the second-highest rated African institution will continue to help African trade and investments.
Pointing to the positive aspects of the current global crisis, ATI's CEO adds "although Africa faces many challenges, this trade and credit crisis presents Africa with a great opportunity to take the lead in finding its own solutions that are uniquely designed for Africa. ATI is in a perfect position to help because of the trust we've built over the years with our regional and international partners, as well as with our African Member States.
Headquartered in Nairobi, Kenya, the African Trade Insurance Agency (ATI) is an African owned International Financial Institution. Founded in 2001 by African States with the financial and technical support of The World Bank Group, ATI provides a range of customised, innovative and competitively priced Credit and Political Risk Insurance Products to support African investments and trade. Since writing its first policy in 2003, ATI has supported US$1.2 billion in trade and investments across Africa.
In 2008, ATI issued insurance policies covering political and commercial risks for transactions worth US$769 million. The Agency also supported exports worth US$95 million from its African Member States. The sectors supported include; telecommunications, manufacturing, agribusiness, education, export, services, hotels, mining and residential housing. Beneficiaries include manufacturers/exporters of goods/services located in Member States, regional and international banks who are providing financial support to regional businesses, investors investing in the region, and the overall business community in ATI's Member States.
ATI offers Political Risk Insurance for Trade & Investment, Political Violence, Terrorism & Sabotage Cover, Comprehensive Non-payment Cover, Inter & Intra-Regional and Domestic Whole Turnover Credit Insurance, Project Loan Cover, Unfair Calling of Bonds Insurance and Mobile Assets Insurance.
The Agency's paid in capital is US$86 million, with US$54 million in additional committed capital.
Awarded a Stable Long Term 'A Stable' rating for Financial Strength and Counterparty Credit by Standard & Poor's in 2008, ATI is on track to continue providing effective cover to Africa.