Africa’s Only Credit & Political Risk Insurer to Help Ugandan Companies Weather the Global Financial Crisis
NAIROBI, April 29, 2009
The financial crisis is causing some investors to lose their appetite for African markets. Simultaneously, demand for African exports is weakening and African companies are feeling the effects. Increased access to products that could protect investors and exporters from risks such as political risk and non-payment by customers could help reduce the impacts. On 6 May, the African Trade Insurance Agency (ATI), of which the Government of Uganda is a member, will officially launch its local office in Kampala, where it will offer customised political risk, credit risk and export credit insurance products in the local market. The ATI launch at the Serena Hotel on the 6 May will feature a press briefing at 10:00 am with the Private Sector Foundation of Uganda, and a cocktail hosted by the Honourable Syda Bbumba, Minister of Finance, Planning and Economic Development.
Falling commodity prices are expected to adversely impact Uganda?s coffee and fish exports, which account for over 50% of the country's overall exports. Although Uganda has diversified into manufacturing and horticulture in recent years, the financial crisis is also threatening these sectors. ATI, which supported transactions across Africa in excess of US$765 million last year, is creating a tailor-made solution that will help exporters in these emerging areas of the economy.
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.
For African companies like HighChem, a Kenyan based distributor of industrial chemicals supplying to buyers in Uganda and across East and Southern Africa, ATI insurance coverage has given peace of mind and security against non-payment from their buyers.
"We obtained credit risk insurance from ATI a couple of years ago just as we were exporting to more markets," explained High Chem Director, John Griffin "In retrospect, our insurance purchase was timely. What we couldn't have predicted then were two major incidents that would happen within months of each other - the political violence in Kenya and the global financial crisis - both of which could have impacted our buyers' ability to pay us. ATI's credit assessment process is very much complementary to our own."
Awarded a Stable Long Term 'A' rating by Standard & Poor?s and fully capitalized by its Member Countries and Organisations, ATI is embarking on an expansion strategy to support up to US$1 billion annually in exports and imports and to attract more African countries and international investors to become members. ATI currently has 13 African Member States and 4 regional and private sector Members, one of which is the Common Market for Eastern and Southern African (COMESA), which was instrumental in the creation of ATI in 2001.
"Our clients and partners reside across the globe. Our goal over the next three years will be to expand our reach into more African countries, while establishing more international partnerships. This will help us to continue providing local, regional and international solutions that support African trade and investments, "noted ATI's Chief Executive Officer, Peter M. Jones. ATI?s Uganda Office is hosted by the Private Sector Foundation of Uganda, where it has been operating since 2007. The Agency also has a field office in Lusaka, Zambia and hopes to launch at least two more offices in East Africa this year.
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 & Poo's in 2008, ATI is on track to continue providing effective cover to Africa.