African Trade Insurance Agency (ATI) in conjunction with GERLING NCM (soon to be Atradius) and Barclays Bank of Kenya facilitates first ever insured receivables-backed trade loan to Kenyan exporter Credit insurance policy assists exporter to secure short
The African Trade Insurance Agency (ATI), the continent's only pan-African, multilateral import & export credit and political risk insurance agency ("ECA"), today announced the issuance of its first Kenyan credit insurance policy to Afro Meat Ltd, a major exporter of fresh and frozen fish to Middle Eastern and European markets. The policy, which has been issued in conjunction with Gerling NCM, will secure Afro Meat against payment default of its buyers.
The policy has been assigned to Barclays Bank as security enabling the bank to extend short term financing to Afro Meat to improve its cash flow and to enable it expand and support further export business. The advantages of this type of financing over asset backed lending is that it is significantly cheaper, quicker and enables the insured exporter to better use its liquid assets to increase production and sales.The issuance of ATI's first Credit Insurance policy is a significant development in the region, as it introduces for the first time the option of borrowing against export trade receivables. Previously, financing of export business has principally been asset backed, a situation which has shut out many viable businesses from access to finance and stifled the growth and expansion of export trade. The policy thus demonstrates how ATI can help banks provide essentially unsecured short term financing for trade through the assignment of a credit insurance policy to the financing institution. Under the policy, in the event of a default by the exporter's buyers, ATI will pay Barclays Bank for the amount that is in default.Mr. Karim Hassanali, the Managing of Director of Afro-Meat said "with this policy, I am now planning to expand my output and increase significantly my capacity to able to meet a growing demand for fish in Europe and other markets. "Barclays Bank of Kenya which has partnered with ATI in this venture has welcomed this development and expressed its willingness to assist more firms to benefit from the security offered by ATI's credit insurance policy. Millicent Palo a Business Support Manager in Barclays Bank has said that she is "looking forward to working with exporters in embracing this policy as apart from protecting both the Exporter and the Bank from insolvent buyers, it's simple to administer. ATI further carries out the function of monitoring the buyers, an important tool in credit risk and hence the Bank's risk is considerably reduced?"Guy Lammens, President and Managing Director of Gerling NCM which reinsures and provides the technical underwriting to ATI said: "With this first credit insurance policy we are pleased to see our trade support policy in Africa moving a step forward. We welcome the interest of Barclays Bank of Kenya for our product and are looking for further joint actions to secure trade". Bernard de Haldevang, CEO of ATI said: "We believe that more banks and exporters will now see the benefits of this service as a means of increasing their sales, offering their customers more favourable trading terms, and helping them trade more securely."He continued: "The net effect, as has been seen over the years in industrialised nations, is much increased competitiveness in the economy. For a typical exporter or manufacturer, up to 40% of net current assets are tied up in trade receivables. Credit insurance is a proven instrument to better use this future cash to generate cheap finance for more sales."Barclays Bank has welcomed the development. Mr. Amin Habib, the Corporate Director of Barclays Bank Kenya said: "ATI has provided exporters out of Kenya with a great opportunity to secure more flexible trade financing options. Barclays recognizes the need to increase Kenyan exporting capacity and will work closely with ATI to facilitate increased regional trade across a wide range of commodities."Note to EditorsSince ATI commenced operations commercially in 2002, the Agency has been providing political risk cover in partnership with Lloyd's of London and credit insurance in partnership with Gerling NCM on cross border transactions involving its African member states.Under the credit insurance programme, ATI has entered into a Partnership agreement with Gerling NCM, in order to provide credit insurance for local, export and import transactions. The Gerling NCM, is an integrated credit insurer with a global network, offering comprehensive solutions in risk transfer, financing and related services. Gerling NCM is the second largest credit insurer worldwide generating premium income in excess of US$ 1 billion per annum. The credit insurance cover offered by ATI and Gerling NCM protects a company's balance sheet against short term trade receivable losses, but also allows exporters to continuously monitor and analyse the financial health of their customers and prospects. It also brings with it professional credit check of customers, and debt collection service. If an invoice remains unpaid, Gerling NCM recovers the exporter's debts on their behalf. The new shareholders of Gerling NCM are Swiss Re, Deutsche Bank, Sal. Oppenheim et Cie., GERLING NCM Pension Trust and the Gerling NCM Group.Every company, from a small/medium-sized to an international group of business, selling on open account, is eligible to subscribe to a credit insurance policy. According to the business and the trade sector in which the company operates, ATI can adapt the policy terms and create a tailor-made contract.The credit insurance policy covers invoices against the risk of non-payment on both domestic and export markets and ATI in association with Gerling NCM can offer cover in more than 180 countries worldwide.