By Eric Ojo, Abuja
Nigeria stand the chance of benefiting from gross political and commercial risk insurance cover on total investments and trade amounting to over $5 billion by 2020 when the formalities of its membership of the African Trade Insurance (ATI) Agency is finalized.
The catalytic effect of using limited financial resources in this way is undoubtedly massive as Nigeria, Africa’s largest economy, joins 14 other African countries that have already signed up to ATI membership.
Joining ATI, according to a statement made available to METRO DAILY, will enable Nigeria to leverage its position to mobilize additional resources to finance trade, especially importation of essential goods such as medicines and communications equipment, to rehabilitate basic infrastructure and strengthen the country’s productive sector.
ATI is a pan-African institution that provides political risk insurance to companies, investors, and lenders interested in doing business in Africa. Formed in 2001 under the leadership of the Common Market for Eastern and Southern Africa (COMESA), with funding and technical support from the World Bank and subsequently the African Development Bank (AfDB).
ATI has grown into a major global player in the export credit agency landscape, and it has recorded significant impact in its existing member countries. Within primary sectors such as energy, infrastructure (which includes road and construction and rehabilitation, the insurance industry and telecommunications).
Moreover, the institution, has supported over $ 22.96 billion worth of trade and investment in its Regional Member Countries (RMCs).
ATI’s mandate is to provide medium to long term credit and political risk insurance, as well as other risk mitigation products to its member countries and related public and private sector actors.
In addition, these products directly encourage and facilitate foreign direct investment as well as local private sector investment in regional member countries and intra-and extra-African trade. Similarly, ATI catalyzes private sector investments in infrastructure projects, thereby promoting economic integration of participating countries into regional markets.
It may be recalled that, through its Trade Finance operations, the African Development Bank Group has approved a $14.12 million facility to support Nigeria’s membership in the ATI. This is a critical and mandatory step to enable ATI commence its operations in Nigeria.
“This financing aligns with four of the Bank’s High 5 priorities, namely: Light Up and Power Africa, Industrialize Africa, Feed Africa and Integrate Africa”, the statement added. .
As a trade finance facilitation initiative, this financing will support operations that are crosscutting and multi-sectoral in nature and will have an impact on agribusiness, infrastructure development, electricity generation, telecommunications and manufacturing.
While explaining the essence of the financial support, the Bank’s Director of Financial Sector, Stefan Nalletamby, said it is part of the AfDB’s development mandate, which is according to him, is executed through partnership with relevant stakeholders.
“The Bank seeks to achieve its ambitious development mandate by working with and through other strategic partners, and where possible, by supporting the development of strong and viable African institutions such as ATI. This financing scales up the work of ATI by supporting the beneficiary RMCs to become members”, he added.