Africa Trade Insurance Agency (ATI) says it will double its insurance cover on Zimbabwe to $500 million this year amid increased interest from investors.
BY NDAMU SANDU
Zimbabwe became a member of ATI last year with Africa’s export credit agency providing cover worth $250 million against political and credit risks.
ATI chief executive George Otieno told NewsDay that his organisation had “so much business coming through particularly through PTA Bank and other banks” with cover provided on energy projects.
“Now, a lot of investors are coming because of the ATI cover. This year, we are looking at $500 million cover to Zimbabwe and we will progress to $1 billion,” Otieno said.
“After a year or two we should be able to support almost 2 to 3% of Zimbabwe’s GDP in terms of attracting investors. In other countries we have done an average of 1 to 3% of GDP in terms of the cover we offer investors.”
Before Zimbabwe became a member of ATI, the Nairobi-headquartered organisation was getting a lot of inquiries from potential investors but could not provide insurance cover.
In the period 2010 and 2014, ATI received enquiries on projects in Zimbabwe worth over $1 billion but could not provide the cover.
ATI provides political and trade credit risk insurance products with the objective of reducing business risk and the cost of doing business on the continent.
Last year, ATI provided cover to projects worth $10 billion.
It offers tailored risk mitigation and credit enhancement solutions and capacity, which helps to unlock financing for a range of infrastructure and other key projects in its member countries.
The body provides guarantees to investors, traders and to the lenders that in the event of a default arising from government action or inaction, the cover gives them compensation. Such guarantee gives comfort to the country’s investors, traders, lenders and other partners.
ATI also supports imports and exports from a member country to anywhere in the world.
For overseas suppliers and lenders, ATI’s cover will be used as a credit enhancement tool for them to lend to companies’ member countries, while at the same time affording competitive terms to borrowers or buyers.