ANNA BORZELLO, Kampala | Tuesday
A MULTINATIONAL African insurance agency, covering risks ranging from war to repossession and aimed at boosting direct investment in the continent, was born here Monday with seven countries coming on board.
“The ATI is a scheme that is telling investors, please go ahead and trade, and if a coup d’etat occurred, you will not lose because we shall cover you,” a typically candid Ugandan President Yoweri Museveni said of the African Trade Insurance Agency.
To be headquartered in Nairobi, ATI will offer coverage for eventualities such as war, civil commotion, embargo, imposition of exchange controls, inability to purchase foreign exchange with national currency, interference with persons owing insurance obligations, action against insured goods and imposition or increase of import taxes.
ATI “is an African-owned agency which was set up with the support of the World Bank at the request of its current member countries, and its aim is to become a pan-African insurance agency and ultimately an insurance company,” ATI director general Bernard de Haldevang said after the inaugural signing ceremony.
ATI’s founding member’s are Uganda, Zambia, Burundi, Kenya, Malawi, Rwanda and Tanzania, while other members of the Organisation of African Unity, now becoming the African Union, are expected to join in coming years.
The actual underwriters will come from the private sector and eligible transactions to be insured will include sales of goods, import and export of capital equipment, loans by foreign lenders, contract and performance bonds.
The soft loan branch of the World Bank, the International Development Association, has put up $105-million as a contribution to the agency’s start-up costs.
“ATI’s aim is to cover all aspects of trade and investment risks from transfer convertibility risks to credit risks, war risks and expropriation risks,” Haldevang said.
ATI has been set up to try to increase trade flows into and out of Africa, which are often minimal because of the perception of risks involved, as Malaysian Prime Minister Mohammed Mahathir said at the launch.
“Africa is not as bad as portrayed in the international press. What businessmen in Malaysia perceive is that this continent is a no-go zone for investment. It is a risky area, but what I have seen indicates the contrary in spite of some problems here and there,” said Mahathir.
He added, “many investors have been not coming here because even when the returns for any investment look impressive at 30 percent compared to 10 percent in Europe, the risk-adjusted rate of return has been making it hopeless to invest here. It becomes a gamble.”
“The only way to get out of this (situation) is to encourage private sector-led growth, and this scheme is one way of achieving it,” Haldevang said.
“This is the first multilateral scheme ever to be put in place where the member countries are willing to underwrite their own risk with their own capital,” added the former Lloyds underwriter, obliquely referring, perhaps, to the Multilateral Investment Guarantee Agency, which is run by the World Bank and does a similar job to ATI but which is not exclusively African in nature.
“This gives the private-sector insurers involved in the scheme a huge amount of comfort that the risks they are taking are less,” he said. – AFP