Even in the face of the global economic challenges that have slowed growth, Africa is still outperforming the rest of the world. This comes as no surprise because, according to Africa Development Bank (AfDB), six of the world’s fastest growing economies in the last 10 years are in Africa. This, according to Mr. Gabriel Negatu, AFDB regional director for East Africa, is no mean feat for a continent that have been written off a decade ago.
Mr. Negatu spoke at the launch of a $15 million equity investment in the African Trade Insurance Agency(ATI).
Internationally Monetary Fund (IMF) forecast have indicated that seven of the world’s 10 fastest growing economies will be African, with European, Mozambique, Tanzania, Ghana, Congo and Zambi expected to grow by more than 6 percent a year until 2015.
Even with these sizzling growth figures, investors are not making a beeline for Africa, and this is where ATI comes in. Africa’s promoters say insurance will have a transformative impact by giving investors assurance that their holdings are secure. “Many investors are not familiar with the investment environment in Africa continue to seek insurance and this is the gap ATI continues to fill,” Mr. Nagetu said.
ATI was founded in 2001 by African States and it offers political and credit risk insurance products, export credit guarantees and other financial products to support both international and regional trade as well as foreign direct investments in Africa member states.
It has thus far supported more than $7 billion in trade and investments in Africa across sectors such as agribusiness, energy, exports, housing, infrastructure, manufacturing, mining and telecommunication.
The $15million capital injection by AfDB boosts ATI’s insurance capacity to cover more transactions, specifically in infrastructure. Additional political and commercial risk insurance will attract investors while supporting the ability of local companies to take advantage of business opportunities.
The investment raises ATI’s capital base to $163 million, which enables the institution to cover $1.6 billion worth of transactions in each of their nine member state.
AfDB is the sixth organization to become a member of ATI.
Other non-country partners include Africa Re and The Eastern and Southern African PTA Bank. “While Africa continues to record impressive growth rates relative to the rest of the world, we must continue to put in place the necessary components of a second economy,” said Mr. George Otieno, ATI’s CEO.
AFDB’s Nagetu said the role of ATI in regional development is critical since it provides foreign investors with guarantees that make investment decisions less risky.
Last year alone, AfDB says, the value created on the continent riding on the back of insurance provided by ATI is excess of $4 billion. “Africa’s demand for infrastructure is almost insatiable at $93 billion per year,” says Mr. Nagetu. “We are only scratching the surface in bridging this gap. With the right investment and policy mix decisions, Africa will continue being an attractive destination for capital, and we are well on our way on this front.”
AfDB, last year, committed $600 million to finance infrastructural projects in the Eastern Africa region and is financing the building of the power transmission line between Ethiopia and Kenya, and the Voi-Taveta-Arusha and Namanga-Arusha roads.
