The African Trade Insurance Agency (ATI) has received a US$15mn equity investment from the African Development Bank (AfDB), boosting its underwriting capital.

Both ATI and AfDB expect the extra capacity to be used towards infrastructure development, although it will not be reserved for it. ATI senior underwriting officer Humphrey Mwangi tells GTR: “A lot of infrastructure development is happening across Sub-Saharan Africa, from the transport to the energy sector. This in turn has triggered trade transactions of different shades, as well as payment obligations on governments which require guarantees such as those offered by ATI.

“Infrastructure projects also bring with them contractors’ obligations whose performance needs circumventing. In this regard one of the new products that ATI will be introducing in coming months is reinsurance of surety bonds to give additional capacity to banks and insurance companies who are the current providers but are currently overwhelmed from a capacity point of view.”

The investment increases ATI’s capital base to US$163mn, which can be leveraged up to 10 times to cover US$1.6bn worth of transactions in its member countries. The agency is also expecting a further US$30mn investment from Ghana and Benin before year end, as they seek to gain membership alongside Burundi, the Democratic Republic of Congo, Kenya, Madagascar, Malawi, Rwanda, Tanzania, Uganda and Zambia.

“Africa is the ultimate beneficiary of this partnership. Here you have AfDB, the highest-rated institution in Africa, rated ‘AAA’ by Standard & Poor’s, and ATI, the highest-rated insurer in Africa with an ‘A/Stable’ rating joining forces to lower the risks in African countries at a time when risk mitigation is most needed,” says ATI CEO George Otieno.

AfDB is the sixth organisation to become a member of ATI. Other non-country members include the African Reinsurance Corporation, Atradius, The Eastern and Southern African Trade and Development Bank (PTA Bank), The PTA Reinsurance Company and Sace, the Italian export credit agency. As a result of the investment, AfDB is also getting a seat on ATI’s board of directors.

“AfDB’s investment is a huge endorsement of ATI’s effort in facilitating the flow of FDI into Africa and promoting trade in the continent,” Mwangi concludes.