The Islamic Development Bank’s credit insurance arm has signed a memorandum of understanding with an African agency to boost insurance availability across the continent.
The Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) and the African Trade Insurance Agency (ATI) will reinsure each other on trade transactions and projects which support their respective member countries.
Furthermore, the two organisations have agreed to start exploring collaboration possibilities for the recovery of paid claims through a formalised debt collection agreement.
“The events in the Middle East and North Africa (Mena) have shown how quickly countries rated as relatively stable can become high risk,” says George Otieno, chief executive officer at ATI.
“ATI welcomes this partnership with ICIEC, which will strengthen insurance protection for African traders who are already trading with Arab countries as well as those who may be seeking opportunities in that region over the coming months.”
The demand for political risk insurance has surged in light of increased debt protection costs and yields on government debt across the Gulf region.”
Following on from the protests in a number of Mena countries, ATI has already stated that it is expecting an increase in premium rates in the near future for trade transactions in the region.
“The demand for political risk insurance has also surged in light of increased debt protection costs and yields on government debt across the Gulf region,” the African insurance company says in a statement.
Trade between Sub-Saharan Africa and Arab member countries of the Gulf Cooperation Council has grown considerably, from US$6.8bn to US$18.1bn, or 170%, in just under a decade.
Trade between the regions peaked at US$25.7bn in the midst of the financial crisis in 2008.