Factoring risk has always been an integral part of any investor’s decisions. Today, it seems navigating through volatility and uncertainty is part of every business environment, says Manuel Moses, CEO of African Trade & Investment Development Insurance (ATIDI).

 

Globalisation, the sluggish global and regional economic landscapes, the deep trauma from the Covid-19 pandemic, the conflict between Russia and Ukraine, and escalating tensions in the Middle East are compelling businesses to rethink their planning and approaches. The concept of “business as usual” may no longer apply. The growing complexity and risks in our global economy are affecting money flows, most notably those to Africa.

In 2000, the total amount of foreign direct investment (FDI) to Africa totalled only US$12bn. In 2023, this meagre figure rose to US$48bn,1 far short of the additional US$1.6tn – US$194bn annually – needed for the continent to achieve its Sustainable Development Goals (SDGs) by 2030.

As daunting as those figures may seem, they are not insurmountable. This annual sustainable financing gap is equivalent to 7% of Africa’s gross domestic product (GDP) and 34% of its investments in 2021. It also equals less than 0.2% of the global and 10.5% of the African-held stock of financial assets.2

Beyond mere figures, there are numerous opportunities that make investing in Africa a very sound business decision. There is the increasingly attractive – more predictable, affordable, convenient and connected – business environments offered by numerous African countries. There is the continent’s population – the youngest in the world, with 60% of Africans under the age of 24.

There are immense opportunities offered by impact-heavy sectors such as infrastructure, agriculture, supply chains, ICT, transport, hospitality and health. There are also the prospects unveiled by the African Continental Free Trade Area (AfCFTA), the world’s largest free trade area by number of member states and a continental market of 1.5 billion citizens and consumers. Additionally, the profitability offered by Africa is an asset. Indeed, in 2019 for example, the continent offered a 6.5% rate of return on inward FDI; higher than 6.2% and 6% in Latin America and the Caribbean, and developed nations, respectively.3

However, Africa still faces challenges that may deter investors or increase financing costs to sometimes unbearable levels. Lingering or re-emerging flags such as debt distress, political volatility, persisting insecurity linked to terrorism and governance gaps cannot be overlooked when considering whether to invest in or within the continent. Yet, these challenges should not outweigh the unique opportunities and barely tapped potential offered by our continent. And when risk aversion persists, investors can consider ATIDI’s unique value-add.

ATIDI was created in 2001 to provide an extra layer of security to foreign investors who perceived the continent as too risky to engage. It has since grown into the continent’s premier provider of trade and investment insurance. The organisation’s footprint spans across all of Africa, aiming to eventually include each of the continent’s countries as member states.4 ATIDI also boasts top investment-grade ratings: ‘A stable’ by S&P Global and ‘A3/positive’ by Moody’s, which allows us to cover projects and help close transactions.

 

How ATIDI supports investors

ATIDI provides tailored political and credit risk insurance products, allowing investors to confidently engage, knowing their projects and the resources they mobilise in them are protected. ATIDI absorbs investment and trade risks, safeguarding investors from incidents such as non-payment, delayed payment, currency inconvertibility, expropriation and contract cancellations.

Our strong partnerships with governments across the continent allow us to uphold our preferred creditor status, ensuring commitments are met and preserving working relationships for future collaboration. In doing so, our organisation acts as a catalyst for FDI in Africa.

We are enablers of transformational investment in our continent, and with the advent of the AfCFTA, our role will become ever more crucial to unlocking investment.

In line with our developmental mandate, we have enabled a total of US$85bn in investments across our continent and are geared to do more.

In 2023, ATIDI achieved record results:

  • Profit for the year increased by 205% to US$69.1mn
  • Insurance revenue grew by 14% to US$155.7mn
  • Gross exposures grew by 19% to US$9.6bn
  • Total assets grew by 27% to US$837.1mn
  • Equity grew by 25% to US$699.3mn

 

Our record performance is all the more outstanding as it comes in a period marked by uncertainties, slow global economic recovery, tight financial conditions and geopolitical tensions. They are a testament to the soundness of our business fundamentals and strategy.

We are geared to pursue our dynamic growth, leveraging our 2023-2027 corporate strategy to be more developmental, transformational, robust and reliable.

To achieve this, we will optimise our processes and efficiency, increase our market presence, grow our footprint and strengthen our bond with our partners.

Africa is on the rise, and ATIDI is playing a central part in providing solutions to finance the continent’s sustainable, human-centric and eco-friendly development.

So, if you are looking to invest in our beautiful continent, think of the opportunities it offers. And if you still have doubts, talk to ATIDI.

 

References

  1. UNCTAD Global Investment Trends Monitor, No. 46
  2. Africa’s Development Dynamics 2023: Investing in Sustainable Development
  3. Overseas Development Institute – ODI VOA
  4. ATIDI presently counts 24 member states and 13 institutional members