By Donald Tafadzwa Chidoori
Africa’s Credit & Political/Investment Risk Insurer, Africa Trade Insurance Agency (ATI) is keen to support various infrastructural, financial and energy projects in Zimbabwe.
ATI will assist the country access finance for a range of infrastructure and other important projects and will support domestic banks and traders by offering protection against loans and supplier credit.
Currently the ‘A’ rated institution is close to finalising projects worth over US$300 million and has an infrastructure related pipeline for Zimbabwe worth US$600 million.
The CEO of ATI, George Otieno in an interview with Risk and Insure Zimbabwe (RI) said that Zimbabwe has, “so much untapped potential. We have seen significant demand for our insurance and we are confident Zimbabwe will benefit from infrastructure and energy developments as a direct result of ATI’s support. ATI will also promote support for other productive sectors of Zimbabwe’s economy and work to build domestic, regional and international capacity to support business opportunities in Zimbabwe.”
“ATI is now able to support various projects and already, we are close to finalizing transactions linked to various projects worth over US$300 million in the financial and energy sectors. Our infrastructure related pipeline for Zimbabwe is $600 million, many of which we hope to close in the near future,” stated Mr Otieno.
The investment by ATI is coming at a time Zimbabwe is in critical need of Foreign Direct Investments. The stumbling block to increasing both trade and FDI in Zimbabwe has been both the political and commercial risks and the unclear policy on Indigenisation and empowerment.
“ATI provides insurance for these risks, and it’s precisely for this reason that ATI was created this enables lenders, traders and foreign investors to enhance insured transactions by assigning the ATI rating to the covered perils,” assured Mr Otieno.
ATI has been rated ‘A’ by Standard & Poor’s for 9 consecutive years. This rating gives ATI credibility and respect from a wide network of international partners. Zimbabwe has failed to gain credibility and respect from International financial institutions like the IMF, A number of foreign investors including Zimbabwe’s all weather friend, China have dragged their feet to invest in Zimbabwe due to the unstable political and economic environment.
ATI’s A rating will enable it to facilitate inward investment opportunities into Zimbabwe. “ATI also has a preferred creditor status giving international reinsurers, banks, investors and other corporates comfort and making them more willing to participate in transactions in Zimbabwe,” said Mr Otieno.
Africa including Zimbabwe has been seen for decades as the world’s riskiest continent, much of this has been based on perception rather than fact. This has led many institutions, countries and corporations to shy away from investing in Africa. However, ATI is slowly changing the storyline to one where African risk becomes bankable.
With the presence of ATI on the ground in Zimbabwe the number of big infrastructural and energy projects is expected to spiral.
In the last three years, ATI has supported investment projects, many of which were directly related to infrastructure, worth over US$ 9 billion in its nine member states.
To date, ATI has helped its member countries to attract over $25 billion worth of trade and investments in sectors such as Agriculture, Energy, Roads and Telecommunications for both Government and Private sector projects.
Other than supporting investment projects ATI offers other types of cover.
“ATI offers 4 types of cover including political risk insurance (PRI), which includes sovereign and sub sovereign non-payment risks. This is also called investment insurance. The other three are commercial risk (which is primarily cover on private sector lenders or buyers against non-payment risks), surety bonds (which we provide to banks and insurance companies) and political violence, terrorism and sabotage (PVT&S) which we can offer as direct insurance or on a reinsurance basis to insurance companies,” said George Otieno.
Zimbabwe has a low insurance penetration rate of 2% the coming of ATI into Zimbabwe does not mean competition for the small market share but is of great advantage to the local insurance industry since ATI will help them increase their capacity. This will be the case specifically for two of its products, political violence & terrorism and for bonds.
The political violence & terrorism cover offered by ATI is of extreme importance to Zimbabwe considering that over the past few months a number of stores, shops, buildings and properties were destroyed during political disturbances across the country.