Ghana joins African Trade Insurance Agency; Invests $17.6m in shareholding

Ghana has signed onto the African Trade Insurance (ATI) Agency, with shareholding valued at $17.6 million.

The ATI is a multilateral pan-African institution that provides insurance guarantees which help its member states to attract investments and spur trade with increased access to credit.

The agency underwrites (covers) credit and political risk insurance, and joining it will enable Ghana to enjoy better borrowing terms, as well as boost foreign direct investments.

The Minister of Planning, Professor George Gyan-Baffour, announced the country's membership of the organisation at a press conference in Accra last Tuesday.

Prof. Gyan-Baffour, who represented the Minister of Finance, Mr Ken Ofori-Atta, said Ghana's membership of the ATI would help boost industrialisation and strengthen the government's debt sustainability efforts.

He said with the ATI, the government could attract commercial financing at a level comparable to what more developed economies obtained.

"This means financing at better terms and longer duration, which can help pay off more expensive debts and create a more sustainable debt management process," he said.

Capacity

Prof. Gyan-Baffour explained that the ATI was a unique institution because “the list of benefits it brings to countries goes beyond insurance”.

He said the organisation operated on the level of investments and trade by supplying the insurance that fueled all major investments and trade transactions in other regions of the world.

“In Africa, this type of insurance has been in short supply, largely because African economies got a late start to development than more developed regions,” he explained.

As a result, he said, the operations of the ATI in the country would have a positive impact on other sectors of the economy, including financial services, manufacturing, trade, as well as energy.

“The important energy sector will also be on the winning end of this partnership with the ATI. Through the ATI’s Regional Liquidity Support Facility (RLSF), backed by KfW, Ghana can help mitigate the negative impacts of climate change,” he said.

New transactions

The acting Chief Executive Officer (CEO) of the ATI, Mr John Lentaigne, for his part, noted that in 2019 alone, the organisation insured transactions across Africa valued at $6.4 billion.

Therefore, he said, the ATI’s operations in the country would help mitigate investment risks and unlock additional investments for Ghana’s benefit.

With Ghana’s economy touted as one of the fastest growing among emerging markets, he said, the association with the agency would propel a review and potentially insure the current pipeline of projects in Ghana, valued at $1.2 billion.

“According to International Monetary Fund (IMF) estimates, Ghana is currently the fastest-growing economy in the world. This is a huge feat for Ghana and the ATI is delighted to welcome such an important African economy into its membership.

“We are looking forward to supporting the government’s 10-point industrialisation strategy and other strategies aimed at strengthening the economy to ultimately create more jobs and a sustainable future,” he said.

Mr Lentaigne explained that aside from supporting the government to mitigate investment risks, the ATI would also support several key areas of the economy in the private sector.

For instance, he said, the agency could provide support for banks by providing access to credit insurance that would act as a form of collateral.

“This will, in turn, allow local banks to lend more to local corporates and ultimately help generate more jobs in the economy, while also strengthening the competitiveness of local banks and boosting private sector growth,” he said.

About ATI

The ATI was founded in 2001 by African states to cover the trade and investment risks of companies doing business in Africa.

It predominantly provides political risk, credit insurance and surety insurance.

For over a decade, the agency has maintained an ‘A/Stable’ rating for Financial Strength and Counter-party Credit by Standard & Poor’s. In 2019, the ATI obtained an A3/Stable rating from Moody’s.