 |
Africa Trade Insurance Agency Launched in Uganda
African leaders attending the ongoing Global 2001 Smart Partnership Dialogue Monday officially launched in Kampala the African Trade Insurance Agency (ATIA).
The launch, announced by Malaysian Prime Minister Mahathir Mohamad at the invitation of Ugandan President Yoweri Museveni, was witnessed by President Daniel arap Moi of Kenya, Pierre Buyoya of Burundi, Omer al Bashir of the Sudan, Vice-President Joseph Msika of Zimbabwe and Prime Minister Bernad Makuza of Rwanda.
Addressing the launching ceremony, Museveni said that investors now should not worry about the political risks in Africa "because we shall insure you".
"If you invest in Africa, you will get returns of 30 percent, while if you invest in Europe you can only get returns of 10 percent or less," he said, arguing that even if there are some risks in investing in Africa, the risks will be matched with the gains.
Speaking on the same occasion, Moi said that in a highly competitive world, the future of the African continent ultimately depends on collective efforts and commitment. He pledged his government's full support to the regional trade insurance agency.
ATIA, with its headquarters in Nairobi, capital of Kenya, is a multilateral agency that will provide political risk insurance and other financial instruments to support trade and investment in Africa. It was established at the Common Market for Eastern and Southern Africa summit in May 2000.
ATIA is designed to insure investors in Africa's most war-prone region against political risk, poor business practices and unfriendly macroeconomic policies. So far, Uganda, Kenya, Tanzania, Rwanda, Burundi, Zambia and Malawi have signed the participation agreement to formally join the agency.
ATIA has a four-fold task, namely cushion business from political risks abundant in Africa, attract trade and investment, cover commercial risks threatening business, and increase membership of the agency and improve business practices.
ATIA is autonomous and has financial and administrative independence. It is free from political control and its operations will be based on commercial considerations only.
Risks eligible for cover include embargoes, expropriation, government interference with entities owing insured obligations, inability to convert or transfer currency, imposition or increase of import or export taxes of a discriminatory nature, interference with transportation of goods, prevention of sale, prevention of export and war or civil disturbance.
Eligible transactions to be insured include sale of goods on credit terms, letter of credit confirmation, financial lease, operational lease, import and export of capital equipment for use by an insured firm in carrying on its business. It will also include loans by foreign lenders, loans by local lenders, contract/ performance bonds and import/export of goods.
"This initiative is unique as it is the first multilateral export credit and political risk agency in which its own member countries assume financial liability for the political risks affecting trade within their own countries," said Bernie de Haldevang, Chief Executive of ATIA.
Highly impressed, the International Development Association, the concesional lending arm of the World Bank, has funded the project to the tune of 105 million U.S. dollars over the next 10 years in an offshore account.
In This Section
|