Remarks by Peter M. Jones, CEO – The African Trade Insurance Agency Cocktail launch event at the Serena Hotel
6 May, 2009, Kampala, Uganda
Honourable Fred Omach, the Minister of State, for Finance and Chairman of ATI’s General Meeting, distinguished guests, ladies and gentlemen:
ATI is honoured to be welcomed in such a grand fashion to your marvellous city of Kampala. I would like to thank the Government of Uganda and specifically the Minister for Finance the Honourable Syda Bbumba, who is unable to be with us this evening, and the Minister of State for Finance the Honourable Fred Omach for making this occasion possible.
Since its inception, ATI has been an institution that swum against the current. From the beginning we have insisted that African trade and investment represented tremendous opportunities for the continent’s economic development. When ATI opened its doors in 2001, the economic climate in Africa was growing. Despite this trend, however, private sector corporations based outside the region remained skittish about entering into the African market and there was, and is still is little support for exporters. I’m sure at that time many observers felt that we were foolish to enter into what was perceived to be a very risky market.
If we fast forward to the present, eight years later, the global financial crisis is the topic of the day. The impact of the crisis on Africa has been widely reported and again we seem experiencing déjà vu. Today, international capital is increasingly nervous about doing business in Africa and I’m sure many observers may once again be left wondering why, at this time, ATI is pushing forward with its ambitious expansion throughout Africa.
Honourable Ministers, I’m proud to announce that ATI plans to continue swimming against the tide in our commitment to give Africa the kind of investment and export credit insurance that has been available in developed countries since the 1920’s.
ATI sits in a very privileged place. As an African-owned multilateral financial institution, we live and work in Africa. This gives us the benefit of understanding our Members, clients andpartners. This perspective enables us to understand the market, respond more rapidly, provide flexible options and devise innovative and tailored solutions to the continent’s trade and investment challenges.
One of our most popular solutions has been our Short-term and Export Credit Insurance cover. This product gives exporters the peace of mind to know that if their customer defaults on a payment, they and their employees will be protected against the adverse financial impact of such an event. This product also enables exporters to sell directly to the end buyer rather than through auction houses, which is often the case for exporters who cannot absorb the risk of non-payment by their end buyers. Thereby increasing the price at which they well sell their good s and services. Though perhaps the most important aspect of this ATI Product to Ugandan exporters, is the potential impact on their bottom line. In fact, it has been estimated that exporters can increase their selling price by up to 100% when selling directly to the end buyer.
Ugandan companies will also benefit from their association with ATI in another very important and tangible way. In April, 2008, ATI was assigned an ‘A’ /Stable rating by Standard & Poor’s. For Ugandan companies, ATI’s highly rated credit standing ensures that with one of our guarantees in hand, they can obtain commercial bank financing on improved terms based on evidence of expected payment under cover from an A rated institution.
After a recent mission to London, where I visited with some of the most renowned private insurance companies in the world, I was convinced that ATI was on the right track. Once we dispelled the myth that many international companies have about the high-risk of doing business in Africa, these corporations signaled to me that they were enthusiastic about entering into the African market precisely because of the enormous potential that exists here.
I’m sure that positive reactions by international corporations like these take place in meeting rooms around the world, everyday. They may not make headlines, but they do pave the way for vital business development. That is what brings us here today. We are here to open the doors to opportunities for Ugandan companies, investors, exporters, and to anyone interested in doing business in Uganda.
Honourable Ministers and distinguished guests, I think it is important to recognize that although ATI is officially launching the opening of its offices today, our partnership with Uganda has beena long and valued association. From 2001, when we first opened our headquarters in Nairobi, Uganda was among the first African countries to become a Member of ATI and hosted the official launch of the Agency here in Uganda, under the auspices of President Musevini . Since then, we have grown from 9 African Member countries to 13, plus three regional members, including COMESA which was instrumental in the creation of ATI, and one private corporation. We expect our Membership to more than double in the next several years. In addition to expansion within the region, we are also aiming our sights on countries and financial institutions outside Africa to become Members of ATI.
Over the past two years we have been working hand in hand in Uganda with partners like the Private Sector Foundation of Uganda, the Bank of Uganda, the Government and local organisations and companies to bring tailored insurance products to the Ugandan market. I’m proud to say that these collaborations led to the completion of ATI’s first transaction in Uganda last year. We provided a US$25 million Political Risk Insurance cover to the Industrial Development Corporation of South Africa (IDC) in their support of a US$75 million investment to finance the design, construction and operation of the 5-star Kampala Hilton Hotel. At the time, this was the largest single deal ever supported by the Agency
From our continuing efforts in Uganda we also know that there is significant demand for our products in the local market. Over the past two years, ATI has received enquiries worth over US$ 1.7 billion in transaction value. These enquiries relate to trade and investment opportunities in Uganda’s agribusiness, construction, financial, housing, mining, oil & gas, power, services and telecommunications sectors. This demand has led to a project pipeline with an estimated value of US$ 250 million.
We hope to build further on this demand in the months and years to come. Honourable Ministers, distinguished guests, ladies and gentlemen, I would like to assure you that after this illustrious event closes and we all leave this beautiful venue, ATI will continue working to provide you with the kind of insurance protection that will help Ugandan companies, investments, exports and imports to increase their business confident in the knowledge that they are protected by ATI.
Thank you
