Nairobi, Kenya, 26th September 2006
ATI, Africa’s only multilateral Export Credit Agency, jointly with Stanbic Bank Kenya, a major financier of flower business in Kenya, today held a seminar at the Lake Naivasha Country Club, with the objective of sensitizing flower exporters on how credit insurance can cover them against non-payment of their private buyers abroad. Among the participants were the flower growers, the Kenya Flower Council (KFC) and Lake Naivasha Growers Group (LNGG).
Highlighting the plight of exporters who have suffered losses when their buyers abroad failed to pay due to insolvency or protracted default, key speakers implored on Kenyan exporters to safeguard their business by embracing credit insurance, a widely used credit enhancement tool in the more developed markets like Europe. Increasingly, commercial banks are appreciating that transactions backed by credit risk cover carry a much improved risk profile and exporters can capitalize on this to secure financing and even negotiate for reduced borrowing costs.
Mr. John Okulo, Head of Corporate Banking at Stanbic Kenya said: “There are several benefits of credit insurance, details of which you will be discussing later during the seminar. I however wish to mention one which I feel provides a good opportunity for Banks and ATI to work together in changing the fortunes of export trade in Kenya, and indeed in the entire region. The financing of export business in this market is principally asset backed, a situation which has shut out many viable businesses from access to trade finance, and stifled the growth and expansion of export trade. ATI’s credit insurance policies have provided a credible solution which has helped banks to provide essentially unsecured short term financing for trade through the assignment of credit insurance policies to the financing institutions.”
Mrs. Nyangate Makhulo, ATI’s Underwriter and Marketing Officer said: “ATI’s Whole Turnover policy, offered jointly with Atradius, one of the global market leaders, protects you as an exporter against the risk of non-payment by your foreign buyers. First, your credit insurance policy enables you to continuously monitor and analyze the financial health of your customers and prospects. Furthermore, if one of your buyers defaults on a payment, either because of declared insolvency or a continuing non-payment without an obvious reason (such as a trade dispute), your policy will compensate you in accordance with the agreed terms and conditions. Finally, your policy will entitle you to hand over the debt collection to ATI.”
Dr. Isabelle Spindler, The General Manager of Redlands Roses, was the Chief Guest during the event. The company took out a credit insurance policy several years ago, which has helped to expand and grow its direct sales to new markets in both Europe and the Far East.
Note to editors:
ATI was established at the Common Market for Eastern and Southern Africa (COMESA) Summit of Heads of State in May 2000 and launched by President Museveni of Uganda in Kampala in August 2001 in the presence of ten Heads of State and Government. Underwriting capital, which currently stands at US$123.4 million, has been made available to ATI’s member countries by the International Development Association (IDA), the concessional lending arm of the World Bank.
World Bank funds, lent to member states for the sole purpose of being used to support ATI’s underwriting, and for which loans the member states are liable to IDA, are leveraged through the provision of additional insurance capacity from both public and private commercial and political risk insurers. The effect of these partnerships can be to significantly increase the available capacity for transactions that ATI supports. ATI became operational in April 2002 when the initial tranches of the IDA funds were disbursed and ATI issued its first insurance policy.
Since then ATI has issued insurance policies covering political and commercial risks in 6 countries for a total transaction value of USD 209.7 million. The sectors covered include telecommunications, manufacturing, agribusiness, services, mining and real estate.
Beneficiaries include foreign companies exporting goods and/or services to participating African countries, foreign financiers funding exports and African companies from ATI countries that are exporting goods/services to the rest of the world.
Member Countries:
Burundi Malawi
Democratic Republic of Congo Rwanda
Djibouti * Burundi
Eritrea * Uganda
Kenya Zambia
Madagascar
*Full membership is subject to ratification
Products and Services:
Political Risk Insurance for Cross Border Project and Trade Transactions;
Non-payment Cover for Private, Parastatal and Sovereign Obligors;
Whole turnover Credit Insurance (protection against Non-payment of Private Buyers);
Currency Inconvertibility and Non-Transfer Cover;
Confiscation Expropriation Nationalisation & Deprivation Cover (Tangible Assets)
Foreign Direct Investment Insurance against Confiscation Expropriation Nationalisation & Forced Abandonment; and
War and Civil Disturbance Cover
