NAIROBI, 10 December 2013 –Despite recognition as of one of the fastest growing economies in Africa, Mozambique is seeking solutions to equitably disperse these gains in order to achieve its broader economic development goals. Helping small and mid-sized companies to grow through increased access to credit is seen as a key solution. For this reason, the African Trade Insurance Agency (ATI) and Mozambique have launched into discussions aimed at the country becoming a shareholder in the Pan-African insurer which covers the political and commercial risks associated with doing business in Africa.
During the meeting, the African Development Bank (AfDB) and ATI’s leadership also discussed with President H.E. Armando Guebuza, the prospect of Mozambique’s membership helping to advance their objective of attaining middle income status by 2025.
“We are confident that we can help Mozambique as we’ve helped our other member countries in Africa to increase both the value and diversity of exports while also supporting investors – to date, this support has helped our members attract over $13 billion worth of trade and investments,” commented George Otieno, ATI’s Chief Executive Officer.
As Mozambique continues to experience record breaking growth, expected to exceed 8.5% in 2013, experts are cautioning that this growth is driven by three largely unsustainable factors – high levels of FDI concentrated in a few sectors, high levels of official development assistance which represents one of the highest Aid/GDP ratios in Africa and growth in the agricultural sector fuelled by favourable weather conditions and aid to small scale farmers.
In order to transform its economy and decrease its dependence on foreign aid, Mozambique will need to look to a public-private model of raising funds to address some of its challenges, particularly in relation to infrastructure development. This will require attracting private capital, which in turn requires access to risk mitigation instruments that can address political and credit risks. ATI is one of few organisations in Africa providing these facilities.
ATI also provides another valuable contribution to its member countries – support to financial institutions and local companies. With ATI’s insurance covering payment default risks, for instance, banks in its African member countries have been able to expand their lending to small and mid-sized companies while exporters have been able to expand their markets in Asia, Europe, the Middle East and North America.
This makes ATI unique. Essentially, the company acts as the export credit agency for Africa in much the same way as the Companhia de Seguro de Créditos S.A. (COSEC) does in Portugal, CESCE in Spain or COSEC in France to secure its investors and exporters expanding into new markets.
