KIGALI, 26 January 2012 – The African Trade Insurance Agency (ATI) announced the opening of its representative office in Kigali at a press conference and a cocktail event held today at the Serena hotel. Triggered by increased demand from the international and local business community, ATI’s presence in Kigali is well-timed. As the European banking crisis deepens, local traders in both Burundi and Rwanda require support as they venture into new markets. Local banks looking to fill the financing gap will need added security and international investors seeking opportunities in the region will be attracted to a country that can offer protection against political and non-payment risks.
ATI fills two primary gaps in local insurance markets. First, unlike local insurers, it can provide or facilitate co-insurance, insurance and reinsurance support. Second, ATI offers insurance protection against commercial and non-commercial risks. These include non-payment and a host of political risks.
A decade ago only international insurers offered these products. ATI is owned by African countries, including Rwanda and Burundi, which were founding members, to fill this space. As further proof of African government’s commitment to its mandate, ATI has been given preferred creditor status by its member countries. This guarantees that an ATI insured project will be protected in the event of a government action or inaction that could cause a claim.
The ATI office in Kigali is supported by a grant from the USAID Competitiveness and Trade Expansion Program (COMPETE), which works to address trade constraints while promoting opportunities for African companies to increase their trade with the United States and global markets. The US Ambassador to Rwanda, H.E. Donald Koran welcomed ATI’s presence in Rwanda during his remarks at the cocktail event that was hosted by Rwanda’s Minister of Finance and Economic Planning, H.E. John Rwangombwa.
“Rwanda and Burundi, like other East African countries are beginning to feel the effects of the European banking crisis. One of the groups that could benefit most from our products are the local banks who are under pressure to fill the financing gap left by the international lenders,” commented Julius Karuga, ATI’s newly-appointed Resident Underwriter in Rwanda.
From its Kigali office located in Prester House, ATI plans to target banks, which are potentially one of their biggest clients. ATI aims to provide insurance to the banks’ borrowers. This would protect the banks in the event either the borrower or their buyers default on payments. The borrowers also benefit because they are able to use their balance sheet as collateral for loans.
This product and strategy has helped to free up credit in the banking sector in neighbouring markets – of the $3.5 billion worth of transactions covered by ATI in 2011, $900 million represented projects insured on behalf of regional banks.
To date ATI has insured transactions in Rwanda valued at $180 million while in Burundi it has insured projects valued at over $87 million. With a local office ATI is keen to grow a pipeline of business in the energy, ICT, infrastructure, hotel and tourism and transport sectors.
From ATI’s experience, local offices can have a big impact on a country’s economy. In Tanzania, for instance, ATI launched an office in 2010. One year later that country benefited from trade and investments valued at over $1 billion, compared to the combined total of $131 million facilitated in six years, prior to opening the office.
Rwanda is a founding member of ATI, helping to launch the organisation in 2001 along with seven other COMESA member countries. Robert Bayigamba, the Immediate Past President of the Rwanda Private Sector Federation and the current President of the Energy, Water & Sanitation Authority acts as Rwanda’s Representative on ATI’s Board of Directors, while the Alternate Director position is held by Joy Ntare, Director of the Financial Stability Directorate at the National Bank of Rwanda.
ATI has been ranked as the second highest rated institution in Africa with an ‘A’ rating from Standard & Poor’s for four consecutive years. This standing gives investors the confidence they may need to put their money into Africa, it also helps ATI to attract more insurance capacity through partnerships with international insurers.
The Rwanda office is ATI’s fourth local office, joining Tanzania, Uganda and Zambia/Malawi. As part of its broader expansion strategy ATI plans additional office launches in West Africa in the next two years.
