Agreement targets coinsurance potential, support for renewable energy, housing & agribusiness sectors
NAIROBI, Kenya, 6 August, 2009…..The Overseas Private Investment Corporation (OPIC) and the African Trade Insurance Agency (ATI), Africa’s only multilateral trade and political risk insurer, today concluded an agreement that will provide underserved micro-, small and medium-sized companies in Africa access to increased technical assistance and foreign direct investment. Participants in the eighth annual Africa Growth and Opportunity Act (AGOA) Forum, where the agreement was signed, identified SME support as critical to the ongoing success of the 2000 legislation.
The memorandum of understanding (MOU) also authorizes the two agencies to reinsure each other, in order to increase the capacity of each to insure more and larger projects across the continent. It encourages both parties to focus specific attention on projects in the renewable or clean energy, agribusiness, and housing sectors.
Both OPIC and ATI intend to begin reaching out to African companies and investors with a business development tour and a technical capacity building program targeting banks, insurers, insurance brokers and African businesses.
The MOU is the second between OPIC and ATI: a 2003 agreement pledged both agencies to facilitate increased levels of private investment in Africa.
“Foreign direct investment in Africa is down by 18 percent in 2009 due to the global economic downturn. Restoring confidence in the continent will be critical to reversing that trend, and the agreement we have signed today will provide prospective investors, both African and American – and SMEs in particular – the means to realize their investments,” said OPIC’s Acting Chief of Staff John Moran. “Pooling the resources of OPIC and ATI – two agencies with a wealth of experience supporting investment in Africa – will generate important benefits on the continent.”
Moran noted that over its 38-year history, OPIC has provided nearly $5.6 billion in financing and political risk insurance to 387 projects in Africa. OPIC’s current portfolio on the continent comprises $2.5 billion in support for 91 projects.
Stewart Kinloch, ATI’s Acting Chief Executive Officer, said, “Small business owners in Africa will be the ultimate winners in this agreement with OPIC. In an economic climate that has seen upwards of a $30 billion drop-off in investments into Africa, we believe this initiative to increase access to finance, insurance and other services for the vulnerable SME sector in Africa to be extremely timely.”
The AGOA Forum enables officials from AGOA-eligible countries and the U.S. government to review implementation of the Act, as well as chart new ways to build closer economic ties between the United States and sub-Saharan Africa. The theme of this year’s forum, hosted by the Kenyan and U.S. governments, is “Realizing the Full Potential of AGOA through Expansion of Trade and Investment.”
ATI is an African owned multilateral financial institution. Founded in 2001 by African States with a mandate to promote and facilitate trade and investments into and from Africa. The Agency provides trade credit and political risk insurance products to foreign investors and African businesses. To date, ATI has supported over US$1.2 billion in trade and investments across Africa in sectors that include telecommunications, manufacturing, agribusiness, education and housing. Awarded a Long Term ‘A Stable’ rating by Standard & Poor’s, ATI is the second highest rated institution in Africa.
With strong roots in the continent and a strong capital base, ATI is trusted by both foreign investors and African companies. The Agency’s landmark Political Violence and Civil Disturbance insurance program launched in Kenya last year is the first of its kind in Africa outside of South Africa. The product was praised by local insurers as an innovation that served to fill a gap in the industry’s capacity to underwrite claims resulting from political violence. The program now extends to companies and investors across East Africa.
OPIC was established as an agency of the U.S. government in 1971. It helps U.S. businesses invest overseas, fosters economic development in new and emerging markets, complements the private sector in managing risks associated with foreign direct investment, and supports U.S. foreign policy. Because OPIC charges market-based fees for its products, it operates on a self- sustaining basis at no net cost to taxpayers.
OPIC’s political risk insurance and financing help U.S. businesses of all sizes invest in more than 150 emerging markets and developing nations worldwide. Over the agency’s 38-year history, OPIC has supported $188 billion worth of investments that have helped developing countries generate over 830,000 host-country jobs. OPIC projects have also generated $72 billion in U.S. exports and supported more than 273,000 American jobs.
