LUSAKA, 10 September, 2013 – Banks and financial institutions participated in a workshop today hosted by the African Trade Insurance Agency (ATI), where they were encouraged to innovate their products to better meet the growing demand from Small and Medium Sized (SME) companies in Zambia. In an effort to help banks free up more lending, for the past 12 months ATI has been innovating its products and services to better meet the needs of the financial sector, which accounts for a majority of its clients.
In a bid to offer more tailored solutions to the financial sector, ATI is transforming their products to allow banks the opportunity to mitigate a broader number of risks.
ATI is also actively in discussion with the Central Banks in the COMESA region to get them to ease the capital reserve requirements for banks that have taken ATI insurance cover. If accepted, the move is expected to bring them in line with Central Banks in the developed markets who typically require lower levels of capital reserves from financial institutions that have taken insurance cover from their national export credit agencies, which is the role that ATI would play if their proposal is approved. This initiative should allow banks to lend more to their customers.
In his opening remarks, Dr. Michael Gondwe, the Central Bank Governor of Zambia praised ATI for its initiatives to help strengthen the financial sector. He also challenged banks to revolutionise their industry in order to meet the credit financing gap that impacts 30 to 37 million SMEs in Africa amounting to an estimated shortfall $140 – 170 billion annually. In Zambia he noted that SMEs represent some 70% of the economy and are therefore the lifeblood of the country’s economic development.
“Banks represent an important client base for ATI. In the first half of 2013 our office in Zambia was able to close the largest single deal in ATI’s history with a regional bank valued at $700 million. This project supported the country’s oil imports and most importantly it demonstrates ATI’s flexibility to support banks in both large and small transactions,” commented Pizzaro Lukhanda, ATI’s Underwriting Representative in Zambia.
ATI helps countries attract more foreign direct investment with political risk insurance while also assisting local companies to increase their competitiveness with access to credit facilities.
In Zambia in the past decade, ATI has supported over $925 million worth of trade and investments into the country largely in the agriculture, energy, mining and manufacturing sectors. With a vibrant portfolio of projects, Zambia also has the highest exposure of $277 million in ATI’s portfolio outperforming all the countries in East, Central and Southern Africa where ATI currently does business. Benin, the first West African country to become a member of ATI has a growing pipeline of deals that are expected to come on-line this year.
The Secretary General of COMESA, His Excellency Sindiso Ngwenya was also invited to participate in the workshop highlighting the central role that the regional body has played in ATI’s formation – the original seven countries that formed ATI were COMESA member countries and to date ATI maintains a close relationship with the organisation including holding a permanent seat on ATI’s Board of Directors.
COMESA is also playing a key role in helping ATI to court new West African members through its ongoing communication with the ECOWAS regional body, which has largely been facilitated by the Secretary General himself. Through this initiative, ATI could see its membership swell from the original COMESA members to include power house economies in the West such as Nigeria and Ghana in the near future.
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About The African Trade Insurance Agency
ATI was founded in 2001 by African States to cover the trade and investment risks of companies doing business in Africa. ATI provides Political Risk, Surety Bonds, Trade Credit Insurance and Political Violence and Terrorism & Sabotage cover. As of 2013, ATI has supported over US$10 billion in trade and investments across Africa in sectors such as agribusiness, energy, exports, housing, infrastructure manufacturing, mining and telecommunications. ATI is the highest rated insurer in Africa with the 2012 renewal of its Long Term ‘A/Stable’ rating for Financial Strength and Counterparty Credit by Standard & Poor’s.
