Nigerian has formerly become a member of the African Trade Insurance Agency (ATI) a pan African institution founded in 2001 by African States to cover the trade and investment risks of companies doing business in Africa. The ATI predominantly provides Political Risk, Credit Insurance and, Surety Insurance and in 2019, it closed the year with exposures of US$6.4 billion and continued to post record results for the eighth consecutive year with 132% growth on the net profit over 2018 owing to strong demand for ATI’s insurance solutions from the international financial sector and from African governments. Membership in ATI provides African countries with additional trade and investment insurance capacity, which helps cushion against the negative economic impacts of COVID-19. With this development, Nigeria will attract additional insurance capacity to help attract investments.

President Muhammadu Buhari

Nigeria contributed US$14.1 million to ATI’s capital in 2019 with African Development Bank’s (AfDB) financial support and fully completed its membership process through the ratification of the ATI’s Treaty. ATI expects an estimated US$138 million in additional capital from prospective new shareholders in the coming months.

The signing of the instrument of ratification to the African Trade Insurance Agency’s (ATI) treaty by President Muhammadu Buhari which took place earlier this week finalized Nigeria’s membership in ATI in a process that began some years ago. Membership in ATI allows Nigeria to attract additional insurance capacity to help attract investments and it also increases ATI’s capacity to support sovereign and commercial transactions in the country. Ultimately, Nigeria benefits because effective risk mitigation is vital to increasing investments and trade flows.

Nigeria’s membership comes at a critical time for the economy as a sharp drop in oil prices due to a COVID-related one-third decrease in demand, has impacted the country’s spending plans. The IMF predicts that falling oil prices will halve Nigeria’s export earnings to US$26 billion, which traditionally accounts for 90% of the government’s budget.ATI is well positioned to support African countries through the pandemic. In the last three years, ATI has helped crowd-in nearly US$3 billion of investments to several African countries. With ATI’s sovereign and sub-sovereign credit wrap solutions, governments and state owned enterprises have been able to obtain competitively priced and longer-term financing.

In Nigeria, ATI has already provided significant support in the country’s oil and gas sector covering oil traders as well as in the financial sector insuring financial institutions. According to Benjamin Mugisha, ATI’s Chief Underwriting Officer, “as one of the largest economies in Africa with a vibrant private sector, ATI looks forward to working with the Ministry of Finance, the Central Bank, local financial institutions and corporate traders to support Nigeria’s economic diversification plans and its post-COVID recover.”

As an important strategic partner, the African Development Bank (AfDB) has played a significant role in funding the membership participation of several African countries. Between 2010 and 2020, AfDB has provided US$70 million to fund the shareholding of seven African governments – Benin, Côte d’Ivoire, Ethiopia, Mali, Nigeria, South Sudan and Zimbabwe. In the coming months, five countries are expected to become fully-fledged members while an existing member state indicated its intention to increase its capital contribution. These countries will cumulatively benefit from US$91 million in financial support from the African Development Bank and the European Investment Bank, which is ATI’s other strategic partner.

Furthermore, the recently held General Meeting approved three new membership applications worth US$47 million, demonstrating ATI’s ability to mobilize international support to implement its development mandate and support African countries’ economic recovery from the COVID-19 global pandemic. Since inception, ATI has supported US$62 billion worth of investments and trade into Africa. And for over a decade, ATI has maintained an ‘A/Stable’ rating for Financial Strength and Counterparty Credit by Standard & Poor’s, and in 2019, ATI obtained an A3/Stable rating from Moody’s.

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