President Buhari has signed the instrument of ratification to the African Trade Insurance Agency’s (ATI) treaty, thus finalising 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$26bn, which traditionally accounts for 90 per cent 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$3bn 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.
“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,” noted Benjamin Mugisha, ATI’s chief underwriting officer.
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$70mn 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$91mn in financial support from the African Development Bank and the European Investment Bank, which is ATI’s other strategic partner.
