Nigeria, ahead of other countries that are fast-tracking their membership of African Trade Insurance Agency, has become a full member.
The country contributed $14.1m to ATI’s capital in 2019 with African Development Bank’s financial support and fully completed its membership process through the ratification of the ATI Treaty.
Senior Communications Officer of ATI, Sherry Kennedy, stated on Wednesday that ATI membership “provides African countries with additional trade and investment insurance capacity,” which helps cushion the negative economic impact of the Coronavirus Disease.
ATI expects an estimated $138m in additional capital from new shareholders in the coming months.
President Muhammadu Buhari, this week, signed the instrument of ratification to the ATI Treaty, he disclosed.
This finalises Nigeria’s membership in ATI in a process that began some years ago.
ATI membership allows Nigeria to attract additional insurance capacity to help attract investments. 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 impacted the country’s spending plans.
The International Monetary Fund predicts that falling oil prices will halve Nigeria’s export earnings to $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, it has helped crowd-in nearly $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.
In Nigeria, ATI has already provided significant support in the oil and gas sector covering oil traders as well as the financial sector insuring financial institutions.
ATI’s Chief Underwriting Officer, Benjamin Mugisha, noted, “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 recovery.”
As an important strategic partner, the AfDB has played a significant role in funding the membership participation of several African countries. Between 2010 and 2020, AfDB has provided $70m 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 full members, while an existing member state indicated its intention to increase its capital contribution. These countries will cumulatively benefit from $91m in financial support from AfDB and the European Investment Bank, which is ATI’s other strategic partner.
The recent General Meeting approved three new membership applications worth $47m, demonstrating ATI’s ability to mobilise international support to implement its development mandate and support African countries’ economic recovery from COVID-19.