TANZANIA attracted US$ 82 million (about 132bn/-) in trade and investments last year ended 2013 from special and unique insurance cover by the African Trade Insurance Agency (ATI).
This was said by the Chairman of the ATI Board of Directors, Mr Israel Kamuzora in Dar es Salaam on Tuesday ahead of the ATI Annual General Meeting (AGM) to be graced today by the Vice President Dr Mohammed Gharib Bilal. "ATI was created to fill a market gap in trade and investment risk mitigation in Africa as the perception of most international lenders is that the continent is unsafe place for lending due to political and trade credit risks," said Mr Kamuzora.
He said the risk mitigation tools for credit and political insurance were non existent in most African countries until late 1990's and where the cover existed, it was very costly. He said ATI achieves these objectives by offering specialty insurance - investment and trade credit insurance, to protect against business risks such as payment default that may be caused by governments or private companies. ATI was formed by ten African countries, Tanzania included.
These are Benin, Uganda, Rwanda, Burundi, Kenya, Democratic Republic of Congo (DRC), Zambia, Malawi and Madagascar. In Tanzania, ATI is co-located together with the Tanzania Private Sector Foundation (TPSF).
The ATI Underwriter responsible for Tanzania Ms Tusekile Kibonde said in Tanzania, ATI has been an instrumental partner in helping to unlock the flow of financing for private companies and for state-run agencies in some key sectors, such as energy. The year ended 2013, ATI supported the energy, financial services, and telecommunications and transport sectors in Tanzania.
In one transaction, for instance, ATI insured a US$ 62 million (about 100bn/-) lending facility set up by several banks to support the Tanzania Electric Supply Company (TANESCO) plans to expand electricity coverage. In another project, ATI covered a Tanzanian bank's US$ 1.1 million (1.7bn/-) loan that helped a local transport company purchase seven additional reconditioned trucks and new tankers.
"ATI helped companies and government agencies to access 65 million US dollars (105bn/-) worth of financing. This is our value-added to the country," remarked Ms Kibonde. Other projects covered included the reinsurance support to companies on political violence worth 13.1 million US dollars, Cover on a contract financing facility for a local subsidiary of 1.5 million US dollars, Cover of the import of telecommunications equipment from Japan worth 1.5 million US dollars.
Ms Kibonde noted that in both transactions, without ATI's cover, the banks would have been less likely to extend these loans. In the meantime, The ATI Chief Executive Officer Mr George Otieno said demand for infrastructure development in the ATI member countries is a reason behind 144 per cent increase of profits to 1.5 million US dollars (about 2.4bn/-) last year, compared to 0.6 million US dollars (about 960m/-) in 2012.
