Presentation to the The African Development Bank Trade Finance Initiative 14 April, 2009 Peter M. Jones Chief Executive Officer
Objectives of Presentation
Background to the Agency
Products and Services
Possible solutions to Trade Finance Crisis
Background to the Agency
What is ATI?
A Multilateral Political Risk and Credit Insurer established by International Treaty
Established by African Member States with the financial and technical support of the World Bank to fill a market failure
WBG provides financial support to allow African Members to fund their equity contributions in ATI
Partners with major public and private credit and investment insurers
ATI: What is the rationale?
Small volume of trade credit and investment in African States does not merit the establishment of national trade credit and investment insurers.
ATI is a regional multilateral insurer that fills this key market gap with the following benefits:
Economies of scale and effective and efficient use of scarce underwriting skills in the region;
Cost-effective use of scarce underwriting capital;
Regional integration and risk sharing that benefits all African Member States;
Enhanced risk diversification from a regional risk portfolio (reducing the impact of an individual country’s volatilities and sector dependencies);
Encouraging public and private sector insurers to assume risk in Africa.
ATI: What is the rationale cont’d:-
ATI reduces the ‘costs of doing business’ in Africa
- Allows exporters to sell direct to buyers on open account ( as against auction houses/wholesalers) and move up the value chain;
- Reduces the interest margins on bank funding;
- Creates a level playing ground for investors and trade credit in African Member States.
Membership is open to:
Regional Economic Organizations
International Development Financial Institutions
Export Credit Agencies
ATI Membership Categories
Current African Member States
Democratic Republic of Congo
*Djibouti, Eritrea and Sudan are signatories (pending ratification and capital subscription). ** Liberia’s membership is pending signature, ratification and capital subscription
ATI is open to all African Union States
Corporate & Regional Body Members
Atradius, COMESA, PTA-Bank & ZEP RE
Focus on new African Member States Eastern and Southern Africa : Angola, Ethiopia, Mauritius, Mozambique & Seychelles Central Africa : Cameroon Western Africa : Benin, Ghana, C ô te d’Ivoire, Mali, Mauritania, Nigeria & Senegal Focus on Regional and International Financial Institutions AfDB, France (AFD), Italy (SACE) and Africa Re ATI: Membership Expansion
Product and Services
Political Risk Insurance:
Short, medium and long term foreign direct investment including intra-regional investment.
Comprehensive nonpayment cover for sovereign and sub-sovereign obligors.
Leverage ATI’s line size by up to 10 times and country limits by up to 2.5 times; and
Encourage public and private risk sharing in Africa;
Filling market failure. Crowd in the public and private sector.
ATI-ACA ATI: Reinsurance
ATI : Reinsurance (Cont’d) ATI: Relationship with Reinsurers Whole Turnover Trade Credit Insurance Political Risk Insurance and Medium Term Credit Insurance Atradius Re Quota Share Reinsurance Treaty. 60% Cession. Reinsurers include: Lloyd’s of London Syndicates; Sovereign Risk (Bermuda); Zurich (USA); AIG; Chubb; and Africa Re Facultative or Treaty Reinsurance as required. Risk Retention no less than 10%
Standard and Poor’s assigned ‘A’ Stable Rating to ATI in April 2008 for both Counterparty and Insurer Financial Strength credit ratings. More business opportunities from Banks, Insurance Broker and International Investors Results: more trade and investment flows for African Member States ATI-ACA ATI: Credit Rating
Expand Membership of African Member States to support higher volumes of regional and international trade and investment
Expand membership of Non-African State Members to expand shareholder and capital base
Provide Pre-export Finance for African Member States’ Exporters
Protect commercial banks from the impact of foreign buyer default on the credit quality of their customers
Through the ATI’s website www.ati-aca.org via Email [email_address] By telephone +254 (0)20 271 9727 +254 (0)20 272 6999 ATI: Contacts