Nigeria has been given a $14.12 million facility by the African Development Bank (AfDB) Group to facilitate its membership of the African Trade Insurance Agency (ATI).
AfDB said the membership is a critical and mandatory step to enable ATI commence its operations in Nigeria, while despite being Africa’s largest economy, will be joining 14 others that have already signed up.
Once the membership formalities in ATI are finalised, Nigeria stands to benefit from gross political and commercial risks insurance cover on total investments and trade amounting to over $5 billion by 2020.
According to a statement from the bank, the catalytic effect of using limited financial resources in this way is undoubtedly massive and complements ongoing and planned interventions geared at building institutional capacity and improving the resilience of the Nigerian economy.
The bank said that joining ATI will enable the country to leverage its position to mobilise additional resources to finance trade, especially importation of essential goods like medicines and communications equipment, to rehabilitate basic infrastructure and strengthen the productive sector.
The Director of the Financial Sector Department, Stefan Nalletamby, said: “The Bank seeks to achieve its ambitious development mandate by working with and through other strategic partners, and where possible, by supporting the development of strong and viable African institutions such as ATI.“This financing scales up the work of ATI by supporting the beneficiary RMCs to become members.”
ATI’s mandate is to provide medium to long term credit and political risk insurance, as well as other risk mitigation products to its member countries and related public and private sector actors.
These products directly encourage and facilitate foreign direct investment, as well as local private sector investment in regional member countries and intra- and extra-African trade.ATI also catalyses private sector investments in infrastructure projects, thereby promoting economic integration of participating countries into regional markets.
“This financing aligns with four of the bank’s High 5 priorities, namely: Light Up and Power Africa; Industrialise Africa; Feed Africa; and Integrate Africa.“As a trade finance facilitation initiative, this financing will support operations that are crosscutting and multi-sectoral in nature and will have an impact on agribusiness, infrastructure development, electricity generation, telecommunications and manufacturing,” the statement noted.