African countries have been in disadvantageous position in attracting Foreign Direct Investment due to perceived political instability and insecurity that has pervaded the business environment. This has not only hindered the strengthening of trade among African countries but also limited the inflow of capital towards the continent.
Now the time has come to the removal of ill conception of Africa because African Trade Insurance Agency is playing a pivotal role in providing insurance to foreign companies to invest in the continent. It covers political and investment risks such as currency in convertibility,confiscation,expropriation, war and arbitration award default.
Opening a relevant workshop at Sheraton Addis yesterday, Ministry of Finance and Economic Cooperation representative Semere Tesfaye said that the government of Ethiopia has shown interest to join the African Trade Insurance Agency (ATIA) as it has been reflected in its application for membership which has been approved by the 46th Meeting of the Board of Directors.
He said Ethiopia’s membership process to ATIA has passed through various steps including series of consultations with key national stake holders including governmental entities and the private sector represented by the Ethiopian Chamber of Commerce and Sectoral Associations.
He also said that in order to make Ethiopia a member of the Agency the African Development Bank Group has extended soft loan worth of 7.5 million USD for capital subscription.
Agency CEO George Otieno on his part said that the Agency has good relations with sub regional organizations such as COMESSA for the enhancement of trade and investment in addition to helping local insurance companies to build their capacity to provide guarantee to the manufacturing sector and import and export business.
According to Otieno, ATIA provides political risk insurance which protects against any unfair action by a government that would negatively affect business or investment. It also provides trade credit insurance such as non payment or delayed payment to suppliers of goods or services by public or private buyer or bank borrower. On the other hand, when political violence,terrorism and sabotage of insurance occur it provides risk mitigation insurance to companies.
According to information made available at the workshop, ATIA comes here not to compete with local insurance companies because the law of the country doesn’t allow this,but it assures foreign companies to come here and invest and through time it helps to avoid wrong conception perceived by outsiders. Currently ten African countries are members of ATIA.