‘Africa’s perceived risk is becoming increasingly acceptable and profitable’

How is insurance assisting African trade? We asked Manuel Moses, CEO of African Trade and Investment Development Insurance (ATIDI).

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This article is sponsored by ATIDI

ATIDI’s mandate is to provide insurance against trade and investment risks. How is business currently and what does that tell you about the business environment and appreciation of risk in Africa today? 

Indeed, ATIDI’s primary mission is to provide crucial support to investors by mitigating both the actual and perceived investment risks associated with Africa. Our substantial exposure in 2023 surpassed $9bn across the continent, and has already had a significant developmental impact. Nevertheless, we are resolutely positioning ourselves to achieve even more, particularly during these challenging economic times. 

We are aware of the high level of sovereign debts in some of our member states, and of hard currency scarcity. Both challenges have an impact on our business, but we will still continue to play a pivotal role in empowering our insureds to access global financial markets with reduced borrowing costs – and look for innovative solutions to address the dollarisation of our economies. 

How has ATIDI’s recent rebrand helped to reconnect you with the wider business ecosystem and your founding purpose?

ATIDI’s recent rebrand has revitalised our connection with the broader business ecosystem and reaffirmed our founding purpose. Through a strategic overhaul of the brand identity, we have successfully positioned ourselves as a forward-thinking and innovative player in the industry. By revamping our brand identity and messaging, we have captured the attention of key stakeholders and prospective partners, fostering renewed interest and engagement. This rebranding effort has not only strengthened ATIDI’s presence within the business ecosystem but has also helped to re-establish our commitment to our original vision, mission and values.

Moreover, the rebrand has enabled ATIDI to realign our product offerings with the evolving needs of our target audience, thus allowing us to better serve our clients and stay ahead of industry trends. By emphasising our core values and leveraging our rich history, we have been able to rekindle a sense of trust and credibility among stakeholders, enhancing ATIDI’s reputation and credibility within the regional and international business community. 

Are international investors gaining a new, more healthy perspective on trade and investment risk in Africa? 

Africa is considered the last frontier in the global economy. Foreign direct investment (FDI) is critical for our young economies’ growth. ATIDI’s role is to encourage and attract FDI into the continent by providing political and credit de-risking solutions. 

A notable trend we are witnessing involves global pension funds and fund managers, typically risk-averse, teaming up with international commercial banks to back big-ticket transactions across our continent. This trend signals a promising shift wherein Africa’s perceived risk is becoming increasingly acceptable and profitable. 

As partnerships between global pension funds and commercial banks flourish, it not only underscores Africa’s attractiveness as an investment destination but also highlights the evolving perception of risk. This growing acceptance of risk is not only beneficial for investors seeking lucrative returns but also for African economies striving for sustainable growth and development.

You recently signed the Regional Liquidity Support Facility memorandum of understanding (MoU) with the government of Kenya, which will include provision to collaborate on renewable energy. How significant is this for ATIDI and Kenya?

This is definitely a milestone for us. However, before I address the potential impact within Kenya, it’s worth highlighting that we have signed Regional Liquidity Support Facility (RLSF) MoUs with nine other ATIDI member states: Benin, Burundi, Côte d’Ivoire, Ghana, Madagascar, Malawi, Togo, Uganda and Zambia. We have been able to support six renewable energy projects in Burundi, Malawi and Uganda; enabling total financing of over $207m and a total installed electricity generation capacity of 136.3 MW. 

All this is in addition to our traditional support for power projects via our Political Risk Insurance cover, including the Alten Solar and Lake Turkana and Kipeto wind power projects – adding a total of 440 MW to the grid. We are looking forward to building on this early success by having a similar positive impact in Kenya. With the country being one of the more mature electricity markets in the region, we expect to hit the ground running and provide cover to several advanced independent power producers (IPPs) and transmission projects that are yet to reach financial close, in part due to key missing elements such as the risk of non-payment by state-owned power utilities addressed via RLSF. 

Given the Government of Kenya’s consistent support for private sector participation in the energy sector, we expect to be a part of landmark and impactful projects in the country – look out for more announcements on this within the next 12 to 24 months!

ATIDI recently issued a portfolio counter guarantee cover valued at $41m to InfraCredit, which helps to finance creditworthy infrastructure assets in Nigeria. How important are such deals expected to be for you and how can deals like this help close Africa’s huge infrastructure gap? 

This transaction stands out as one of the pivotal achievements in our portfolio. It exemplifies our vital role in supporting our member states in two fundamental ways: firstly, enabling development of local capital and debt markets, by enabling the issuance of local currency guarantees and debt instruments, hence catalysing attraction of investment interest from pension funds, insurance firms and other long-term investors through ATIDI’s Investment grade guarantees; and secondly, by assisting in securing affordable or cheaper local currency funding to critical infrastructure projects in Africa. 

ATIDI’s cover to InfraCredit supports a portfolio of underlying projects that have demonstrable development impact through creation of jobs, contribution to GDP and import substitution of essential or critical inputs and aligns with the environmental, social and governance (ESG) goals. It also aligns perfectly with ATIDI’s core mission, as we strive to fulfil our developmental role and ensure that our support directly impacts the lives of people.

How is ATIDI helping to pursue the goals of the African Continental Free Trade Area (AfCFTA)? 

Part of ATIDI’s role is to work with other continental development finance institutions (DFIs), regional economic communities (RECs) and other stakeholders. For instance, we are working with COMESA and ZEP-Re on the Regional Customs Transit Guarantee Scheme (RCTGS), which removes the need for posting customs bonds at each border and reduces the need for extensive checking of goods at our borders. This reduces the cost of trade and time wastage across borders. RCTGS will be upscaled into a continental customs transit guarantee scheme under AfCFTA.

Can you give a rough idea of how much you have paid out against claims and what are the most common insurance claims? 

ATIDI’s focus is to remediate reported losses on behalf of Insureds within the policy cure periods. As such, a majority of the reported losses are cured pre-claim. In 2023, reported losses amounting to $77.7m were cured pre-claim due to ATIDI intervention, working collaboratively with policyholders and obligors. Claims amounting to $69.3m were paid in 2023 and in 2024 so far. The most common claims that ATIDI faces are non-payment claims resulting from obligor insolvency.