Agreement Establishing The African Trade Insurance Agency

The benefits of Cameroon`s accession to the Agency`s agreement are clearly stated in the bill. The draft law authorizing the President of the Republic to continue Cameroon`s accession to the agreement establishing the African Commercial Insurance Agency, signed on 18 May 2000, is being considered in the National Assembly. The agency, based in Nairobi, Kenya, is a financial institution that provides many benefits and services to both the public and private sectors. The government explains the benefits of the government guarantee for financing major projects, protecting against political and financial risks, reducing transaction costs and facilitating financing. The Agency operates through insurance, co-insurance and reinsurance mechanisms and has two peculiarities: attracting more investment to Member States and contributing to increased levels of trade on the African continent. According to the government in the explanatory statement of the law, international rating allows the agency to set more flexible credit conditions on the basis of non-payment coverage for transactions in regional, national and international private and public projects. In particular, Cameroon`s accession to the agreement will help boost trade and attract investment by reducing transaction costs. This will result in easier access to credit insurance, political risk insurance, insolvency protection and protection of foreign direct investment for exporters, importers and investors. Cameroon has expressed interest in the agreement since 2015 and is recognized as a full member of the accession process. The main objective of the ITA is to provide political risk coverage to companies, investors and lenders interested in operations in Africa. Membership of the ITA is open to all African Union member states.

The Agency is supported by the World Bank, which provides reduced-rate loans to participating Member States. The main advantage of a regional insurance system is its potential to cope with the perception of a high risk of activity in Africa as a region. Many financial institutions and companies associate political risks with the entire region and never enter the experimental phase to distinguish between different political risks between countries. This perception of high regional political risks prevents financial institutions and businesses from establishing themselves in the region. ATI has 18 member countries and 11 other partners such as the African Development Bank, trade Development Bank, UK Export Finance (UKEF), SACE, Chubb and Atradius. [6] India has become the first non-African country to become a shareholder through its export credit agency, the ECGC[7] ATI, in order to push africa`s much-needed investment insurance capacity to support a higher level of foreign direct investment. [1] Seven COMESA countries have received a World Bank grant to conduct a study on the factors contributing to the low level of FDI in their countries. The study showed that political risk was the main obstacle and concern of potential investors. The study was expanded to a World Bank project (The Regional Trade Facilitation Project I)[4] which revealed the ITA. ATI started in 2001 in Kampala, Uganda [5] and opened in Nairobi, Kenya, headquarters of ATI. The purpose of the agency is to supplement, supplement, and supplement the provision or support of insurance, including reinsurance, guarantees and other financial instruments and services, in negotiation, investment and other productive activities in African states, which may be offered by the public or private sector or in cooperation with the public or private sector.