President Muhammadu Buhari has signed the instrument of ratification to the African Trade Insurance Agency’s (ATI) treaty, making the country a full member of the continental group.
The move finalises Nigeria’s membership of the ATI at the end of a process that began some years ago.
Membership of the ATI allows Nigeria to attract additional insurance capacity to help attract investment. It also increases the ATI’s capacity to support sovereign and commercial transactions in the country.
Ultimately, Nigeria benefits because effective risk mitigation is vital to increasing investment and trade flows.
Nigeria’s membership comes at a critical time for the economy, as a sharp drop in oil prices due to a decrease in demand that has impacted on the country’s spending plans.
The International Monetary Fund predicts that falling oil prices will halve Nigeria’s export earnings to US$26 billion. Export earnings typically account for 90% of the government’s budget.
Support for Africa
The ATI is well positioned to support African countries through the pandemic.
In the past three years, the agency has helped crowd in nearly US$3 billion of investments to several African countries. With the ATI’s sovereign and sub-sovereign credit wrap solutions, governments and state-owned enterprises have been able to obtain competitively priced and longer-term financing.
In Nigeria, the ATI has already provided significant support in the country’s oil and gas sector covering oil traders, as well as in the financial sector insuring financial institutions.
“As one of the largest economies in Africa with a vibrant private sector, ATI looks forward to working with the Ministry of Finance, the Central Bank, local financial institutions and corporate traders to support Nigeria’s economic diversification plans and its post-COVID recovery,” said Benjamin Mugisha, ATI’s chief underwriting officer.
As an important strategic partner, the African Development Bank (AfDB) has played a significant role in funding the membership participation of several African countries.
Between 2010 and 2020, AfDB has provided $70 million to fund the shareholding of seven African governments – Benin, Côte d’Ivoire, Ethiopia, Mali, Nigeria, South Sudan and Zimbabwe.
In the coming months, five more countries are expected to become fully fledged members of the ATI. An existing member state has also signalled its intention to increase its capital contribution.
These countries will benefit cumulatively from $91 million in financial support from the African Development Bank and the European Investment Bank.
Furthermore, the recently held general meeting approved three new membership applications worth $47 million, demonstrating ATI’s ability to mobilise international support to implement its development mandate and support African countries’ economic recovery from the COVID-19 pandemic.