ABIDJAN, Côte d'Ivoire, 23 September 2015 / PRN Africa / — The African Development Bank (AfDB) Group has approved a combined US $30 million soft loan to Benin, Côte d'Ivoire and Ethiopia to be utilized for membership subscriptions in the African Trade Insurance Agency (ATI). This is a critical step and a prerequisite for ATI to commence its operations within these countries. Under the approvals, Benin and Ethiopia will each receive US $7.50 million, whilst Côte d'Ivoire will receive US $15.0 million.
The ATI provides medium to long term credit and political risk insurance, as well as other risk mitigation products to the Bank's Regional Member Countries, RMCs, and related public and private sector actors. These products directly encourage and facilitate foreign direct investment (FDI) and both intra- and extra-African trade through Trade Finance Facilitation. ATI catalyzes private sector investment in infrastructure projects, thereby promoting the economic integration of participating RMCs into regional markets.
Highlighted by the AfDB Board as an innovative use of ADF resources to catalyze trade and investments in RMCs, ATI estimates that the combined facility will unlock up to US $1.8 billion of commercial, trade credit and political risk underwriting cover at any one time in the countries. The catalytic effect of using limited Bank resources this way is huge, sometimes at up to 60 times the amounts of the original investments.
This facility is fully aligned with the Bank's Ten Year Strategy (2013-2022), and a number of its sectoral strategies aimed at supporting regional integration, private sector and infrastructure development for sustainable and inclusive growth in Africa. The project also aligns with Country Strategy Papers of the respective RMCs on improving the financial sector so that it can support the expansion of productive activities (especially for SMEs) and development of export capacity, through access to risk capital and credit.
According to the Director of the Financial Sector Department, Stefan Nalletamby, "The AfDB seeks to achieve its ambitious mandate as a Development Finance Institution by working with and through other institutions and strategic partners, and where possible by supporting the development of strong and viable African institutions such as the ATI. This programme provides additionality through scaling up the work of ATI by supporting the beneficiary RMCs to become members".
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