Africa Investment Forum: African Trade Insurance Agency signs MoU with European Investment Bank

The African Trade Insurance Agency (ATI), Africa's multilateral guarantee agency covering trade and investment flows across the continent, recently signed a Memorandum of Understanding (MOU) with the European Investment Bank (EIB) at the Africa Investment Forum. This agreement aims to expand ATI's reach by welcoming new member states with EIB's financing support. In an exclusive interview with CNBC Africa, John Lentaigne from ATI provided insights into the significance of this partnership and the potential impact on trade and investment in Africa. Lentaigne highlighted that with the EIB financing, countries like Cameroon, Niger, and Togo will join ATI, reflecting the growing interest from companies looking to engage in business activities across Africa. The collaboration between ATI and EIB involves the EIB financing $50 million of equity to facilitate the entry of new member states into ATI. This equity is leveraged against insurance, potentially unlocking an additional $2 billion of trade and investment flows with an average leverage rate of 24 times. By providing de-risking solutions, ATI enables investors to make informed long-term decisions in countries like Niger, Mali, Cameroon, and Togo. During the Africa Investment Forum, ATI engaged in conversations with various stakeholders, including multilateral partners like the African Development Bank, as well as private sector investors. Lentaigne emphasized the importance of addressing investor concerns and facilitating an environment conducive to long-term investments. By offering country risk cover and a-rated guarantees, ATI helps attract institutional capital into African markets, overcoming the challenges posed by sub-investment grade ratings. The upcoming African Continental Free Trade Area (AfCFTA) agreement was also a focal point of discussion, with expectations of boosting intra-African trade and encouraging cross-border investments. Lentaigne expressed optimism about the potential for increased participation from African equity investors, particularly in SME sectors, to drive economic growth and foster greater collaboration across the continent. When questioned about the limited cross-border investment activities by equity investors, Lentaigne acknowledged the need to enhance SME participation and address the barriers hindering capital flows within Africa. While active equity markets exist in various African countries, there is room for improvement in encouraging equity investors to diversify their portfolios and explore opportunities beyond their domestic markets. In conclusion, the partnership between ATI and EIB signals a significant step towards enhancing trade and investment opportunities in Africa. As the continent strives to leverage initiatives like the AfCFTA to promote economic integration and regional collaboration, institutions like ATI play a crucial role in de-risking investments and facilitating sustainable growth. With the support of strategic partnerships and innovative financing solutions, Africa is poised to unlock its full economic potential and attract greater interest from global investors.