Changing business in Africa
” I believe that ATI’s products… will further boost Rwanda’s competitiveness “
JULIUS KARUGA, the possessive African Trade Insurance Agency (ATI) Resident Underwriter responsible for Rwanda and Burundi) has a singular passion – he is committed to helping African companies become more competitive.
ATI offers political risk and commercial risk insurance to African and international companies. It operates more like an Export Credit Agency (ECA) by covering the risks of investors and companies doing business internationally, giving them a competitive edge in the global marketplace.
“This is what attracted me to ATI. I believe that we can help African companies become more competitive by using the same tools that Western countries have relied on for nearly a century,” adds Karuga.
ATI was created in 2001 by African countries to help them attract more foreign direct investments. The relatively small size of most African economies at that time did not warrant the creation of multiple national ECAs so the countries were to pool their resources into ATI, which would then act on their behalf to protect their investors, banks, exporters, importers and manufacturers. To do this, ATI provides a mix of trade credit and political risk insurance enabling investors to do business comfortably in any ATI member country, and for local companies to do business on credit rather than cash basis.
Banks are some of ATI’s biggest clients accounting for transactions valued at close to $900 million in 2011. With this type of insurance, banks are able to protect their debts against payment default risks. They are also able to advise their borrowers to take ATI’s cover, which in turn can lower their bank rates.
ATI has also left its stamp on local insurance markets, where they have helped increase capacity and create more product diversity.
To date, ATI has facilitated over $7billion worth of trade and investments into its member countries. Of this figure, Rwanda has benefited from $180 million in new investments and trade.
With the launch of an office in Kigali in January 2012, ATI hopes to capitalize on its local presence to double or even triple the amount of investments and trade it facilitates into Rwanda.
“In the past, we relied on London-based brokers to bring business to us – so a project in Kigali, would reach us through a European link. My goal in Kigali is to bring the potential benefits of ATI’s products to the guy on the street, to add value to their business. And for banks and international investors ideally we would like to be their risk management partners.”
ATI brings another benefit to the markets in which it operates by making them attract strong international supporters in their quest to help Africa become more competitive. For instance, SACE, Italy’s ECA, invested $10 million in ATI in 2010 as a strategy to help them grow their business in Africa.
Donors have also played a big role in ATI’s expansion. USAID’s Competitiveness and Trade Expansion Program (COMPETE), for example, has partnered with ATI to help them launch the Rwanda/Burundi office.
“USAID and other US Government agencies will continue to prioritize working with partners like COMESA and ATI to improve the business environment in this region,” notes Matthew Rees, USAID East Africa’s Regional Trade Advisor.
Locally, the Rwanda Development Board (RDB) is also firmly behind ATI.
“Rwanda was last year named as the third competitive country in sub-Saharan Africa after Mauritius and South Africa. I believe that ATI’s products, specifically world class international insurance solutions, will further boost Rwanda’s competitiveness,” commented RDB’s Services Development Department Head Hubert Ruzibiza.
In Kigali, the man tasked with the mission to help Rwandan businesses increase their competitiveness is already taking notes for his growing arsenal of international business practices.
“It’s important to stress,” he concludes, “we are here to collaborate and to help Rwanda and Burundi, our member countries, have better access and to benefit more from ATI’s products.”
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