AFDB loans Nigeria $14.1m to aid trade insurance membership
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The African Development Bank Group (AfDB), Tuesday said it has approved a $14.12 million facility through its trade finance operations, to support Nigeria’s membership in the African Trade Insurance Agency (ATI).
According to the lender, the facility is a critical and mandatory step to enable ATI commence its operations in Nigeria, as the country joins 14 other African countries that have already signed up to ATI membership.
“The Bank seeks to achieve its ambitious development mandate by working with and through other strategic partners, and where possible, by supporting the development of strong and viable African institutions such as ATI.
“The financing scales up the work of ATI by supporting the beneficiary countries to become members, Stefan Nalletamby, director of the bank’s financial sector department said.
The AFDB further disclosed in its statement released Tuesday that “once membership formalities in ATI are finalized, Nigeria could benefit from gross political and commercial risk insurance cover on total investments and trade amounting to over $5 billion by 2020.”
It explained that the catalytic effect of using limited financial resources in this way is undoubtedly massive.
“The approved facility complements ongoing and planned interventions geared at building institutional capacity and improving the resilience of the Nigerian economy.
Joining ATI will enable Nigeria to leverage its position to mobilize additional resources to finance trade, especially importation of essential goods such as medicines and communications equipment, to rehabilitate basic infrastructure and strengthen the country’s productive sector.
ATI’s mandate is to provide medium to long term credit and political risk insurance, as well as other risk mitigation products to its member countries and related public and private sector actors.
These products directly encourage and facilitate foreign direct investment as well as local private sector investment in regional member countries and intra- and extra-African trade.
ATI catalyzes private sector investments in infrastructure projects, thereby promoting economic integration of participating countries into regional markets.
This financing aligns with four of the Bank’s High 5 priorities, namely: Light Up and Power Africa, Industrialize Africa, Feed Africa and Integrate Africa.
As a trade finance facilitation initiative, the financing will support operations that are crosscutting and multi-sectoral in nature and will have an impact on agribusiness, infrastructure development, electricity generation, telecommunications and manufacturing, the bank noted.