The African Development Bank Group (AfDB)on Tuesday gave approval for a $14.12 million financing to support Nigeria’s membership in the African Trade Insurance Agency (ATI).
The bank said in a statement sent to reporters that Nigeria could be a potential beneficiary of a gross political and commercial risk insurance cover on total investments and trade valued at over $5 billion by 2020 once it formalises its membership of ATI.
The facility made available through the bank’s trade finance operations was approved as a critical step to enable ATI commence operations in Nigeria reputed to be Africa’s largest economy.
Nigeria joins 14 other African countries that have already signed up to ATI membership.
The ADB said 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 mobilise 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.”
The bank said ATI’s mandate was to provide medium to long term credits 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 promotes private sector investments in infrastructure projects, by facilitating economic integration of participating countries into regional markets.
The ADB said the financing arrangement aligns with four of its High 5 priorities, namely “Light Up and Power Africa,” “Industrialize Africa,” “Feed Africa and Integrate Africa”.
As a trade finance facilitation initiative, the bank said the financing will support operations that are crosscutting and multi-sectoral in nature and impacting on agribusiness, infrastructure development, electricity generation, telecommunications and manufacturing.
“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 Director of the Financial Sector Department, Stefan Nalletamby, said.
“This financing scales up the work of ATI by supporting the beneficiary RMCs to become members,” he added.