NAIROBI, Kenya, Mar 12 – The African Trade Insurance Agency (ATI) has partnered with the Islamic Cooperation for the Insurance of Investment and Export Credit (ICEIEC) to re-insure imports and exports between Africa and the Middle East.
Through the agreement, the two agencies aim to provide cover for corporations in light of increased debt protection costs and yields on government debt across the Gulf region.
Speaking during the signing, ATI Chief Executive Officer George Otieno said the deal would ease pressure on traders who have been forced to reassess the region\’s risk profile, which has pushed insurance premiums up.
"At the moment Africa lacks enough capacity to write this business and we end up re-insuring in the west but we believe we have the same risk profile with the Middle East so we want to be sharing business," Mr Otieno said.
Trade between Arab member countries of the Gulf Cooperation Council and Africa has grown in the last 10 years from an estimated $6.8 billion to $18.1 billion.
Both firms are among the strongest rated financial institutions in their respective regions.
This, along with a combined capital base of $356 million will help ease the impact of the recent political upheavals that has seen governments in Tunisia and Egypt toppled with others such as Libya and Yemen on the brink of collapse.
"This partnership will strengthen insurance protection for African traders who are already trading with Arab countries as well as those who may be seeking opportunities in that region over the coming months," Mr Otieno said.
ICEIEC Chief Executive Officer Dr Abdul Rahman Taha said trade financing and guarantees would play a crucial role in driving the African economy.
"We see a great deal of synergy with this partnership. This will help us provide cover for traders where we were once unable to provide cover," Dr Rahman said.
Under the terms of the agreement, both institutions will reinsure each other on projects supporting their respective member countries.
They will also explore the possibility of formalizing a Debt Collection Agreement in order to collaborate on collections or recover claims.
Both institutions offer protection to investors with political risk insurance products and for exporters with export or trade credit insurance that covers an agreed percentage of an invoice or receivables that remain unpaid as a result of protracted default, insolvency or bankruptcy.
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