NAIROBI, Kenya, Aug 6 – The Overseas Private Investment Corporation (OPIC) and the African Trade Insurance Agency (ATI), on Thursday concluded an agreement that will provide underserved micro-, small and medium-sized companies in Africa access to increased technical assistance and foreign direct investment.
Participants in the eighth annual Africa Growth and Opportunity Act (AGOA) Forum, where the agreement was signed, identified SME support as critical to the ongoing success of the 2000 legislation.
ATI Acting Chief Executive Officer Stewart Kinloch noted that African entrepreneurs had for a long time had to pass up economic opportunities because they lacked the capacity to reach their full potential and that the current framework of AGOA though well intentioned, could go further to help local businesses.
“The partnership we are signing is geared towards addressing these hindrances to business growth and even expand on the basic premise on which AGOA is based to support economic development,” he said
He welcomed the move saying it would readily avail finance to those who urgently need it but called on African governments to loosen custom regulations that would make it much easier for the credit to be fully utilised.
“OPIC is a financier in the way ATI is not. OPIC can reach out to exporters in Africa with the provision of finance at SME level which I think is a real bolt on addition to AGOA,” he stressed.
OPIC’s Acting Chief of Staff John Moran said the pooling of resources between the two institutions with a wealth of experience of supporting African investment would generate important benefits on the continent.
He also noted that foreign direct investment in Africa was down by 18 percent this year due to the global economic downturn.
“Restoring confidence in the continent will be critical to reversing that trend, and the agreement we have signed today will provide prospective investors, both African and American – and SMEs in particular – the means to realise their investments,” said Mr Moran.
Mr Moran noted the greatest hurdle for SME’s was drafting proposals that attract financial institutions to hand out credit
A key feature of the agreement is that it will have no standard timeline aimed at make it as flexible as possible to African needs.
The MOU authorises the two agencies to reinsure each other, in order to increase the capacity of each to insure more and larger projects across the continent. It also encourages both parties to focus specific attention on projects in the renewable or clean energy, agribusiness, and housing sectors.
Both OPIC and ATI intend to begin reaching out to African companies and investors with a business development tour and a technical capacity building program targeting banks, insurers, insurance brokers and African businesses.