Etihad Credit Insurance (ECI), the Federal Export Credit Corporation of the United Arab Emirates, and the African Trade Insurance Agency (ATI) have signed a reciprocal reinsurance agreement to strengthen trade ties and boost exports between both markets. This is done by providing businesses with trade finance and credit insurance solutions.
The agreement follows the Memorandum of Understanding (MoU) that each entity signed in March last year to improve the global competitiveness of exporters by improving their awareness of export credit and trade finance solutions and encouraging them to use risk mitigation tools against commercial and political risks.
Under the agreement, signed by Massimo Falcioni, CEO of Etihad Credit Insurance and Manuel Moses, CEO of ATI, the two organizations aim to support joint Emirati and African ventures in their own countries as well as their collaborative initiatives in other countries by sharing the risks allowing these companies to develop trade on a global scale.
Highlighting the importance of this strategic alliance, Falcioni said, “The UAE and the African continent have an illustrious historical bilateral commercial relationship, and we at ECI are proud to build on this tradition with the support of ATI. This collaboration will give UAE exporters real confidence to access the diverse markets and resources of the African region with state-backed guarantees and protections against trade and political uncertainties.
Moses said: “This agreement with ECI is a major step in strengthening our commitment to providing risk solutions to corporates, investors and commercial lenders interested in doing business in the UAE and Africa. Deepening our ongoing partnership , this reinsurance agreement will pave the way for unprecedented business opportunities for companies to enhance their regional and global competitiveness.”
Trade between the UAE and Africa has seen steady growth in recent years, with the Emirates becoming the fourth largest investor in Africa last year by investing in 71 different projects worth $5.64 billion , according to research consultancy Knight Frank. And according to data released by the Emirates News Agency (WAM), the value of non-oil trade between the UAE and Africa reached $40.7 billion in the first nine months of 2020, up from 36, $9 billion in the same period of 2019, while the value of non-oil trade between the two stood at $50 billion in 2019, down from $33 billion in 2015.
High Growth Sectors
The UAE is particularly looking to capitalize on many high-growth sectors in African countries, including tourism, infrastructure, energy, transport, logistics and IT.
Recently, ECI partnered with Israel Export Insurance (ASHRA) to provide buyer credit guarantees supporting a AED540 million ($147 million) healthcare project in Ghana, which involves the construction of four hospitals and a central medical storage facility in the country. The project aims to improve Ghana’s healthcare facilities and is expected to benefit over 3 million Ghanaian citizens.
ECI, in association with its British counterpart UK Export Finance (UKEF), has also supported a major initiative in the Republic of Senegal to strengthen its national emergency response capacity sector. The AED540 million project, named Redco Project Senegal, is financed by Standard Chartered Bank with a partial direct loan from UKEF and is backed by ECI under a reinsurance agreement with the ‘UKEF worth AED 348 million.
The ATI was established in 2001 by seven countries of the Common Market for Eastern and Southern Africa (Comesa) with technical and financial support from the World Bank to provide companies and exporters with political and commercial risk insurance to to attract foreign direct investment to the region.
The largest economic bloc of African countries with 21 member countries, Comesa is set to become one of the most promising markets in Africa, with around 600 million consumers by 2025. Trade between the United Arab Emirates and these countries has seen a steady increase in recent years, and by positioning itself as the main hub for trade to and from the region, the UAE has paved the way for attracting investment from around the world to the region. .
ATI is a key member of the Berne Union (BU) – an international organization and community of leading export credit and political risk insurers – which annually offers around 2.5 trillion dollars of payment risk protection to banks, exporters and investors, representing more than 13% of global cross-border trade. This month, ATI also hosted the 2022 Berne Union Annual General Assembly in Kigali, Rwanda, in line with the BU’s strategic direction on promoting the role and potential of export credit. in sub-Saharan Africa.– TradeArabia Press Service