HARARE: Zimbabwe will access about $1 billion for infrastructure development from the African Trade Insurance Agency (ATI) if the country pays its $15 million subscription. Parliament also needs to immediately ratify a treaty that President Mugabe signed at the last Comesa meeting in Malawi in 2012 if the country is to promptly receive benefits. Being a member of the ATI will help the country attract investment and trade.
Zimbabwe is regarded by foreign investors as a high political and credit risk country. It is understood that the Reserve Bank of Zimbabwe, with the help of local financial institutions, has raised $10 million while the African Development Bank (AfDB) is chipping in with $5 million.
The AfDB is a shareholder of ATI and has been funding countries to join the insurance facility in order to boost their economies. Parliament is this week expected to debate the agreement that was introduced in the National Assembly last week by the Deputy Minister of Industry and Commerce Chiratidzo Mabuwa.
Industry and Commerce Minister Mike Bimha yesterday confirmed the development, saying Zimbabwe stood to benefit immensely by joining the ATI. “What was left was for Parliament to approve the treaty, and we did not have the money to pay the subscriptions,” said Minister Bimha.
“But now we are being assisted by the African Development Bank to raise the other part while the other part is being facilitated by the Reserve Bank of Zimbabwe and local financial institutions. So what is left now are the Parliamentary processes.” He said at the moment, Zimbabwe was a member, but could not access other benefits since it was not paid up.
“So, once we pay up the subscriptions and get the agreement domesticated, we will be able to get cover and access funding for infrastructure projects such as power, roads, railway line and dams. “A number of countries have benefited from this funding for infrastructure projects. So we stand to benefit on two fronts, which is on insurance cover and being able to borrow money for infrastructure development with favourable conditions,” said Minister Bimha.
Finance and Economic Development Minister Patrick Chinamasa, said the ATI would insure the country’s exports and imports, which is a pre-requisite for international trade. “Being an ATI member will see us being insured against political risk. Most of the premiums that we pay at the moment are too high because we are perceived as a high political risk.
“So this will facilitate trade. We have put together some money for subscriptions and thanks to the AfDB, they are also giving us some money to pay for these subscriptions.
“Once we create a conducive environment for doing business in Zimbabwe, it will naturally attract investment into the country. Where our exporters were being shunned before, now we will be better off,” said Minister Chinamasa.
While both ministers Chinamasa and Bimha could not confirm the quantum that Zimbabwe would access from the agency, Government sources said the country would get more than $900 million for infrastructural projects.
“The intention is to expedite the process by paying the subscriptions and for Parliament to ratify the Agreement so that we can access the funding as well as getting the political and credit risk cover. “Everyone is excited about joining the ATI including financial institutions. That is why they contributed in raising the $10 million,” said the source.
The ATI was founded in 2001 and is based in Nairobi, Kenya. It was established under an International Treaty by African Member States at the initiative of the Common Market for Eastern and Southern Africa and with the technical and financial support from the World Bank.
Its mandate is to provide medium- to long-term credit as well as increase its provision of trade, credit and political risk insurance products that encourage foreign direct investment and trade in Africa. Some of the countries that are already members to the ATI include: Benin, Malawi, Burundi, Rwanda, Democratic Republic of Congo, Tanzania, Kenya, Uganda, Madagascar and Zambia.
Other members of the insurance agency include AfDB, COMESA, African Reinsurance Corporation and the Eastern and Southern African Trade and Development Bank (PTA Bank), the PTA Re Insurance Company (Zep Re), among others.
Since 2003, ATI has supported over $17 billion worth of trade and investments across the continent and expanded membership with plans to attracting even more African member countries and international financial institutions.
