ATI launches operations in Ghana – presence expected to boost industrialization and debt sustainability efforts - African Trade Insurance Agency

ATI launches operations in Ghana – presence expected to boost industrialization and debt sustainability efforts

  • The Government of Ghana became a full member of the African Trade Insurance Agency (ATI) in October 2019 with shareholding valued at US$17.6 million that was provided with the financial support of KfW through the German government.
  • Membership will help mitigate Ghana’s investment risks thereby unlocking additional investments as well as lowering its borrowing costs. Now that Ghana is a full member, ATI expects to review, and potentially insure, the current pipeline of projects valued at US$1.2 Bn.
  • In Ghana, ATI is hosted by The Ministry of Finance. The Ministry is co-hosting a series of launch activities this week aimed at sensitizing the private sector and government agencies to the benefits of using ATI’s guarantee and insurance instruments.

ACCRA, 18 February, 2020 – Ghana welcomed the African Trade Insurance Agency (ATI) into its market today at an official press conference led by Hon.  Ken Ofori-Atta, the Minister of Finance. ATI is a multilateral and pan-African institution that provides insurance guarantees which helps its African member governments attract investments and spur trade with increased access to credit. In 2019, ATI insured transactions across Africa valued at US$6.4 Bn and expects to insure much of its current pipeline of transactions in Ghana valued at US$1.2 Bn.

ATI plans to support Ghana in several key areas of its economy. Specifically, the institution can support Ghanaian banks by providing access to credit insurance that will act as much needed collateral. This will, in turn, allow local banks to be able to lend more to local corporates and ultimately help generate more jobs in the economy while also strengthening the competitiveness of local banks and boosting private sector growth.

The government also stands to benefit from ATI’s entrance into the market. ATI has successfully helped neighbouring governments attract lower-cost financing at longer durations by providing a novel insurance scheme that effectively ‘wraps’ the government’s borrowing requests with insurance. This makes the request more appealing to commercial lenders and thus attracts better terms (such as longer durations or lower all-in cost of finance).

Trade is another important sector, providing the highest sectoral contribution to Ghana’s GDP at 15.2%. ATI can support Ghana’s drive to increase trade with other African countries and internationally in a number of ways. First, ATI can insure exporters seeking to expand into new markets protecting them against payment risks with new trading partners. ATI can also insure foreign importers providing critical inputs into the economy that can help the Government scale-up exports in the manufacturing sector and create higher-paying and more jobs in the sector.

The energy sector is another area that ATI hopes to support with its Regional Liquidity Support Facility (RLSF). The Facility was created to help tackle climate change by supporting renewable energy projects in ATI’s member countries.

The RLSF supports small and mid-scale renewable energy projects with an installed capacity of up to 50 MW (and in exceptional cases up to 100 MW) by protecting the developers against the risk of delayed payments by public off-takers.  This ensures that more renewable energy projects reach financial close, which can help the government of Ghana create a greener energy mix to help mitigate against climate change.

The Facility can be accessed once Ghana signs onto the RLSF Memorandum of Understanding. ATI is currently in discussions with the Ministry of Energy on Ghana, which may result in Ghana joining the Facility in the near term.  ATI is actively encouraging other countries to sign on as a way of providing more cost-effective and clean energy solutions to the continent.

QUOTE from Hon. Ken Ofori-Atta, Minister of Finance, Ghana

“ATI is an institution that will be a strong partner for Ghana. Importantly, it is an African institution with the respect and credibility of an international financial institution. ATI provides a valuable tool for governments because its insurance is a well-rated security. ATI’s insurance, strong international financial network, coupled with their investment-grade credit ratings have helped African governments create more sustainability within their economies. I’m also confident that the benefits of Ghana’s membership into this important institution will extend well beyond the government as many sectors stand to gain from increased access to ATI’s credit and investment insurance facilities.”

QUOTE from John Peter Amewu, Minister of Energy, Ghana

“Ghana’s energy sector will receive a boost of confidence with ATI’s entry into the market. My Ministry is strongly looking at signing onto ATI’s Regional Liquidity Support Facility (RLSF). By signing onto the RLSF Memorandum of Understanding, Ghana will become the third West African country to do so. The Facility will help Ghana mitigate against climate change by helping to make our energy mix greener and this will ultimately benefit the environment by supporting our strategy of reducing the sources contributing to climate change.”

QUOTE from John Lentaigne, Ag. CEO, ATI

“According to the IMF’s estimates, Ghana is currently the fastest growing economies in the world. This is a huge feat for Ghana and ATI is delighted to welcome such an important African economy into its membership. We are looking forward to supporting the government’s 10-Point Industrialization Strategy and other strategies aimed at strengthening the economy to ultimately create more jobs and a sustainable future.”

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