African Trade Insurance Agency (ATI), an African international financial institution that provides credit risk and political risk insurance, has expanded its activities in Rwanda in order to develop its services to the private sector.

Formed in 2001, ATI is a staff of 14 African governments, with Rwanda being a founding member. It has been mandated to promote trade and investment within and outside Africa. There are currently nine full members states ATI: Burundi, DRC, Kenya, Madagascar, Malawi, Rwanda, Tanzania, Uganda and Zambia, while Djibouti, Sudan, Ghana, Liberia and Eritrea are waiting to become members .

Thanks to the credit risk insurance, companies involved in import and export are insured against non-payment, payment of long duration, and insolvency. The insurance ATI does not just international debtors, but also the national payments. It protects its insured against payment defaults due to bankruptcy, the deteriorating financial situation or if payment extends beyond the credit period for a particular buyer.

"If a debtor fails to pay in 180 days, we believe it is an extended payment and pay compensation to our policy holder, said Cecile B. Rague Kaisha, an underwriter to ATI.

She said the agency provides a credit period of up to one year. She stressed that the AI can also provide insurance cover for risks prior to shipment and may also insure debtors (companies prefer to be sent by insured rather than on an annual basis).

In this type of insurance, significant amounts of resources that are necessary local insurance companies may not be able to raise. ATI member states contribute at least U.S. $ 9.5 million.

"We have a capital subscription of over U.S. $ 85 million, which can help companies worth ten times that amount," Rague Kaisha said during a one day workshop to sensitize the private sector on services agency.

Political Risk

Apart from credit insurance, ITA also provides political risk insurance, which covers mainly investors and suppliers to protect themselves against government action, inaction or interference that may cause financial loss. Specifically, the risks covered include expropriation, transfer restriction, war, civil strife, embargo and defects of arbitrary rewards.

Kaisha Rague explained that currently has two clients ATI political risk insurance in Rwanda who have insured their buildings for U.S. $ 20 million U.S. $ 2-3 million, respectively.

"We expect two more operations in the coming months, one for credit insurance and one for the insurance policy," Kaisha-Rague said.

While many institutions and companies are still reeling from the effects of the economic and liquidity crisis, businesses of ITA exploded as banks, insurance companies and other institutions have continued to serve with her.

"Last year we closed with a gross written premium of $ 1.9 million, and we expect to close this fiscal year with $ 4.5 million U.S.," said Rague Kaisha.

However, credit insurance is still a new concept in the region, with only five Kenyan companies were the main beneficiaries of the policy of credit insurance. This was also evident from the reactions of a group of local businessmen attending the workshop, which strongly listened to the presentation.

It is apparent that their primary concern lies with premiums payable. In this regard, Rague Kaisha said that the premium is calculated according to different aspects such as turnover, type of insurance risk, country and type of insured property.

She has advised business entities dealing with import and export, although there are other companies on the international market for similar cases, their prices are usually higher than the ITA. The reason for this, "she said, is that international insurers, it is clear that most African countries have political crises and thus impose higher premiums.

"They do not differentiate between say Rwanda and the DRC," said Kaisha. "Yet," political crisis "is still a matter of perception."