RFIB Group, along with a number of Lloyd’s & Company private reinsurers and the African Trade Insurance Agency (ATI) have helped the African Development Bank (AfDB) secure a $500 million credit insurance deal structured to cover a portion of the bank’s portfolio of non-sovereign operations throughout the continent.
The insurance will cover approximately 22% of the Bank’s $2.3 billion outstanding non-sovereign financial sector portfolio.
Specifically, it will protect the Bank against the non-payment of loans made to approximately 30 African financial institutions.
The portfolio spans the African continent, with exposure to financial institutions in all major regions of the continent, and is expected to release sufficient capital to create almost $500 million of headroom for new lending.
This transaction is expected to have an important demonstration effect to encourage similar institutions to invest more on the continent in the future.
In addition, this vehicle will enable many insurance companies operating outside Africa to participate in the financing of development in Africa for the first time.
“This transaction leverages the Bank’s own capital to achieve more development and lending as it creates new pathways for collaboration between private insurers and the Bank in the development of the African continent,” said Akinwumi Adesina, President of the AfDB.
“This is a significant step towards enhancing Africa’s finance partnerships across the globe.”
Adesina added that, given Africa’s endowment as a resource-rich continent with a strong economic outlook, the bank had adopted more efficient and effective initiatives to bridge the existing development financing gaps.
The transaction is also expected to strengthen the development of credit insurance markets in Africa.
“With ATI’s insurance guarantees leveraging the balance sheet of AfDB and crowding-in new investments, this innovation provides a timely solution to the scarcity of trade finance that could create enormous impact across the continent,” George Otieno, Chief Executive Officer of ATI.
“ATI’s commitment reflects the US$35 billion worth of trade and investments that we have supported in the past decade, which, thanks to this model, can now be more easily replicated, to the ultimate benefit of Africa.”
RFIB added, “RFIBs Political Risk & Trade Credit team (PRTC) are delighted to have been able to assist the African Development Bank and ATI in putting together this significant insurance-backed programme that will allow the Bank to facilitate further lending, promoting further development in Africa.”