Yesterday, President Buhari signed the instrument of accession for the establishment of the African Trade Insurance Agency. This was disclosed by his Special Adviser on Media and Publicity, Mr. Femi Adesina.
What’s the background?
In 2006, research carried out by East African countries revealed that Foreign Direct Investments were not endeared to the African market due to political risks. The survey was carried out under the Common Market for Eastern and Southern Africa (COMESA), an organization of independent sovereign states with an agreement to develop their natural & human resources for the good of their people. It was formed in December 1994 to replace Preferential Trade Area (PTA). Its aim reflects its interest to promote a sustainable economic growth.
What is the Insurance Trade Agency?
Africa Insurance Trade is a multilateral financial pan-African institution and offers investment insurance against political risk willing to do business in Africa by assessing risks as well as mitigating them.
It was founded in 2001 to help reduce business risks and cost of doing them with a financial and technical support from World Bank. It is backed up by seven other African countries with a vision to transform Africa into a prime trade and investment destination.
Why does this matter?
Mr. Adesina explained that this agreement aims to attain a sustainable growth, promote economic activity, and create an enabling environment for foreign trade, as well as cross-border and local investments. Also, the agency, when executed, would acknowledge previous multilateral efforts made by African States towards regional economic integration through co-operation in trade liberalisation and development.
The agency will curb loss of finance and projects as a result of political instability.