In its effort to change the perception of investment risks in the country, thereby attracting the much needed foreign investments, the Federal Government has assured foreign investors of safety of their investments.
The Minister of Finance, Ms Zainab Shamsuna Ahmed, explained that the Federal Executive Council in 2017 granted approval for the membership of Nigeria to the African Trade Insurance Agency (ATI).
She said this approval would provide risk guarantee for foreign investments into Nigeria as well as Nigerian exports.
The Finance Minister made this known at the ‘forum on de-risking trade and investments in Nigeria’ organised by the ATI Agency, on Monday in Abuja.
Zainab explained that the core mandate of the ATI is to facilitate private sector-led trade flows, investment and ‘productive activities’ through the provision of insurance, co-insurance & reinsurance.
“The entrance of ATI has come at a most auspicious time indeed when confidence is returning to our economy.
“ATl also provides financial instruments and related services; and promote economic growth in member countries by attracting investments and facilitating trade to its member countries, offering commercial credit risk insurance, political risk insurance, political violence, terrorism and sabotage insurance, and bond insurance.
“It also facilitates exports, Foreign Direct investment (FDIs) into and trade flows within the continent.
“It is obvious that some of the risks mentioned above are what are generally tagged as high risk areas where our local insurance industry requires a complementary/helping hand. This of course is not to discountenance the fact that the Nigerian insurance sector has been able to attract of recent, high caliber portfolio African and Global brands in our market.
“We are optimistic that consumption of ATl Products will have important impacts on Job creation; Infrastructure development; Transfer of technology; incremental availability of Bank and Financial Services funding (financial deepening); incremental export and sales to new and existing markets; increased profitability, import substitution and foreign exchange earnings,” she said.
She further added that: “In reaching this decision, the FG carried out a cost benefit analysis of Nigeria’s membership and came to the conclusion that there is indeed value-addition in our investment.
“Nigeria is encouraged by the rich profile of ATI being a multilateral institution, recognized under the United Nations charter, with thirteen (13) African countries as members.
“Our further check on the Agency also revealed that its shareholders also include public and private entities such as the African Development Bank (AfDB), Trade Development Bank, PTA Reinsurance Company, and the Common Market for Eastern and Southern Africa (COMESA).”
She explained that the FG’s decision to join the ATI was taken at the time when Nigeria was reappraising its membership in other international organisations.
“It was soon after this decision that we decided to disengaged from 90 such organisations,” she said.
The ATI since its inception has supported over $45billion worth of trade and investment across the African continent, and secured an investment grade rating of “A” from Standards and Poor’s.
Lead Economist in the African Development Bank (AfDB), Mr. Anthony Simpasa, in his overview of Nigeria’s economic and risk profile, said that, “overall, the private capital flows has sharply declined. According to reports from the Nigeria Bureau of Statistics (NBS), Foreign Direct Investments (FDIs) have also declined sharply from 2014 to 2017.
“Public debt (both external and domestic) is increasing steadily. Total public debt stands at 42.1%. Nigeria spends more than 40% of its GDP to service its debts.”
Mr. George Otieno who is the Chief Executive Officer of ATI, said that, “The main purpose for setting up ATI is because Africa was seen as a destination where investments are shy; most investors don’t want to come to Africa because of perceived political risks.
“The journey for Nigeria to join ATI has taken almost 10 years.
“We are in final stages of completion. Nigeria needs to sign the ATI treaty and ratify it in parliament. Nigeria has already budgeted for its own contribution. Also the AfDB is going to support Nigeria with part of the capital contribution.
“Nigeria is coming up with $20milion to start but have indicated that it will like to pay $50million as its capital contribution which will be 20% of share capital at the moment. Once that happens, Nigeria is going to be the highest contributor in terms of capital.”
“We’ve been able to support trade and investments this year to a tune of $5billion in member countries. This equates to almost 25% of FDIs inflows into Africa.”
