Africa’s Investment and Credit Risk Insurer 1 Presentation to the The African Development Bank Trade Finance Initiative 14 April, 2009 Peter M. Jones Chief Executive Officer

Africa’s Investment and Credit Risk Insurer 2 Objectives of Presentation 1.Background to the Agency 2.Products and Services 3.Possible solutions to Trade Finance Crisis

Africa’s Investment and Credit Risk Insurer 3 Objective 1 Background to the Agency

Africa’s Investment and Credit Risk Insurer 4 What is ATI? A Multilateral Political Risk and Credit Insurer established by International Treaty Established by African Member States with the financial and technical support of the World Bank to fill a market failure WBG provides financial support to allow African Members to fund their equity contributions in ATI Partners with major public and private credit and investment insurers

Africa’s Investment and Credit Risk Insurer 5 ATI: What is the rationale? Small volume of trade credit and investment in African States does not merit the establishment of national trade credit and investment insurers. ATI is a regional multilateral insurer that fills this key market gap with the following benefits: 1.Economies of scale and effective and efficient use of scarce underwriting skills in the region; 2.Cost-effective use of scarce underwriting capital; 3.Regional integration and risk sharing that benefits all African Member States; 4.Enhanced risk diversification from a regional risk portfolio (reducing the impact of an individual country’s volatilities and sector dependencies); 5.Encouraging public and private sector insurers to assume risk in Africa.

Africa’s Investment and Credit Risk Insurer 6 ATI: What is the rationale cont’d:- ATI reduces the ‘costs of doing business’ in Africa by: - Allows exporters to sell direct to buyers on open account ( as against auction houses/wholesalers) and move up the value chain; - Reduces the interest margins on bank funding; - Creates a level playing ground for investors and trade credit in African Member States.

Africa’s Investment and Credit Risk Insurer 7 Membership is open to: African States Non-African States Regional Economic Organizations International Development Financial Institutions Export Credit Agencies Private Corporations ATI Membership Categories

Africa’s Investment and Credit Risk Insurer 8 Current African Member States Burundi Democratic Republic of Congo Kenya Madagascar Malawi Rwanda Tanzania Uganda Zambia *Djibouti, Eritrea and Sudan are signatories (pending ratification and capital subscription). ** Liberia’s membership is pending signature, ratification and capital subscription ATI is open to all African Union States Corporate & Regional Body Members Atradius, COMESA, PTA-Bank & ZEP RE ATI Membership

Africa’s Investment and Credit Risk Insurer 9 Focus on new African Member States Eastern and Southern Africa: Angola, Ethiopia, Mauritius, Mozambique & Seychelles Central Africa: Cameroon Western Africa: Benin, Ghana, Côte d’Ivoire, Mali, Mauritania, Nigeria & Senegal Focus on Regional and International Financial Institutions AfDB, France (AFD), Italy (SACE) and Africa Re ATI: Membership Expansion

Africa’s Investment and Credit Risk Insurer 10 Objective 2 Product and Services

Africa’s Investment and Credit Risk Insurer 11 Political Risk Insurance: Short, medium and long term foreign direct investment including intra-regional investment. Comprehensive nonpayment cover for sovereign and sub-sovereign obligors. Trade Credit Risk Insurance: Inter & intra-regional whole turnover trade credit non-payment cover (365 days) Medium to long term buyer credit insurance Exports, imports and domestic sales ATI : Product Offering

Africa’s Investment and Credit Risk Insurer 12 Maximum Tenor 10 years No Minimum Transaction Size Maximum line size (net exposure): Political Risk: US$7.5 million Credit Risk: US$3.75 million Indemnity: - Up to 100% (Political Risks) - Up to 85% (Commercial Risks) Price to risk. No subsidy to the private sector ATI-ACA ATI: Main Terms

Africa’s Investment and Credit Risk Insurer 13 Objectives: Leverage ATI’s line size by up to 10 times and country limits by up to 2.5 times; and Encourage public and private risk sharing in Africa; Filling market failure. Crowd in the public and private sector. ATI-ACA ATI: Reinsurance

Africa’s Investment and Credit Risk Insurer 14 ATI : Reinsurance (Cont’d) ATI: Relationship with Reinsurers Whole Turnover Trade Credit Insurance Political Risk Insurance and Medium Term Credit Insurance Atradius Re Quota Share Reinsurance Treaty. 60% Cession. Reinsurers include: Lloyd’s of London Syndicates; Sovereign Risk (Bermuda); Zurich (USA); AIG; Chubb; and Africa Re Facultative or Treaty Reinsurance as required. Risk Retention no less than 10%

Africa’s Investment and Credit Risk Insurer 15 Standard and Poor’s assigned ‘A’ Stable Rating to ATI in April 2008 for both Counterparty and Insurer Financial Strength credit ratings. More business opportunities from Banks, Insurance Broker and International Investors Results: more trade and investment flows for African Member States ATI-ACA ATI: Credit Rating

Africa’s Investment and Credit Risk Insurer 16 ATI: Solutions Expand Membership of African Member States to support higher volumes of regional and international trade and investment Expand membership of Non-African State Members to expand shareholder and capital base Provide Pre-export Finance for African Member States’ Exporters Protect commercial banks from the impact of foreign buyer default on the credit quality of their customers

Africa’s Investment and Credit Risk Insurer 17 Through the ATI’s website via By telephone +254 (0) (0) ATI: Contacts