Last week, the government of Togo revealed that the West African country has completed its membership in the African Trade Insurance Agency(ATI) thus becoming the 18th African sovereign shareholder. 

According to Sani Yaya, Togo’s Minister of Economy and Finance, “insurance capacity is an important aspect of our ability to rebuild and to ensure that critical projects receive the funding and guarantee support they require,” amid the coronavirus economic fall-out.

“We see membership in ATI as a necessary component in our ability to shore up the economy and to weather this (COVID-19) storm,” Yaya added while commenting on the integration.

Togo’s membership reflects a trend that has seen a record number of West African countries join Africa’s multilateral guarantee agency with Ghana, Niger, and Nigeria all completing membership in the last nine months. This trend is expected to continue as countries seek support to ensure investment and trade flows on the continent especially during the novel coronavirus pandemic. 

According to ATI’s Acting CEO John Lentaigne, “the COVID-19 crisis increases the relevance of African development finance institutions such as ATI.” Lentaigne expounded that with the world struggling to handle the fast-moving coronavirus pandemic, the combined resources of African financial institutions will be needed to effectively counter its deadly threat to Africa’s development. 

With African countries focused on mitigating the short and long-term economic impacts of the COVID-19 pandemic, investment insurance capacity is seen as a critical part of the financial support that will be needed to shore up the economies on the continent. Subsequently, ATI has opened a path for Togo to reduce its local and international debt levels through connections with global investors and financiers who seek comfort in knowing that their sovereign transactions and other investments are back-stopped by a reputable insurance guarantee agency, in this case, ATI. 

Reflecting on the important role that ATI plays in Africa’s economic growth, the European Investment Bank (EIB) provided a $12.5 million concessional loan to cover Togo’s shareholding in the agency. “Close cooperation between African and European partners is key to successfully reduce the unprecedented impact of COVID-19 and tackle the negative economic impact of the virus both globally and in more vulnerable economies,” Ambroise Fayolle, Vice President of the EIB said. 

There is a perpetual shortage of investment insurance in most African markets, without which vital investments, both equity and debt, as well as cross border trade will remain sub-optimal. By joining the ATI, Togo will have access and maintenance to investments, loans, and, trade flows which will help the country to remain an attractive investment destination. 

Furthermore, ATI will provide political risk insurance to companies, investors, and lenders interested in doing business in Togo while promoting the country’s sectors. Amid the impending coronavirus economic impact, investment into Africa and Togo is essential, ATI will help the West African country stay afloat and mitigate the aftermath of the coronavirus pandemic. 

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