Prospective investors in the country are assured of the safety of their investments following the availability of political risk cover amounting to over $1 billion by African Trade Insurance Agency (ATI).
The insurance cover is for lost properties owing to political risks.
The risks are those emanating from political turmoil or change in the country’s policies which ultimately result in damage to the investment made in the country, ATI board chairman Israel Kamuzora said in an interview in Dar esSalaam this week.
He told The Guardian that ATI undertook to provide guarantees to protect development projects, contracts, investments and other business transactions against non-payment and risks that involve the government, better known as political risks.
He said the firm offered cover to business activities by offering compensation for any disaster caused due to a political crisis or terrorism in the country, adding that the firm had been concentrating on energy and infrastructure sectors since 2009 when it was incorporated in the country.
According to him, the firm is among 27 registered insurance firms currently operating in the country, adding that it was established with a view to mitigating any losses caused due to war or other disasters, such as a terrorist attack.
“This is not an ordinary insurance firm as it supports projects worth millions of shillings, and thus it attracts foreign direct investments to stimulate foreign business in the country,” Kamuzora said, adding that it also offers political insurance cover which protects foreign investors from bankruptcy should there be a change in government’s policies.
Elaborating, ATI’s Tanzania Chapter’s general manager Albert Rweyemamu said ATI worked in collaboration with banks in the country to provide extra security against payment defaults by their borrowers, thus enabling them to issue as many loans as possible to small and medium enterprises (SMEs).
He noted that companies wishing to expand their businesses into markets outside Tanzania could use ATI to reduce the risks of non-payment by their new clients or buyers. “ATI provides these companies the comfort of knowing that they will be reimbursed if their client is slow in paying back or completely fails to do so,” Rweyemamu said.
Tanzania is a founding member of ATI, which is based in Nairobi, Kenya. It was originally launched by nine COMESA countries in 2001. It had already established some projects before it pulled from the COMESA armpit.
Rweyemamu said that the countries conducted a World Bank-funded study to establish why they were attracting such low levels of direct foreign investment. The study results showed that investors feared doing business in the region because of the perceived high levels of political risks and uncertainty.
As a solution, he said, the countries then pooled resources to form ATI, which currently has offices in Rwanda, Uganda, Zambia, Malawi, Tanzania and Kenya, where it is headquartered.
In Tanzania ATI collaborates with the Tanzania Private Sector Foundation (TPSF), an organization that aims to develop small and medium business enterprises in the country.