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AfDB launches landmark US$500 million credit insurance deal with African Trade Insurance Agency, UK reinsurers

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The African Development Bank (AfDB) and African Trade Insurance Agency (ATI) announce the successful completion of a US$500 million credit insurance deal structured to cover a portion of the Bank’s portfolio of non-sovereign operations in Africa.

This transaction is expected to have an important demonstration effect to encourage similar institutions to invest more on the continent in the future.

While ATI will be the direct insurer facing the African Development Bank, the transaction involves the participation of a number of Lloyd’s & Company private reinsurers who will share the risk on African financial institutions. This vehicle will enable many insurance companies operating outside Africa to participate in the financing of development in Africa for the first time.

The deal is the second Balance Sheet Optimization transaction under the “Room to Run” initiative following the successful signing of the Synthetic Securitization transaction in September.

The insurance will cover approximately 22% of the Bank’s US$2.3 billion outstanding non-sovereign financial sector portfolio. Specifically, it will protect the Bank against the non-payment of loans made to approximately 30 African financial institutions. The portfolio spans the African continent, with exposure to financial institutions in all major regions of the continent, and is expected to release sufficient capital to create almost US$500 million of headroom for new lending.

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“This transaction leverages the Bank’s own capital to achieve more development and lending as it creates new pathways for collaboration between private insurers and the Bank in the development of the African continent,” said Akinwumi Adesina, President of the African Development Bank Group. “This is a significant step towards enhancing Africa’s finance partnerships across the globe.”

Adesina added that, given Africa’s endowment as a resource-rich continent with a strong economic outlook, the Bank had adopted more efficient and effective initiatives to bridge the existing development financing gaps.

Launching the transaction at an event in London, Penny Mordaunt, International Development Secretary commented, “This is a great example of how the City of London can partner with African institutions to mobilise more investment for developing countries and support the creation of the 18 million new jobs a year which Africa needs. This work is driving economic development abroad and supporting prosperity at home”.

The transaction is also expected to strengthen the development of credit insurance markets in Africa. The experience and comfort gained in transferring risks between the African Development Bank, the African Trade Insurance Agency and the Lloyd’s reinsurers is expected over time to lead to the lengthening of insurance terms and lower insurance and financing costs, leading to more trade and investment in, and among, the private sector and the African region.

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“With ATI’s insurance guarantees leveraging the balance sheet of AfDB and crowding-in new investments, this innovation provides a timely solution to the scarcity of trade finance that could create enormous impact across the continent. ATI’s commitment reflects the US$35 billion worth of trade and investments that we have supported in the past decade, which, thanks to this model, can now be more easily replicated, to the ultimate benefit of Africa” said George Otieno, Chief Executive Officer of ATI.

RFIB commented, “RFIBs Political Risk & Trade Credit team (PRTC) are delighted to have been able to assist the African Development Bank and ATI in putting together this significant insurance-backed programme that will allow the Bank to facilitate further lending, promoting further development in Africa.”

This landmark transaction between AfDB and ATI is one of several recent initiatives undertaken by the Bank under its “Room to Run” program that responds to the G20 and G7 call on the multilateral development banks (MDBs) to explore innovative ways to optimize their balance sheets to achieve the “Billions to Trillions” development agenda. Credit insurance is one of such instruments involving a specialized market with currently low penetration in Africa, but intent on playing a more active role.

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Rainstorm plunges forty Ogun communities into darkness

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Forty communities in Ogun State have been plunged into darkness following a rainstorm on Sunday.

The downpour, which began midday, destroyed electricity facilities in some parts of the state, leading to a blackout.

“Due to broken poles occasioned by the heavy downpour at Ota and Mowe, customers in the following communities: lyana lyesi, Osuke Town, Egan Road, lyana Ilogbo, Ijaba, Ijagba, Itele, Lafenwa, Singer, Joju, Alishiba, Oju Ore, Tollgate, Eledi, Akeja, Abebi, Osi Round About, Ota Town, Ota Industrial Estate, Igberen, lju, Atan, Onipanu, Obasanjo, Lusada, Arigba, Odugbe, Ado-Odo, Igbesa, Owode,” the Ibadan Electricity Distribution Company (IBEDC) said in a statement late Sunday.

“Olokuta, Hanushi, Bamtish Camp Lufiwape, Eltees Farm, August Engineering, Spark Cear Soap Ayetoro, Amazing Grace Oil, Christopher University, Royal Garden Estate, Pentagon Estate, and environs are experiencing power outages”.

It called on residents of the areas to avoid “contact with the broken poles, saggy wires or any other electrical installation affected by the rain.

“Our technical team is working to clear and replace the broken poles and installations to ensure power supply is restored as soon as possible,” IBEDC said.

A video circulating on social media showed fallen electricity poles on vehicles in a flooded Sango-Ota area of the state.

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Israel Vows To Increase ‘Military Pressure’ On Hamas In ‘Coming Days’

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(FILES) Israeli Prime Minister Benjamin Netanyahu (Photo by Abir SULTAN / POOL / AFP)

Prime Minister Benjamin Netanyahu on Sunday said Israel will increase “military pressure” on Palestinian militant group Hamas in a bid to secure the release of hostages held in Gaza.

“In the coming days we will increase the military and political pressure on Hamas because this is the only way to free our hostages,” Netanyahu said in a video statement on the eve of the Jewish holiday of Passover, threatening to “deliver additional and painful blows” without specifying.

Despite an international outcry, Netanyahu has repeatedly said that the army will launch a ground assault on Rafah, a southern Gaza city so far spared an Israeli invasion where more than 1.5 million Palestinians have taken refuge.

The army has said some of the hostages abducted from southern Israel during Hamas’s October 7 attack that sparked the war were being held in Rafah.

Military spokesman Rear Admiral Daniel Hagari said in a televised statement later on Sunday that “the chief of staff has approved the next steps for the war,” without offering details.

“On Passover, it will be 200 days of captivity for the hostages… We will fight until you return home to us.”

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FG to Launch CNG Initiative Ahead of Tinubu’s Anniversary

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The presidency announced on Sunday that the Federal Government is gearing up to launch its compressed natural gas (CNG) initiative in May, coinciding with President Bola Tinubu’s upcoming first anniversary in office.

Tinubu had declared the end of the fuel subsidy era during his inauguration, a move that led to a surge in fuel prices.

However, he assured the public of implementing measures to mitigate the impact, including the introduction of CNG-powered mass transit buses and tricycles.

According to presidential aide, Bayo Onanuga, the initiative is now ready to be set in motion after nearly a year in the making.

Onanuga stated in a late Sunday statement, “In all, over 600 buses are targeted for production in the first phase that will be accomplished this year.”

He further elaborated on the plans, mentioning, “A new plant on the Lagos-Ibadan Expressway will assemble thousands of tricycles.”

Onanuga revealed that parts manufactured by Chinese company LUOJIA, in partnership with local entities, are en route to Nigeria and expected to arrive early in May.

He added, “About 2,500 of the tricycles will be ready before May 29, 2024.”

The Federal Government aims to procure “5,500 CNG vehicles (buses and tricycles), 100 Electric buses, and over 20,000 CNG conversion kits,” Onanuga explained.

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He also highlighted efforts to facilitate the development of CNG refilling stations and electric charging stations.

President Tinubu’s approval of tax and duty waivers in December 2023 has paved the way for collaboration with the private sector to advance the initiative.

Onanuga noted, “The private sector has responded with over $50 million in actual investments in refueling stations, conversion centers, and mother stations.”

Additionally, plans are underway to assist petrol-powered buses and taxis in transitioning to CNG. Onanuga assured, “Thousands of conversion kits for petrol-powered buses and taxis that want to migrate to CNG are also ready with CNG cylinders.”

In response to negotiations with labour unions over the subsidy removal effects, Tinubu has urged patience from Nigerians, expressing confidence in the long-term benefits of his reforms.

As part of the government’s efforts, a package includes a temporary pay increase for federal employees, suspension of VAT on diesel, and social security cash transfers to the poorest citizens.

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