The African Trade and Investment Development Insurance (Atidi) is eying an increased role in the continent, thanks to increasing membership and capital base.
Atidi started in 2001 with seven countries as members. This number has been growing, attracting more countries and partners, as the uptake of Atidi’s political and credit risk insurance products increased.
Atidi Chief Executive Officer Manuel Moses spoke to the Business Daily about the landscape of political and credit risk in African markets such as Kenya, the entity’s role in the country’s energy projects and the opportunities in the country’s privatisation programme.
Looking at the political and credit risk landscape across the continent, what is your outlook this year?
What we are seeing is a growing demand for our products. Since the Covid pandemic, we have seen the view of investors about risk change. Many of them have come to realise that actually things can go wrong.
Risk is no longer theoretical. Therefore, the demand for credit risk insurance has shot through the roof. We cannot meet all the demands.
We have to be selective and do only what we can. Political risk events are also going up.
We look at crises as opportunities. We are not looking at it only as a crisis, but we are also seeing it as something that presents opportunities. It has been said: Never let a crisis go to waste.
How easy has it been to position Atidi as a development catalyst, given that many insurers are just viewed as institutions that take premiums and pays out claims?
We are enabling development to happen. Projects that would otherwise not happen are happening, thanks to our instruments.
For example, here in Kenya, we have been involved in a number of projects including wind power projects. When Kenya wanted what is now the second largest wind power project in Africa, money had been raised and power purchase agreement signed. However, developers raised the risk that non-payment by Kenya Power would lead them into loan default.
So, we innovated an instrument that allows for that independent power producer to still deliver his invoices to Kenya Power.
If there is a delay of up to 12 months, we keep on paying them so that they can pay their loans, and then leave Atidi to have a firm conversation with the Kenya government and Kenya Power, to make sure that those monies are recovered.
So while many people only see the funders, the actual enabler of that funding is quiet. This is why we are here to try to make sure that our stories are also heard because without insurance, many projects cannot happen. That is why we are a development insurer.
Kenya continues to see the energy sector as an area that requires more projects to green their grid and accommodate the rising demand. Any transactions in the pipeline?
Yes, definitely. I must commend Kenya since it is one of the leading in terms of the green energy as a share of the total energy generated. We have a pipeline of projects in the geothermal space and we want to make sure that those projects happen.
Kenya had kind of stopped in terms of more generation because generation was slightly ahead of demand, but now it is turning again. You always want to have that buffer because shortages create outages.
Kenya has re-engaged in generation, and we want to be helping Kenya do that. Our instruments are very useful and instrumental to make sure that those projects that we are looking at in the geothermal space happen. We are also looking at a few others that are solar and anything else that is green.
We have memorandum of understanding that brings all the interested parties in the energy space to one table. So we have Kenya Power, the National Treasury, Ministry of Energy and Atidi on one page.
This Memorandum of Understanding that brings all the interested parties together has enabled this intervention in the energy sector to happen not only in Kenya, but also across the continent. We have signed up about seven countries under this particular program and we are doing projects in countries that would otherwise not do these projects.
On the privatisation programme, Kenya seems to be catching up with other African entities in terms of trying to get itself out of the business of running entities. Which opportunities do you see here?
We must acknowledge that governments, including Kenya, had gone to do businesses that otherwise the private sector should do. For example, what business is it for a government to be running hotels when the private sector can do it even better?
What the government should be doing is to enable the private sector to operate such businesses and then partner with us, to de-risk the private sector so that they can put their capital relying on, say, a concession from the government.
We have a role now to say to the government, as it goes into public-private partnership (PPP) programmes, Atidi will handle the risk. So in the documentation itself, we are already in partnership with the government, because we are also owned by the governments. We see ourselves playing on this agenda of privatisation by giving the right tools.
One of the risks that is elevated in many government projects in Kenya is court cases, as people or institutions challenge the process of PPPs. How do you play in that space to ensure that the private investors do not shy away?
It’s a very valid point. It speaks to the urgency. I think the government wants to do things quickly and so there is a tendency to try to skip a few steps.
Unfortunately, whenever you skip a few steps in the interest of completing something quickly, it triggers delays as other stakeholders seek consultations.
We are appealing to governments to understand that infrastructure projects take time. We are telling them not to cut corners. That is the only sure way of insulating themselves from court cases and being bogged down in executing what they want.
