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New facility to boost SME access to credit

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The African Trade Insurance Agency (ATI) in conjunction with the Bankers Association of Malawi and the Reserve Bank of Malawi are today set to unveil an insurance product that will help banks increase their lending to local companies.

The development comes at a time when access to credit has been singled out as one of the biggest hurdles to doing business in Malawi, especially for small and medium-sized companies.

Under the initiative, ATI will provide insurance cover to banks in Malawi to enable them manage risks associated with lending to local companies, including small and medium scale enterprises.

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The banks will be able to use ATI insurance products as security for the loans.

ATI’s Zambian-based underwriter responsible for Zambia and Malawi, Pizzaro Lukhanda, said in a statement the facility is targeted at banks through which many people will be able to benefit from.

He said Malawi is a founding member of ATI and that the initiative has already helped the country support and attract over US$455 million worth of trade and investments in the last five years.

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“With local banks on board, there is no reason why we can’t help Malawi double this figure in an even shorter time frame,” said Lukhanda.

In 2014, ATI insured US$1.3 billion worth of trade and investments in its African member countries and of this amount, 80 percent of these transactions involved banks.

ATI was founded by Comesa member countries 15 years ago with support from the World Bank and the African Development Bank.

It is aimed at giving comfort to foreign investors who may think Africa is too risky a destination.

ATI provides two main products, political investment risk insurance and trade credit insurance.

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