Building partnerships, exploring opportunities for trade and investment insurance, and decarbonizing portfolios among members are among the main priorities of Ms Maëlia Dufour, the newly elected President of Berne Union (BU).

The BU is an international industry association for export credit and political risk insurance, which represents all of the world’s major export credit agencies, multilateral investment insurers and largest private credit and Political Risk Insurance (PRI) companies, and whose mission is to actively facilitate cross-border trade by supporting international acceptance of sound principles in export credit and foreign investment.

The BU Members collectively provide payment risk capital worth $2.5 trillion each year to banks, exporters, and investors, insuring approximately 13 per cent of the value of total global cross-border trade.

By providing credit insurance, it protects exporters and banks against non-payment/default by obligors, which may be caused by commercial or political risk.

In the first half of 2022, BU Members provided new commitments totalling USD 44 billion in support of trade and cross-border investment in Sub-Saharan African countries.

Ms Dufour, the Director of International Relations, Business Development, Rating, Environment and Climate at BPI France, was elected President of BU while her Vice President, Mr Benjamin Mugisha, is the Chief Underwriting Officer (CUO) of the African Trade Insurance (ATI). The two were elected during the BU Annual General Meeting (AGM) which took place from 7 to 10 November, at the KCC in Kigali.

The AGM was hosted by ATI in Kigali – a Pan-African multilateral that is owned by several African governments, including Rwanda, which has been a shareholder since its inception in 2001. ATI provides political risk insurance to companies, investors, and lenders interested in doing business in Africa and has been a Berne Union member for close to ten years.

In an interview with The New Times, Ms Dufour said that there is a need for providing risk insurance to sustainable projects aimed to promote a green economy.

"Berne Union is an association of private insurers, public insurers, and multilateral insurers. My first goal is to reach net-zero target. We have to exchange information among members on financial incentives that are provided by any member for sustainable projects, to see how all the members will decarbonize their portfolios and to see how their respective governments will commit to reaching the net-zero target,” she said.

Net zero refers to the balance between the amount of greenhouse gas produced and the amount removed from the atmosphere.

Decarbonization, which the new President said is her first priority, refers to all measures through which a business sector, or an entity – a government, an organization – reduces its carbon footprint, primarily its greenhouse gas emissions, in order to reduce its impact on the climate.

"The second priority is zero market failure and the third is to increase collaboration and partnerships between all the members by signing different agreements. We want to collaborate in order to have partnerships and we are going to sign agreements so that our customers get financing. BPI, for instance, would be keen to sign agreements with ATI as well as with other members of the BU,” she said.

Among other priorities, the leadership team will also focus on financing of SMEs.

"SMEs face a lot of difficulties while trying to access financing. To address this challenge, BPI France, has created a division that deals with SMEs with up to 100 million Euros available for the SMEs to get financing,” she said.

She added that the meeting in Kigali was also an avenue for BU members to better know and understand Africa and network with each other and highlight opportunities.

"We can tell exporters that there is potential in insurance in Africa and at BPI France we have 14 billion Euros for the African continent. This represents 13 per cent of our portfolio mostly in Senegal, Ivory Coast, Ghana, and other countries in transportation, infrastructure, water resources, and renewable energy, and the government of France has committed a lot to the African continent,” she said.

Joint effort with ATI

Mr Manuel Moses, CEO of the African Trade Insurance Agency (ATI) said that the organization, which is also a member of the Berne Union, was created 20 years ago to give insurance to investors in African countries as well as promote investment and trade.

In 2000, a group of African countries, under the leadership of COMESA, commissioned a World Bank-funded study to look into why the region was not attracting more Foreign Direct Investments as Africa accounts for only 5.2 per cent of global foreign direct investment.

The results showed political risks to be the main concern for the investors.

ATI was launched one year later, to provide risk solutions for investors and in 2006, it added credit insurance to the product menu when member countries identified trade as another important pillar of growth.

"Besides giving insurance to both local and international investors in Africa, we also give the same insurance to exporters in case of trade credit. Those are two areas we were mandated by African governments to focus on.

We realized that when we looked at the needs, there was so much on the continent and we needed to find partners within the industry. We thus became members of BU to collaborate in trade and investment solutions in support of Africa’s development agenda,” he said.

$71 billion transactions in portfolio

Mr Moses said that since 2001 when ATI started operations, it has recorded transactions worth $71 billion cumulatively across the continent, adding that ATI’s projection is to double the annual transactions from $6 billion to $12 billion in the next five years.

"As a founding member, Rwanda has benefitted over the years - currently, our portfolio in the country is about $140 million worth of transactions and a pipeline of $100 million in infrastructure and financial services sectors,” he noted.

He urged investors to do more in the continent as their risks are mitigated by the multilateral insurer.

Opportunities in AfCFTA

Moses said that there are many opportunities for the insurance business such as African Continental Free Trade Area (AfCFTA).

The African Continental Free Trade Area is a free trade area encompassing most of Africa. It was established in 2018 by the African Continental Free Trade Agreement.

"The continental free trade area is going to create a market for 1.3 billion people with a combined GDP of $3.4 trillion, with significant potential for more growth.

As a pan-African trade investment insurer, we aim to support and facilitate regional trade. Our insurance solutions are particularly relevant in realizing the AfCFTA mandate,” he said.

He reiterated that SMEs are engines of job creation, adding that they contribute significantly to the economic growth and development of the continent. ATI helps local companies and SMEs access finance, as they often find it difficult to access bank financing because they are seen as high-risk. ATI has therefore developed a number of guarantee products to make it easier for banks to finance these prospective clients.

Conclusion

Sub-Saharan Africa remains a strategic focus for the Berne Union, which launched a working group chaired by ATI, to build awareness and promote collaboration among industry stakeholders on projects relating to the region. The new presidency and ATI are keen on supporting Rwanda for the country to be a beneficiary of this collaboration in the near future.