Benjamin Mugisha“ATI plays a key role in increasing the bankability of projects by insuring both off-taker and investment risks in its member states”

Exclusive interview with Benjamin Mugisha, Resident Underwriter, African Trade Insurance Agency, (ATI), Central, East & Southern Africa and speaker at the upcoming iPAD Rwanda Power & Infrastructure Investment Forum.

1. Please tell us more about your organisation, The African Trade Insurance Agency, and your activities in East Africa.

ATI is a multilateral institution owned by African governments and established with World Bank support under a United Nations Treaty in 2001. The African Development Bank is now also an active supporter and Board representative with a recent $15 million equity investment and an agreement to help fund the share capital of new member countries. ATI provides insurance products intended to promote economic growth in our member countries through increased investments and trade. To date, we have facilitated business transactions worth over $17 billion. We leverage capacity through partnerships with major public and private sector insurers (Export Credit Agencies, the Lloyds of London Insurance market, Munich Re, etc.). We are rated ‘A/Stable’ by S&P allowing us to partner with most commercial and multilateral financial institutions.

ATI is present in all East African countries. We cover transactions across a wide range of sectors including energy, where we have supported the largest wind farm project in Africa (Kenya); telecommunication and building infrastructure (Tanzania); Access to electricity in rural areas (Uganda) and GSM Networks (Burundi). Rwanda has been an ATI member country since its inception in 2001. In 2014, ATI supported efforts to improve the country’s ICT industry resulting in over US$ 60 million additional FDI to Rwanda.

2. Any specific projects in the energy sector you are particularly excited about?

Our mandate is to promote trade and investment in member states. The energy sector is a key driver of economic growth and ATI is playing its role in facilitating investments into the sector. We have a strong pipeline of projects in member states likely to bring an additional US$ 6 billion worth of investments into the sector. One area we are excited about is renewable energy. Currently we are looking at a wide range of renewable energy projects ranging from hydroelectric projects to solar and wind technologies.

However, as countries look to harness their natural resources, we also see more projects that are gas fired, coal fired or, in the case of Rwanda, peat fired. Aside from generation, we are also looking to support investments in transmission, distribution, and energy efficiency. All these are eligible for ATI cover and we are excited about the sector’s prospects in the short, medium and long term.

3. What are the main challenges in project finance in the energy sector in this region? In Rwanda in particular?

One of the main challenges in financing energy projects is their bankability. Investors (both lenders and equity) are looking for a framework that ensures steady cash flow to service debt and make a predictable return. ATI plays a key role in increasing the bankability of projects by insuring both off-taker and investment risks in its member states. Another challenge is the low level of skills in the domestic financial sector to assess, and support, project finance transactions at a complex stage. However, this is improving and we have seen both Development Finance Institutions (DFIs) and commercial Banks start to participate in complex project financing.

4. What surprises you about this sector?

We understand that no two countries are the same. It is surprising to see how big the differences can be; whether it’s the IPP framework/maturity of the sector including cost reflective tariffs in Uganda to the massive untapped renewable energy potential in the DRC. A positive surprise is the strong Government support for energy projects in all member states. It reflects how important the sector is to Africa’s development.

5. At iPAD Rwanda you are part of the programme. What will be your main message at the event?

Our key message is that ATI is an African provider of solutions to make projects more bankable and attract investment into Africa in general and Rwanda in particular. We have a track record of delivering this support to small, medium and large complex transactions. We have appetite for energy transactions and would like to increase our support for the energy sector in Rwanda, which is a founding ATI member state.

6. What are you most looking forward to at iPAD Rwanda?

I attended the 2014 iPAD Rwanda. It is the leading power and infrastructure forum for Rwanda. An excellent opportunity to network and discuss business with policy makers, government agencies in the energy sector, investors, project developers and contractors/suppliers. This year ATI is a speaker at IPAD Rwanda and I therefore look forward to not only building business opportunities but also showcasing ATI’s role as a partner for development of the sector in Rwanda.