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ZIMBABWE is set to join the Africa Trade Insurance Agency with $5 million already set aside for membership fees as it seeks to open up access to lines of credit and foreign investment.

The $5 million is part of the $110 million grant availed to Zimbabwe by the African Development Bank.

“Subscribing to ATI is to reduce Zimbabwe’s perceived risk factor thereby attracting potential investors in the process,” Finance and Economic Development Minister Patrick Chinamasa told journalists yesterday.

“Zimbabwe is faced by high cost of money when mobilising external lines of credit.

“This has left investors shunning the country opting for other destinations,” he added.

ATI is a multilateral financial institution that provides export credit insurance, political risk insurance, investment insurance and other financial products to help reduce the business risks and costs of doing business in Africa.

The agency also facilitates exports and foreign direct investment into and trade flows within the continent.

It was launched in 2001 with the financial and technical support of the World Bank and the backing of seven African countries.

In less than a decade, it had supported over $2,5 billion worth of trade and investments across the continent, while it secured an investment grade rating of “A” from Standard amp Poor’s.

The agency was also created to fill a market gap in trade and investment risk mitigation in Africa.

In the past, risk mitigation tools for credit and political insurance were not available for many African countries, and where the cover existed, it was very costly.

Minister Chinamasa said the Government would work closely with AfDB and private sector to mobilise the minimum subscription of $7,5 million.

Foreign investment has a significant and positive impact on market liquidity, especially in a dollarised econ- omy.

But FDI’s have remained subdued due to the perceived country risk. During the first 10 months of the year, Zimbabwe received FDI’s amounting $146,6 million, down from $311,3 million during the same period last year,” according to Finance Ministry.

It is however expected to reach $591 million next year, on the back of the continued implementation of the ease and cost of doing business reforms and the re-engagement.

Source : The Herald