Ghana has signed a Memorandum of Understating (MoU) with KfW, a German State-owned development bank, to finalise membership in the African Trade Insurance (ATI) Agency towards lowering borrowing costs, extending tenors and increasing investments.
As the first financing agreement under the Reform and Investment Partnership with Germany, the MoU assisted Ghana with 16million EUR to secure its shareholding and membership into the ATI Agency, a multilateral investment guarantee institution that mitigates investment risks in Africa.
Mr Charles Boahen, the Deputy Minister of Finance, signed the agreement on behalf of the Government, while Mr Christoph Retzlaff, the German Ambassador to Ghana signed on behalf of Germany.
Ghana’s shareholding and membership in the ATI will enable the government to further develop the private sector, which is a key reform agenda under the Reform and Investment Partnership Agreement between Ghana and Germany.
Mr Charles Boahen, the Deputy Minister of Finance, said as Ghana had become a full member, ATI would now be able to insure much greater volumes of transactions in Ghana, which were currently valued at approximately four billion dollars.
He said the signing of the agreement marked a significant milestone that reflected the first fruits in Ghana’s partnership with Germany and the G20 ‘Compact with Africa”.
The sector Minister said: “When our government first signed onto the reform partnership in 2017, our goal was to create a more favourable environment for private investors and to open up opportunities to foreign companies in sectors such as energy, infrastructure and health.”
He said if Ghana was a member of the ATI before the PDS agreement, the country would have relied on the ATI.
He said being a member of ATI would help attract more investment as investors could replace government guarantee with an ATI insurance product or guarantee, which meant that government would not have to incur contingent liability and that the risk of investment then move from government into private hands or the multilateral agency.
Dr Stefan Oswald, the Director General and Special Envoy for the Reform and Investment Partnership said: “The agreement signed today will move Ghana towards a more investor-friendly and sustainable economy, which are both developments that will have a positive developmental impact.
He said: “The Government of Germany welcomes the opportunity to support Ghana as it continues to make tremendous strides in reforms and transparency that have set an enviable pace for other countries to follow”.
On his part, Dr Jan Martin Witte, the Director of Central Africa and Regional Funds of the KfW, said the day marked an important milestone not only for the Reform and Investment Partnership between Ghana and Germany but also for KfW.
He said the MoU was not just the first financing agreement signed under the Reform and Investment Partnership but was also the first Agreement signed by KfW to finance the membership of a country into the ATI Agency adding that, “Ghana is the forerunner and we truly see this as a role model approach for more countries to follow.”
Mr John Lentaigne, the Acting Chief Executive Officer of the ATI Agency, said the ATI and Ghana were waiting for this day to finally announce that Ghana is a full member of the ATI and that the day’s ceremony meant that the multilateral was open for business in the country.
He said: “As one of the largest and most dynamic economies in Africa, we see Ghana’s membership as a game changer adding that “With ATI’s support, Ghana will now have access to previously scarce investment insurance, which will help to considerably lower the country’s borrowing costs as well as to attract new investors.”
The Bilateral Reform and Investment Partnership between Ghana and Germany, through the Federal Ministry for Economic Cooperation and Development (BMZ), was launched in 2017 to promote private sector investments and sustainable economic development under the G20 ‘Compact with Africa’.
It also seeks to encourage a partnership model that is based on mutual trust and accountability.