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Thursday, 16 August, 2001, 11:50 GMT 12:50 UK
Africa insures foreign investors
Barricades burning in Zimbabwe
Governments will carry the risk of claims for civil disorder
African heads of government will launch an insurance fund providing political risk cover for foreign investors, when they meet in Uganda this weekend.

The Nairobi-based African Trade Insurance (ATI) agency is expected to start issuing its first policies in September to support trade and investment.

Seven African governments will underwrite the agency to encourage growth and trade in a continent where commercial cover is extremely limited and expensive or altogether unavailable.

"[Talks will] address the probable solutions to the problems and remove obstacles that impede accelerated direct foreign investment into the emerging economies," said conference organiser, Ugandan Water, Lands & Environment Minister Ruhakana Rugunda.

Corruption clamp down

The ATI will have a $105m pool of funds to cover political risks including losses caused by war or civil disorder.

Any payments on claims by investors will be drawn from the capital loaned by the World Bank to the ATI's members.

This is designed to apply pressure to those governments to ensure they maintain stability in their countries and clamp down on corruption.

The founding members are Uganda, Tanzania, Malawi, Rwanda, Uganda, Zambia and Kenya and the International Development Association, the concessional lending arm of the World Bank, which has put up $5m.

President Thabo Mbeki of South Africa, will meet his counterparts from Mozambique, Botswana, Malawi, Tanzania and Kenya at the summit to discuss "Enhancing the Climate for Foreign Direct Investments through Smart Partnership".

Malaysian Prime Minister Mahathir Mohammed, who has championed the idea of Smart Partnership, is also expected to attend.

See also:

12 Jun 01 | Business
Investing in South Africa
29 May 01 | Business
West urged to lift African imports
20 Feb 01 | Business
IMF policy comes under fire
17 Aug 01 | Business
Zimbabwe on the verge of collapse
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