SMEs to benefit from NIC and African Trade Insurance Agency partnership

NIC Bank and African Trade Insurance Agency have renewed their strategic partnership aimed at providing collateral to their Trade Financing customers while at the same time cushioning the Bank from any eminent risks associated with young businesses.

Making the announcement earlier on today, NIC Bank Retail Director MR. Robert Kibaara said that the one year old partnership had proved to be resourceful in servicing the banks customers as well as growing the SME segment for the business.

Early last year, NIC Bank became the first bank to take up ATI’s new insurance cover that protected its entire portfolio of trade finance borrowers against the risks of insolvency and non-payment – risks that have traditionally inhibited most African banks from lending to SMEs.

The partnership renewal comes at a time many financial institutions are trying to get a chunk of the quickly growing SME segment in the country.

“At NIC Bank, we feel giving our customers access to value-added services is another way to provide exceptional customer care and differentiate ourselves in the market. Our selection of Strategic Partners like ATI is a clear example of how partnerships can lead to an enriched product offering” said Kibaara.

The partnership with ATI enabled NIC Bank to extend credit facilities such as short term loans, invoice discounting, bank guarantees and letters of credit without the requirement of the standard tangible securities as is the current practice by banks. Furthermore, the insurance facility cushions the bank’s credit business and guarantees a measure of stability in case of financial instability in the market.

On his part, George Otieno, ATI Chief Executive Officer, said that, the growth in the SME segment in Kenya and beyond was a result of the concerted efforts that both government and the private sector had put in supporting the segment.

“ATI is a unique institution. The company provides political/investment and credit risk insurance to investors and companies doing business in Africa. Since inception, ATI has covered over $17 billion worth of trade and investments in its member countries,” He explained.

In recent years the securitisation of loans and bond portfolios have become a major issue in financial circles, considering the growth in large scale trade financing. The East Africa region’s volume of collateralised loan and bond obligations is noteworthy for any prudent financial institution.