[ACCI-CAVIE] African Trade Insurance Agency (ATI) issues insurance support for Angola’s’ World Bank guaranteed Water Supply Project (The BITA Water Project). The BITA project will develop water supply infrastructure to supply urban and peri-urban belts of Luanda to ease the current supply problems and meet the increasing demand; The World Bank’s partially guaranteed facility, is a syndicated loan among 5 Lenders.
In a landmark water project in Angola, ATI has provided insurance support for the World Bank’s partially guaranteed facility to the Government of Angola for expansion and improvement of water supply service in the urban and peri-urban belts of Luanda. The BITA Water Project consists of production, transmission and distribution investments to serve 2 million people and is expected to have overall positive environmental and social impacts by improving the health and environmental conditions of the beneficiaries.
The project, valued at USD1.09 billion, is a 15-year syndicated loan financed through a combination of private commercial banks. The lenders provided up to USD910 million to the Republic of Angola, acting through the Ministry of Finance, with the World Bank issuing a guarantee on the loan facility. Given the size of investment required for the project and the level of uncovered risk, the Government of Angola initiated discussions with ATI to explore potential additional credit insurance options.
Working together with the private insurance market, ATI provided the lenders a 2nd loss insurance above World Bank’s Guarantee of up to USD351 million to cover principal and interest therefore, enabling the project to reach financial close. ATI’s cover will mitigate the risk of the Government’s failure to make debt service payments under the loans for the project.
Despite the challenging times ensuing from the ongoing COVID 19 crisis, along with a drop in crude oil prices in early 2020 which had a negative impact on the Angolan economy and deepened the country into recession, the BITA water project was pursued by the Government of Angola as a national priority investment to develop substantial new water production. The Government reaffirmed the importance of this project for the country that was included in the 2019 budget. The project itself is designed to be financially sustainable in its own right and it will generate cash flows.
Since inception, ATI has supported projects valued at over USD66 billion in Sub-Sahara Africa. Despite not being a member country, ATI supported this strategic deal as Angola’s membership in ATI gains momentum, with an equity injection of USD25 million expected in the coming months. Becoming a shareholder of ATI will enable Angola to access a range of guarantee instruments and other investment and trade insurance products offered by ATI. Membership will benefit both local private sector, through the provision of an extensive set of financing tools in support of trade and investment; and foreign investors, thereby enhancing access to foreign direct investment (FDI) into the country’s economy.