A CONTINENTAL trade insurance agency plans to launch in Tanzania a product that would cover banks against the risk of non-payment within the Small and Medium-Sized companies (SME) sector.
The firm, African Trade Insurance Agency (ATI), arrived at the decision owing to the finding that companies in the SMEs category lack the necessary collateral and experience that would normally be required to secure a traditional bank loan.
According to an ATI statement availed to the 'Daily News' in Dar es Salaam yesterday, the agency has in response to the obstacle rolled out the product, which would cover banks against the risk of nonpayment within the sector.
"In Kenya, NIC and other banks have lined up to sign onto the product. Based on the reaction from local banks, ATI plans to launch this product in Tanzania within a few months", the statement read.
The agency's newly-appointed Representative, Ms Tusekile Kibonde, in Tanzania is hopeful that the bank product will boost Tanzania's ranking in the World Bank's index, which currently places the country close to the bottom in the region in the category of a company's ability to secure credit and working capital.
In 2013, Tanzania was ranked fourth in the East African Community (EAC) behind Kenya, Rwanda and Uganda, according to the statement.
"Tanzanian companies are practical and I believe ATI has achieved success in this market precisely because we offer practical solutions -- and based on the response from the business community, I believe there is still room for growth here, particularly in the energy sector," she said.
ATI was created over a decade ago by Tanzania and other COMESA countries and the WB to help attract Foreign Direct Investments and to support trade.
Keen on addressing the concerns of investors by insuring their transactions against a range of investment risks, the agency protects local companies interested in expanding their business in new markets.
The pan African insurer has facilitated 1.5 billion US dollars worth of trade and investments in Tanzania where it established local presence in 2010.