In an effort to stimulate trade between South Africa and Zimbabwe, a new trade credit insurance facility has been introduced by Invent Multiple Agents and Actuaries, a Zimbabwean insurance firm, in collaboration with Asset Finance Insurance South Africa (AFI) and Fachs Reinsurance Brokers. This initiative aims to mitigate the risk of non-payment for South African exporters by offering trade credit policies. The economic landscape between these neighboring nations has been challenging, with Zimbabwe experiencing significant inflation and shortages in foreign currency. The introduction of Zimbabwe's new gold-backed currency, the ZiG, is a recent development.
The lack of available insurance has previously restricted credit sales to Zimbabwe, impacting the trade volume between the two countries. The newly established facility is backed by reinsurers providing a US$200mn capacity, with individual coverage limits set at US$1mn per Zimbabwean importer, subject to adjustments based on specific requirements. AFI serves as the policy issuer, with Fachs handling the reinsurance brokerage. Invent is tasked with evaluating the creditworthiness of Zimbabwean buyers and offering underwriting advice to the reinsurers.
Given Zimbabwe's current economic difficulties, exacerbated by a severe drought, the insurance is expected to initially support imports of agricultural products, followed by fertilizers, plastics, and fats. Fachs' managing director, Farai Chris Zimbango, and Invent's managing consultant, Tanaka Zingwanda, both highlighted the significance of this facility in facilitating trade and its alignment with the goals of the African Continental Free Trade Area.
Source: thezimbabwemail.com
Photo source: Dreamstime.com