West African Insurance Companies Association (WAICA) in partnership with the Economic Community of West African States (ECOWAS) is set to create and establish an agency for the protection of foreign direct investment in the sub-region against the uncertainties of political and other related risks.
Speaking at the annual general meeting of WAICA hosted in The Gambia by the Insurance Association of The Gambia (IAG) on 16 and 17 April, the secretary general and chief executive officer of WAICA, William B. Coker, said the idea of establishing the agency, dubbed WAICA/ECOWAS Investment Guarantee and Reinsurance Agency, is prompted by the fact that safety and protection of investment is a major concern to all current and potential stakeholders, especially investors, in West Africa.
“This venture is another vehicle that can be used to facilitate regional economic integration, which is the aim of both WAICA and ECOWAS,” Mr Coker said, adding that the agency is a private sector player which will be run and managed as a commercial venture; “therefore the issue of bureaucracy will not be there”.
The reinsurance aspect of the project will be taken care of by WAICA Reinsurance Corporation, which is a new reinsurance company set up by WAICA, Mr Coker disclosed.
When operational, the agency will give potential investors worldwide the opportunity to invest in West Africa knowing that they are protected against political uncertainties and other related risks that might ruin their investment.
Analysts say a major factor inhibiting the flow of foreign direct investment into the ECOWAS region is the unstable political environment of its member states and their very weak democratic governance structures.
Foreign investment will however flow to the regions where risk can easily be mitigated, returns are commensurate to risk and safety of capital can be guaranteed, which is what the proposed agency is set to do.
New forms of political risks have played up in the last decade to deter FDI to the region the more. These risks range from corruption to communal unrest, disruption to business operation, and unilateral investment policy changes by national governments.
Therefore establishment of the investment guarantee institution as a mitigating measure will help bolster investor confidence on the safety of their investment capital and in turn ensure better flow of FDI into the sub-region.