Sumitomo Corporation, a major Japanese investor in Safaricom Telecommunications Ethiopia Plc, has obtained political risk insurance to safeguard its significant investment in Ethiopia’s telecom sector. The insurance coverage, provided by the African Trade and Investment Development Insurance (ATIDI), is supported by Japan’s Nippon Export and Investment Insurance (NEXI) and marks a historic agreement aimed at reducing risks for foreign investors in Africa.
The ten-year insurance policy is a critical element of the largest foreign direct investment (FDI) ever made in Ethiopia and one of the largest Japanese-backed projects on the continent. Safaricom Ethiopia, which secured its first mobile network license in 2021, counts Sumitomo Corporation, Vodacom, Vodafone Group, and other founding members among its key stakeholders.
This coverage protects against multiple political risks, including government confiscation of assets, currency inconvertibility, and breach of contract. Such financial guarantees are essential for mitigating uncertainty in complex infrastructure projects, thereby strengthening investor confidence.
The announcement was made during a high-level side meeting at the Ninth Tokyo International Conference on African Development (TICAD9) themed “Unlocking Japan’s Private Sector Investment in Africa.” Manuel Moses, CEO of ATIDI, emphasized the importance of innovative partnerships and risk mitigation solutions in unlocking Africa’s vast investment potential. He noted that collaboration to support projects like Safaricom Ethiopia ushers in a new era for Japanese private sector participation across the continent.
NEXI, set to become an ATIDI shareholder in 2023, is actively expanding its support to Japanese companies venturing into African markets, using the Ethiopian telecom project as a flagship example.
In a related development, ATIDI and Mitsubishi UFJ Financial Group (MUFG), one of the world’s leading financial institutions, signed a Memorandum of Understanding to enhance cooperation in providing risk mitigation solutions for Japanese investors across Africa. MUFG’s role focuses on mobilizing international and Japanese capital, while ATIDI offers insurance and guarantees to foster investment.
Ankit Khandelwal, Director for Africa sovereigns and development finance institutions at MUFG, stated that these initiatives align with TICAD9’s objectives of improving quality infrastructure, accelerating energy transitions, and strengthening public-private partnerships.
This expanding network of strategic partnerships between African and Japanese institutions symbolizes a shared commitment to transforming Africa’s potential into long-term sustainable prosperity through targeted investment and collaboration.
