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Judith Phiri, Business Reporter
THE Export Credit Guarantee Corporation (ECGC) of Zimbabwe has called on exporting businesses and entities to ensure they have Export Credit Insurance that guarantees they are protected against the risk of non-payment by a foreign buyer.
ECGC is a private company wholly owned by the Reserve Bank of Zimbabwe (RBZ) and as an Export Credit Agency reinsures both commercial and political risk, to promote and facilitate Zimbabwe’s international trade.
In a webinar jointly hosted with ZimTrade on Thursday, ECGC Credit Insurance Underwriter, Ms Neo Chitanga said Export Credit Insurance was a vital element of the economic infrastructure.
“It allows exporters to accept foreign transaction risks while avoiding possibilities of catastrophic loss. Without the support offered by Credit Insurance, some critical transactions would not take place,” she said.
She said political risks covered by the insurance include war, civil disorder, foreign currency transfer delay, payment suspension or freeze, cancellation of buyer’s authority to import and failure by foreign government buyer to fulfil contractual obligation.
Among commercial risks covered, Ms Chitanga said these were buyer insolvency in liquidation or receivership, buyer’s protracted default, buyer’s non-acceptance of goods and insolvency of bank issuing or confirming a letter of credit.
“Benefits of Export Credit Insurance include compensation in case of a loss occurring, business growth as the Export Payment Insurance Policy (EPIP) allows you to enter new markets with confidence and enables you to expand your presence where your business is already active.”
Ms Chitanga said it also increases the exporter’s access to finance, easier access to information on customer credit worthiness and assistance in solving collection difficulties. In terms of country risk assessment, she said there were categories with countries in A considered very safe and those in Z being high risk countries.
Examples of countries in category A include Germany and Spain, in B considered safe being South Africa and Botswana; Namibia and Kenya fall in category C considered moderately safe countries.
While in category D, countries like Uganda and Cameroon are considered risky countries to tread with care and countries such as Iraq and Lebanon fall in category Z of high-risk countries.
“Factors used in country assessment include domestic political and social situation, external relations of the country, economic structural factors, domestic, economic and institutional situations as well as balance of international payments and external debt.”
Ms Chitanga said buyer assessment for exporters should be based on creditworthiness of buyer looking at form of business and age, terms of payment, commercial morality and financial standing among others. She urged exporters to source information about the buyers before exporting to them from information bureaux, ECGC’s own underwriting experience, banks and other export credit agencies.
ZimTrade Eastern Region development officer, Mr Admire Jongwe said as the national trade development and promotion organisation, they were rolling out a number of programmes and initiatives to capacitate small to medium enterprises (SMEs) and local entrepreneurs in enhancing production standards and exporting.
He said they were growing the presence of Zimbabwean products internationally through their increased participation in international trade leveraging on their network of stakeholders and continued quality service.
Zimbabwe continues to record growth in exports with the total for last year breaching the US$7 billion mark. The National Export Strategy and National Trade Policy target to grow exports to US$7,2 billion by the end of 2023.
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