INTERNATIONAL DELEGATION TO NAMPO
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Transcript of INTERNATIONAL DELEGATION TO NAMPO
INTERNATIONAL INTERNATIONAL DELEGATION TO DELEGATION TO
NAMPONAMPO
PRESENTED BY CHRIS THIRION
HEAD: PLANNING & PORTFOLIO MANAGEMENT16 MAY 2011
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ROLE OF ECAsROLE OF ECAsEXPORT CREDIT AGENCIES AND SPECIFICALLY THE EXPORT CREDIT INSURANCE CORPORATION OF SOUTH AFRICA UNDERWRITES
BANK LOANS SUPPLIERS CREDITS INVESTMENTS
ABROAD TO ENABLE SOUTH AFRICAN CONTRACTORS TO PARTICIPATE IN CAPITAL GOODS & SERVICES CONTRACTS OTHER COUNTRIES.
COUNTRY ANALYSIS
Exposure on African continent of USD 925 million spread over: Angola 2% DRC 9% Gabon 1% Ghana 4% Malawi 10% Nigeria 2% Mozambique 60% Sudan 3% Swaziland 1% Uganda 3% Zimbabwe 4% Zambia 0.5% Seychelles 0.5%
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Export CreditExport Credit
SA Exporters
Exporter’s Cover GREs
Policy of Insurance# 100% PRI# 85% CRI (Project Finance); ≤ 100% CRI Corp. Buyer
SA LENDER(S) BUYER
LOAN AGREEMENT# Loan = 85% of SA Contract Price
# Interest = LIBOR + 2.50%# Tenor = 2 – 10 years
IMU
Exporter Undertaking Agreement # 50% SA Content or # Qualifying Exporter
South Africa Foreign Country
SUPPLY AGREEMENT
# Export Capital Goods/Services
# Payment Terms: 15% Down Payment 85% Financial Credit
# Delivery Period: up to 36 Months
TRADE RISKSTRADE RISKS
EXPROPRIATION
LOSS DUE TO EXPROPRIATORY MEASURES TAKEN BY HOST GOVERNMENT
TRANSFER RESTRICTION
LOSS DUE TO ACTION BY HOST GOVERNMENT PREVENTING THE CONVERSION OF LOCAL CURRENCY INTO HARD CURRENCY OR THE TRANSFER OF HARD CURRENCY OUT OF THAT COUNTRY
TRADE RISKS (Continue)TRADE RISKS (Continue)
WAR & CIVIL DISTURBANCE – LOSS DUE TO ACT OF WAR, CIVIL COMMOTION, TERRORISM AND SABOTAGE
BREACH OF CONTRACT – LOSS DUE TO A MATERIAL BREACH BY HOST GOVERNMENT OF A CONTRACT ENTERED INTO WITH THAT GOVERNMENT
PROTRACTED DEFAULT – LOSS DUE TO PAYMENT DEFAULT BY GOVERNMENT BORROWER/GUARANTOR
TRADE RISKS (Continue)TRADE RISKS (Continue)
CONTRACTOR NON-DELIVERY – pre shipment
INSOLVENCY – SEQUESTRATION, LIQUIDATION OR JUDICIAL MANAGEMENT OF THE BORROWER
PROTRACTED DEFAULT – AN UNDISPUTED PAYMENT DEFAULT BY THE BORROWER
CONCLUSIONCONCLUSION
NOT GETTING PAID!
DUE TO:
POLITICAL AND RELATED INTERVENTION COMMERCIAL OUTCOMES
POLITICAL AND RELATED POLITICAL AND RELATED INTERVENTIONINTERVENTION
EXPROPRIATION
WAR & CIVIL DISTURBANCE
BREACH OF CONTRACT
PROTRACTED DEFAULT
TRANSFER RESTRICTION
NON-CONVERTABILITY
CONCLUSIONCONCLUSION
NOT GETTING PAID!
DUE TO:
POLITICAL AND RELATED INTERVENTION COMMERCIAL OUTCOMES
COMMERCIAL OUTCOMESCOMMERCIAL OUTCOMES
INSOLVENCY
SEQUESTRATION, LIQUIDATION OR JUDICIAL MANAGEMENT OF THE BORROWER
PROTRACTED DEFAULT
AN UNDISPUTED PAYMENT DEFAULT BY THE BORROWER
TRADE ACTIVITIES TRADE ACTIVITIES EXPOSED TO RISKSEXPOSED TO RISKS
EXPORT CREDIT SUPPLIERS CREDIT FINANCIAL CREDIT
INVESTMENTS EQUITY INVESTMENTS SHAREHOLDERS LOANS COMMERCIAL LOANS
EXPORT CREDITEXPORT CREDIT
SUPPLIERS CREDIT CREDIT TO FOREIGN BUYER GIVEN BY EXPORTER
TRADE RISKS INVOLVED: PRE-SHIPMENT - POLITICAL POST-SHIPMENT - POLITICAL AND COMMERCIAL
MITIGATION: PRE-SHIPMENT PRI COVER PREVENTING EXPORT DUE TO
POLITICAL EVENT IN COUNTRY OF DESTINATION POST-SHIPMENT PRI AND CRI COVER ENSURING
PAYMENT IS RECEIVED TO A LEVEL OF 100% OR 85% FOR PRI AND CRI RESPECTIVELY
TRADE ACTIVITIES TRADE ACTIVITIES EXPOSED TO RISKSEXPOSED TO RISKS
EXPORT CREDIT SUPPLIERS CREDIT FINANCIAL CREDIT
INVESTMENTS EQUITY INVESTMENTS SHAREHOLDERS LOANS COMMERCIAL LOANS
EXPORT CREDITEXPORT CREDIT
FINANCIAL CREDITRECOURSE OR NON-RECOURSE LOANS PROVIDED TO FOREIGN BUYERS TO PROCURE CAPITAL GOODS & SERVICES FROM SOUTH AFRICAN EXPORTERS/ CONTRACTORS
TRADE RISKS INVOLVED: FINANCIAL INSTITUTION EXPOSED TO POLITICAL ANDCOMMERCIAL RISKS ON OUTSTANDING LOAN ADVANCED
MITIGATION: POST-SHIPMENT PRI AND CRI COVER AGAINST NON-PAYMENT
TO A LEVEL OF 100% PRI AND FROM 85% UP TO 100% CRI ON LOAN ADVANCED
TRADE ACTIVITIES TRADE ACTIVITIES EXPOSED TO RISKSEXPOSED TO RISKS
EXPORT CREDIT SUPPLIERS CREDIT FINANCIAL CREDIT
INVESTMENTS EQUITY INVESTMENTS SHAREHOLDERS LOANS COMMERCIAL LOANS
INVESTMENTS INVESTMENTS
EQUITY INVESTMENTINVESTOR MAKING AN EQUITY INVESTMENT IN A FOREIGN ENTITY FOR THE PURPOSE OF EXPANDING OR DIVERSIFYING ITS BUSINESS
SHAREHOLDER LOANSHAREHOLDER ADVANCING A LOAN TO THE FOREIGN ENTITY
COMMERCIAL LOANFINANCIAL INSTITUTION PROVIDE A COMMERCIAL LOAN TO FOREIGN GOVERNMENT OR PRIVATE SECTOR ENTITY TO EXPAND BUSINESS, INFRASTRUCTURE, DEVELOPMENT OF A NEW PROJECT, EXPANDING OF EXISTING PROJECT
INVESTMENTS INVESTMENTS
TRADE RISKS INVOLVED:
EQUITY INVESTMENT INTERVENTION BY FOREIGN GOVERNMENT RESULTING IN BUSINESS NOT BEING
ABLE TO OPERATE AS ENVISAGED OR NOT MAKING PROFITS FOR A CONSECUTIVE PERIOD OF THREE YEARS
NOT BEING ABLE TO REPATRIATE CAPITAL AND DIVIDENDS
SHAREHOLDERS LOAN – NOT BEING ABLE TO REPATRIATE THE LOAN AS WELL AS INTEREST EARNED
COMMERCIAL LOAN – NOT BEING ABLE TO REPATRIATE THE LOAN AS WELL AS INTEREST EARNED
MITIGATION: INSURANCE COVER UP TO 90% OF THE INVESTMENT (ACTUAL CASH EQUITY),
SHAREHOLDER LOAN OR COMMERCIAL LOAN INSURANCE COVER UP TO 90% OF DIVIDENDS OR INTEREST (NOT EXCEEDING IN
AGGREGATE THE AMOUNT OF CASH EQUITY INVESTED OR CAPITAL AMOUNT OF LOAN)
LEVELS OF COVERLEVELS OF COVER
Cover up to 90% should the required % SA content be achieved
SA Content:
Materials less imported component Wages & salaries (paid in SA) Freight costs (paid in SA) Insurance premiums (issued in SA) Finance charges (excluding post delivery) Fees & charges & profits
SA LOCAL CONTENT SA LOCAL CONTENT POLICYPOLICY
No minimum % applies to projects in Africa:
Exporter to be resident in SA as defined in terms of Income Tax Act no 58 of 1962
Exporter must have entered into export contract with foreign buyer
Exporter must have financial & technical means Exporter to achieve minimum score of 30% in terms of
the Broad Based Black Economic Empowerment Scorecard
50% SA local content applies to rest of the world as well as to projects in Africa if the BBBEE scorecard cannot be met
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ECIC Worldwide ExposureECIC Worldwide Exposure
ASSISTANCE TO SMEsASSISTANCE TO SMEs
Performance Bond Insurance
Supplier’s Credit for Small Medium Transactions
PERFORMANCE BOND PERFORMANCE BOND INSURANCEINSURANCE Developed in partnership with IDC;
Focus on SMMEs facing financing capacity hindrances;
Enable SMMEs to participate in exports of capital goods & services;
PERFORMANCE BOND PERFORMANCE BOND INSURANCEINSURANCEProduct Criteria:
Bond value to 10% of contract price
Bond callable on demand
SMMEs to benefit (National Small Enterprise Act, Act 102 of 1996)
Export contract value not exceeding USD10 million
Credit term two years or more
ASSISTANCE TO SMEsASSISTANCE TO SMEs
Performance Bond Insurance
Supplier’s Credit for Small Medium Transactions
SUPPLIER’s CREDIT FOR SUPPLIER’s CREDIT FOR SMALL MEDIUM SMALL MEDIUM TRANSACTIONSTRANSACTIONS Rationale for the development of the Rationale for the development of the
productproduct
Improve turnaround times for concluding and financing of small & medium transactions
To cater for transactions ranging from US$1million to US$ 20 million more effectively
SUPPLIER’s CREDIT FOR SUPPLIER’s CREDIT FOR SMALL MEDIUM SMALL MEDIUM TRANSACTIONSTRANSACTIONS Rationale for the development of the product Rationale for the development of the product
(continue)(continue)
To assist small to medium exporters to offer their clients credit that is simple and quick to implement
To create jobs in SA and to stimulate economic growth
To improve ECIC competitiveness in the market
2009 SUPPPORT 2009 SUPPPORT AGREEMENTAGREEMENTLocal Banks
ABSA First Rand Investec Standard Nedbank IDC
International Banks
Royal Bank of Scotland Standard Chartered Citibank Deutsche Bank Credit Agricole