U.S. DEPARTMENT OF AGRICULTURE (USDA)U.S. DEPARTMENT OF AGRICULTURE (USDA)FOREIGN AGRICULTURAL SERVICEFOREIGN AGRICULTURAL SERVICE

(FAS)(FAS)

Michele Kennedy-KouadioOffice of Trade ProgramsCredit Programs

GSM-102 EXPORT CREDIT GUARANTEE PROGRAM

Doing Business in Africa – Global Trade Forum

November 18, 2013

TRADE PROGRAMSTRADE PROGRAMSFOREIGN AGRICULTURAL SERVICE (FAS)) http://www.fas.usda.gov

Lead international agency in the United States Department of Agriculture (USDA)—

Represents a network of USDA agencies and private companies through its partnership with U.S. Cooperator Groups

FAS OVERSEAS ATTACHES,COUNSELORS, AND TRADE OFFICES http://www.fas.usda.gov/ofso/overseas_post_directory/ovs_directory_search.asp

Point of contact for overseas banks, importers, and governments in overseas markets desiring information about GSM-102 or other programs that help with importation of U.S. agricultural products into their countries

TRADE ASSOCIATE REPRESENTATIVEShttp://www.fas.usda.gov/pcd/PartnersSearch.aspx

By products such as U.S. Wheat Or regional such as SUSTA

U.S. GOVERNMENT AGENCIES THAT PARTNER UNDER THE NATIONAL EXPORT INITIATIVE (NEI)

U.S. Export Import Bank, Overseas Private Investment Corporation, U.S. Small Business Administration/Office of International Trade, U.S. Department of Commerce, U.S. Department of Agriculture, U.S. Agency for International Development’s Development Credit Authority

GSM-102 CREDIT GUARANTEE PROGRAM GSM-102 CREDIT GUARANTEE PROGRAM

Facilitates export financing of U.S. agricultural products by guaranteeing repayment to U.S. banks (or exporters) that extend credit terms to USDA approved banks in the Africa Middle East (AME) region.

http://www.fas.usda.gov/excredits/foreignbanks.html

Buyers of U.S. agricultural products in the AME region seek financing opportunities under GSM-102 when banks in the AME region are reluctant to lend

Importers can seek terms through USDA approved banks in the AME region, even when the shipment destination country is not the same as the location of the bank opening the L/C. Not all countries in the AME region are eligible to have banks approved.

http://www.fas.usda.gov/excredits/countryrisk.html

BANKS: CREDIT TERMS UNDER GSM-102 BANKS: CREDIT TERMS UNDER GSM-102 USDA approved banks in the AME must open an L/C in favor of the exporter of the

U.S. agricultural product

The U.S. bank may or may not confirm the L/C as confirmation is not required under the program

U.S. bank will negotiate credit terms with the foreign bank in the AME region according

to parameters of the GSM-102 program

Tenor extended to the USDA approved bank in Africa will be limited according to the risk grade of the country where the bank resides http://www.fas.usda.gov/excredits/countryrisk.html

The cost of the program is the fee paid by the exporter to USDA http://www.fas.usda.gov/excredits/gsm102fees.html

SUCCESS: SUCCESS: ALL GSM-102 PARTICIPANTS BENEFIT ALL GSM-102 PARTICIPANTS BENEFIT

May help importer obtain attractive loan terms with the USDA approved foreign bank

USDA approved foreign bank receives a

dollar trade credit on attractive terms from the GSM-102 guarantee holder (U.S. bank typically)

Reduces risk to the U.S. bank (or exporter)

Helps exporter of U.S. agricultural

products enter new growth markets in the AME region

IMPORTERS: STEPS TO PARTICIPATEIMPORTERS: STEPS TO PARTICIPATE Learn about the details of participating in

GSM-102 through the USDA representative that covers your country

Find an exporter of the U.S. desired agricultural commodity

Enter into a firm sales contract with the exporter

Negotiate loan terms under GSM-102 with a USDA approved bank who is willing to open an L/C

Ask the exporter to register the export sale contract under the GSM-102 program

The exporter will provide a copy of the sales contract to USDA if required

The U.S. exporter must pay the GSM-102 fee before shipment of your goods and before a GSM-102 guarantee is issued

Note:

As GSM-102 does not cover the

risk of the AME bank opening the L/C,

the bank is likely to review the

importer’s company financials and cash

flow to cover any risk the bank may

assume—

  Risk CategoryTenor 0 1 2 3 4 5 6

90 Days $0.182 $0.186 $0.196 $0.257 $0.343 $0.463 $0.614

4 Months $0.211 $0.215 $0.227 $0.296 $0.398 $0.535 $0.716

6 Months $0.236 $0.241 $0.254 $0.332 $0.445 $0.599 $0.796

9 Months $0.323 $0.330 $0.347 $0.453 $0.608 $0.819 $1.088

12 Months $0.350 $0.357 $0.376 $0.491 $0.659 $0.887 $1.178

15 Months $0.492 $0.503 $0.529 $0.691 $0.928 $1.248 $1.658

18 Months $0.561 $0.574 $0.604 $0.789 $1.058 $1.424 $1.892

24 Months $0.686 $0.700 $0.737 $0.963 $1.293 $1.738 $2.310

GSM-102 (Premium per $100 USD of GSM-102 coverage)Semi-Annual Payment of Principal

FEE PAID BY EXPORTER TO USDA FOR GSM-102 GUARANTEEFEE PAID BY EXPORTER TO USDA FOR GSM-102 GUARANTEEBased On Tenor (Between Banks), Risk Grade Of Country Where Bank Is Located, Amount Of Sales Contract Covered Under GSM-102, and Repayment Intervals

  Risk CategoryTenor 0 1 2 3 4 5 6

9 Months $0.435 $0.445 $0.468 $0.611 $0.821 $1.104 $1.468

12 Months $0.464 $0.474 $0.499 $0.652 $0.875 $1.177 $1.564

15 Months $0.602 $0.616 $0.648 $0.846 $1.136 $1.528 $2.030

18 Months $0.667 $0.682 $0.717 $0.937 $1.258 $1.692 $2.248

24 Months $0.851 $0.869 $0.915 $1.195 $1.604 $2.157 $2.866

GSM-102 (Premium per $100 USD of GSM-102 coverage)Annual Payment of Principal

FEE PAID BY EXPORTER TO USDA FOR GSM-102 GUARANTEE FEE PAID BY EXPORTER TO USDA FOR GSM-102 GUARANTEE Based On Tenor (Between Banks), Risk Grade Of Country Where Bank Is Located, Amount Of Sales Contract Covered Under GSM-102, and Repayment Intervals

AME BANK PARTICIPATIONAME BANK PARTICIPATION

Read about details of the GSM-102 program

http://www.fas.usda.gov/excredits/reg.asp

Contact Credit Program Division Representative for Details - Michele.Kouadio@fas.usda.gov

Discuss possible terms that could be negotiated with your U.S. correspondent banks under GSM-102

Look at the guidelines to apply for review and approval under the GSM-102

http://www.fas.usda.gov/excredits/foreignbankreq.html

Your bank must have a location in an AME bank eligible country

Importer of U.S. goods will seek loan terms from the AME bank

As the terms extended under GSM-102 to the AME bank occur because the importer is buying U.S. agricultural products

The AME bank benefitting from the trade credit, will likely be encouraged to extend loan terms to the importer

Your bank may receive up to two years (varies by location of the bank in country) in repayment terms to the U.S. bank

The loan you extend to the importer is not guaranteed under GSM-102, and USDA is not involved in the terms between the foreign bank and the importer

GLOBAL USAGEFY 2011 – 2012 (in USD

millions)

+Eurasia Region discontinued in 2012

$ U

SD

Mill

ions

GSM-102

AME REGIONAME REGION10/1 thru9/30

ShippingLocation

Announced($mil)

Registered ($mil)

Bank Used in the AME

Agricultural Products

2011 Egypt, Morocco, Saudi Arabia, Nigeria, Guinea Bissau, Iraq, Ghana

$350 $239 Africa Export Import Bank (Multilateral Egypt) , Mashreqbank (UAE), Investec (South Africa),

Soybean Meal Soybean Oil Wheat Yellow Corn

2012 Angola, Egypt, Ghana, Morocco, Saudi Arabia, Tunisia

$400 $246 *

* reflects cancellations

Afrexim MashreqbankInvestecMauritius Commercial Bank

Poultry, Soybeans, Rice, Soybean Oil, Wheat, Yellow Corn, Soybean Meal

2013 Angola, Egypt, Ghana, Libya, Nigeria,Tunisia

$475 $173 Mauritius Commercial Bank, Africa Export Import Bank, Investec, Mashreqbank

Poultry, Soybeans, Soybean Meal, Wheat, Soybean Oil, Rice, Yellow Corn

U.S. MARKETS – U.S. MARKETS – Leading Regional Markets:• Sub Saharan Africa ranks 12th • North Africa ranks 14th

BICO Report through June 2013

SubSaharan Africa (BICO – June 2013)

Top U.S. Markets – Not in Rank order

Ghana

Ethiopia

South Africa

Angola

Kenya

Liberia

Cameroon

Gabon

Nigeria

SubSaharan African Top U.S. MarketsSubSaharan African Top U.S. Marketsby Commodity Categoryby Commodity Category

(Tons) BICO Report Oct-Dec 2012 (Tons) BICO Report Oct-Dec 2012Country Consumer

OrientedIntermediate Bulk

Nigeria 12,347 5,505 193,475

Ethiopia 1,017 149 50,470

Angola 65,938 1,902 2,522

Ghana 53,087 4,497 41,085

Kenya 3,363 13,350 23,885

Cameroon 440 2,238 23,786

Gabon 18,948 202 130

South Africa

12,931 10,545 21,549

CongoBrazzaville

13,945 52.9 0

CongoKinshasa

11,624 21.2 2.8

PRODUCTS COVERED PRODUCTS COVERED Must Must be U.S. origin be U.S. origin

• Bulk commodities (wheat, feed grains, soybeans, rice)

• Intermediate products (oilseed meals, flour, hides, genetics, seeds, saplings)

• Consumer-oriented products (meat, fruits, vegetables, grocery products)

• Fiber: cotton and wool, including fabric and yarns

• Forest Products: Wood and wood products

http://www.fas.usda.gov/excredits/gsmcommodities.html

ELIGIBLE COUNTRIESELIGIBLE COUNTRIES

AFRICA AND MIDDLE EAST REGION

Participating Countries Can Receive Shipments; and *Some are also Eligible to Have Banks Approved:

Afghanistan, Algeria*, Angola*, Bahrain*, Benin, Botswana*, Burkina Faso*, Burundi, Cameroon*, Cape Verde*, Central African Republic, Chad, Comoros, Cote d’Ivoire, Democratic Republic of the Congo, Djibouti, Egypt*, Equatorial Guinea, Eritrea, Ethiopia, Gabon*, Gambia, Ghana*, Guinea, Guinea-Bissau, Iraq, Israel*, Jordan*, Kenya*, Kuwait*, Lebanon*, Lesotho*, Liberia, Libya, Madagascar, Malawi*, Mali, Mauritania, Mauritius*, Morocco*, Mozambique*, Namibia*, Niger, Nigeria*, Oman *, Pakistan, Qatar*, Republic of the Congo, Republic of South Sudan, Rwanda, Saudi Arabia*, Senegal*, Seychelles, Sierra Leone, South Africa*, Swaziland*, Tanzania*, Togo, Tunisia*, Uganda*, United Arab Emirates*, West Bank/Gaza, Yemen, Zambia* and Zimbabwe. 

* USDA has determined that the following countries in this region are eligible to have banks approved (as of August 7, 2013):

Check Website Routinely for Additions/Deletions

Banks interested in becoming approved by CCC should visit the link below for more information. http://www.fas.usda.gov/excredits/foreignbanks.html

ELIGIBLE BANKSELIGIBLE BANKS• Eastern and Southern African Trade and Development Bank (PTA Bank),

Burundi/Kenya (Multilateral)• African Export-Import Bank (Afrexim), Egypt (Multilateral)• Byblos Bank S.A.L., Lebanon• The Mauritius Commercial Bank Ltd., Mauritius• Attijariwafa Bank, Morocco• BMCE Bank, Morocco• Investec Bank Limited, South Africa• Nedbank Limited, South Africa• Abu Dhabi Commercial Bank PJSC, United Arab Emirates• Credit Europe Bank (Dubai) Ltd., United Arab Emirates• Mashreqbank PSC, United Arab Emirates• National Bank of Ras Al-Khaimah PSC (Rakbank), United Arab Emirates

USDA REPRESENTATIVES IN AFRICAUSDA REPRESENTATIVES IN AFRICA

ETHIOPIA – American Embassy, Addis Ababa

Quintin Gray, Counselor

agaddisababa@fas.usda.gov

Covers African Union, Djibouti, Eritrea, Somalia,

South Sudan, Yemen

KENYA – American Embassy, Nairobi

Kate Snipes, Counselor

agnairobi@usda.gov

Covers Burundi, Malawi, Rwanda, Tanzania, Uganda, Zambia

NIGERIA – U.S. Consulate General, Lagos

Russell Nicely, Counselor

aglagos@fas.usda.gov

Covers Benin, Cameroon, Ghana, Liberia

SENEG AL – American Embassy, Dakar

Joani Dong, Attache

agdakar@fas.usda.gov

Covers: Burkina Faso, Cote d’Ivoire, Mali,

Niger, The Gambia

SOUTH AFRICA – 877 Pretorius Street, Pretoria

Eric Wenberg, Minister Counselor

Corey Pickelsimer, Senior Attache

Nicolas Rubio, Attache

agpretoria@fas.usda.gov

Covers: Angola, Botswana, Lesotho,

Madagascar, Mauritius, Mozambique,

Namibia, Swaziland, Zimbabwe

OFFICE OF TRADE PROGRAMSOFFICE OF TRADE PROGRAMSCREDIT PROGRAMS DIVISIONCREDIT PROGRAMS DIVISIONGSM-102 Export Credit Guarantee Program GSM-102 Export Credit Guarantee Program

Africa and the Middle East

Business Development and Planning Michele.Kouadio@fas.usda.gov