Zimnat sets up trade credit insurance unit

ZIMNAT has established a specialist division offering trade credit insurance to cover the risk of payment default for traders supplying goods on credit to both local and foreign markets.


The new stand-alone division will offer surety bonds and guarantees.

Speaking to NewsDay on Monday, Zimnat official, Shepherd Tembo said the division hoped to facilitate exports through the trade credit insurance.

“The division expects to promote and facilitate international trade through export trade credit insurance, which will give local companies the confidence to export to different international markets, knowing that the risk of non-payment is offset by the insurance cover they have,” he said.

“Given that Zimnat will be taking over that risk, it has to undertake due diligence and thoroughly vet the companies that are being supplied with goods on credit, that means the company taking out the insurance policy has the added benefit of a free vetting service.

“Often, such vetting, particularly when it is of a company abroad, is costly.”

The insurance will also cover exporters seeking bank loans to finance their exports and the export credit insurance covers the risk of non-payment when exporters offer trade credit to foreign buyers.

In the event of default, companies that have taken out trade credit insurance will be supported by Zimnat in recoveries from the debtor.

In terms of the domestic credit insurance, this will be made available to local suppliers to cover the risk of non-payment when they offer trade credit to local companies.

Tembo said the new division intended to remodel the way trade credit insurance and surety were done in Zimbabwe through tailoring what would be generic products to suit particular circumstances to facilitate trade.

“In this way, the insurance provides suppliers with access to advantageous financing facilities by leveraging on the buyer’s stronger credit rating,” he said.

The division offers trade facilitation bonds as well.

“These performance or advance payment bonds guarantee the successful execution of the underlying trade contracts by the traders or suppliers,” Tembo said.

In October 2017, the African Trade Insurance (ATI) Agency set up shop in the country with the goal of providing local players with export finance, export credit risk insurance and finding buyers outside the country for exporters.

The goal was to get exporters to increase exports with the support of the ATI if the foreign buyers defaulted on paying for the goods.

The idea was to plug the widening trade deficit.

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