Export credit insurance policy uptake increases

BY MTHANDAZO NYONI

THE Export Credit Guarantee Corporation of Zimbabwe (ECGC) has seen an increase in the number of exporters taking up the export credit insurance cover policy. The performance of insured exports, however, remains low due to high production costs among other constraints.

ECGC is an export credit agency (ECA) wholly owned by the Reserve Bank of Zimbabwe and is meant to offer financial services to exporters.

Head of operations Andrew Mafukidze told NewsDay, that the company received a significant number of enquiries for the export credit insurance cover last year as a result of the gradual increase in overall national exports.

“Almost 90% of these enquiries resulted in exporters taking up the policy as they realised the immense benefits it offered,
which include compensation in the event of default by foreign buyers; increase in export sales through offering credit terms; venturing into new markasaets and increasing the number of buyers; and credit assessment or vetting of foreign buyers,”
Mafukidze said.

“The major challenge was that although we issued out the policies to exporters, performance in terms of insured exports was not high enough,” he said.

Mafukidze said this could be attributed to constraints in the domestic economy that include high production costs, shortages of foreign currency for procuring raw materials and re-tooling as well as low capacity utilisation being experienced, especially by the manufacturing sector.

He said their plans for this year were to enhance and deepen their role as a world-class insurer of export and domestic trade.

“In this respect, therefore, we will intensify our engagements with exporters with a view to assisting them to increase their exports and to diversify into other markets. We will obviously be highlighting the benefits of credit insurance, which has been embraced in most of the economies which have done well in terms of exports, such as South Africa, India and China,
to name a few,” he said.

“As you may be aware, we received an additional $10 million capital mid-last year, which effectively puts us in the top five insurance companies in Zimbabwe in terms of capitalisation. This development has greatly enhanced our underwriting capacity,” Mafukidze said.

He said they remained optimistic about 2019 and were determined to continue
playing their role as the national export credit agency.

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