The Sunday Mail
ZIMBABWEAN exporters have for a long time been receiving a raw deal when conducting business outside the country.
Quite a number of exporters have been duped into dubious deals that have left them, not only with tears of regret but powerless as the avenues for redress on the international market are on many occasions vague.
Realising these difficulties, the Reserve Bank of Zimbabwe in August 1999 established the Export Credit Guarantee Corporation of Zimbabwe (ECGC) whose main task is to offer credit insurance and guarantee facilities for these troubled exporters. Since 1999, the ECGC has been working wonders to promote the growth and diversification of the country’s export trade.
The Sunday Mail Business caught up with the ECGC managing director, Ms Sekai Chirume who has been at the helm of this important company since its formation. She says while other players in the field are mainly driven by the profit motive, ECGC is driven by the RBZ need to boost export trade and generate more foreign currency for the country. Read on …
SMB: Can you briefly explain to us when the Export Credit Guarantee Corporation of Zimbabwe was formed and what necessitated the formation of this company?
Ms Chirume: ECGC is a wholly owned subsidiary of the RBZ. It was incorporated in August 1999 and commenced operations in 2000. Its primary objective is to promote the growth and diversification of Zimbabwe’s export trade through the provision of financial services that address the needs of this sector. The company aims to achieve this objective by providing credit insurance and guarantee facilities in a manner that enables exporters to manage payment/buyer related risks and obtain sufficient credit from banks to meet export orders beyond the limitations of collateral security available to them. The provision of these services, which are generally available to exporters in competitor countries, levels the playing field for Zimbabwean exporters and enables them to compete much more effectively in export markets. The insurance service allows exporters to increase their exports by taking on new buyers and expanding into new markets. Banks will use the guarantee scheme to manage their lending risk to exporters.
SMB: What exactly does the ECGC do and do you think many people know about it?
Ms Chirume: ECGC promotes and facilitates Zimbabwe’s domestic and international trade; provides specialized skills to Zimbabwean exporters to enable them to assess and analyse cross border risks in their efforts to sustain and expand export markets. ECGC also assesses the creditworthiness of domestic and foreign buyers trading with its clients. The organisation also enhances Zimbabwean businesses’ competitive positions through enabling them to offer credit facilities similar to those offered by other countries; and assists new traders and Micro Small and Medium Enterprises (MSME) to access finance from financial institutions.
In the past, ECGC marketed its products directly to potential clients through industry organizations and other bodies such as ZimTrade. With the emergence of the MSME sector as the new economy and engine for growth, ECGC now intends to widen its reach to include this important sector.
SMB: What are some of the products that ECGC offers and who are your target clients?
Ms Chirume: We have the Export Payments Insurance Policy targeting exporters; Domestic payments Insurance Policy targeting manufacturers and suppliers of products who sell on credit terms to their clients, Customs bonds targeting shipping and forwarding companies and companies with in-house shipping and clearing departments.
We also have all classes of short term insurance products targeting individuals and corporate clients
SMB: Can you briefly explain the Export Payments Insurance Policy? The target clients, which countries you cover and how this policy has been received?
Ms Chirume: The Export Payments Insurance Policy is a versatile insurance program offering exporters insurance cover against non-payment of their export proceeds due to a wide spectrum of commercial and political risks. The cover protects exporters from unpredictable payment risks inherent in export transactions and assists them in obtaining easy access to post shipment finance from banks. Our target clients are exporters selling their goods on credit terms and we cover all countries. The policy has been well received by exporters who want to protect their export receivables, expand into new markets and increase their sales by offering credit terms.
SMB: How much support have you been receiving from the Reserve Bank of Zimbabwe?
Ms Chirume: ECGC is very grateful for the support it is receiving from the shareholder in the form of; Capital injection which far exceeds the minimum capital requirements set by the regulator, Insurance and Pensions Commission; working capital support and technical assistance in developing the MSME guarantee.
SMB: There are obviously other competitors in the same field, what is the advantage of ECGC over these competitors?
Ms Chirume: We have a strong and supportive shareholder, but more importantly, ECGC plays a pivotal role in the economy through its national mandate to support and facilitate Zimbabwe’s export growth. ECGC, being a quasi-governmental institution, is not so much driven by the profit motive but by the support it offers to exporters to enable them to generate the much needed foreign currency for the country. ECGC has vast experience and expertise in underwriting credit insurance and prides itself in its timeous claims payment ability.
SMB: What are some of the challenges that you have faced since the formation of ECGC?
Ms Chirume: The problems faced by the economy since dollarization have resulted in the business underwritten by ECGC’s going down. These include low capitalisation of companies, lack of access to working capital, use of antiquated machinery, low industry capacity utilization, declining export performance and decline in global mineral prices. On the other hand, some exporters prefer to self-insure their export receipts while the illiquidity in the economy has affected the uptake of general insurance products.
SMB: Going forward, what other products are you thinking of introducing and why?
Ms Chirume: ECGC is currently working on the MSME Guarantee which will soon be introduced as part of the National Financial Inclusion Strategy.
The guarantee will be offered to financial institutions as collateral security for loans advanced to MSMEs after the realization that this sector was failing to access finance due to lack of collateral security. Other new product initiatives are, debt collection and factoring/invoice discounting.
