THE Export Credit Guarantee Corporation (ECGC) is pushing exporters to get insurance cover which allows them to accept credit terms from buyers thereby boosting exports.
BY TATIRA ZWINOIRA
Part of these efforts include the ECGC engaging with ZimTrade and the Minerals Marketing Corporation of Zimbabwe (MMCZ) to get these bodies to steer some exporters in their direction. ECGC’s moves come at a time when exports failed to meet the 2016 target, attaining $2,83 billon against an initial projection of $3,36 billion.
ECGC head of operations, Andrew Mafukidze told NewsDay yesterday that Zimbabwean exporters needed competitive terms to compete in the region.
“For instance, if someone is exporting to Zambia rather than them insisting on pre-payments they can then give credit terms. But, credit terms in their nature pose a lot of credit risk in that how well do you know the buyer? So as a credit insurance company what we then do is investigate the credit worthiness of those buyers with a view of then saying to our exporter you can then export in 60 or 90 days,” he said.
“In the event of that buyer defaulting we then make good on the loss. Basically, we are simply saying once an exporter has that cover from us they will increase their sales and venture into other markets where they were a bit sceptical to go into.”
ECGC is a wholly-owned subsidiary of the Reserve Bank of Zimbabwe offering up to 90% cover on the loss arising from both commercial and political risks.
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“We have tremendous support from the central bank. We will not have any limit because of the capacity which we have through reinsurance,” Mafukidze said.
Engagements with ZimTrade include attending all their seminars, workshops and meetings in order to make their presence known to attract exporters who participate in the events. For the MMCZ, it has been to get the body to encourage exporters of minerals to get cover.
However, MMCZ has only encouraged exporters of minerals besides platinum, gold, nickel and diamonds to get cover.
Due to the nature of accepting credit terms, experts believe the move to exclude the four minerals stems from the fact they are the top revenue generators out of all minerals in the country.
Mafukidze said ECGC was targeting between 2% and 5% of exporters this year, the same benchmark used by international export credit institutions.
