Manufacturers require long-term financing options, says ECGC

HARARE - The Export Credit Guarantee Corporation of Zimbabwe (ECGC), a wholly owned subsidiary of the Reserve Bank of Zimbabwe, was formed in 1999 as part of measures to offer credit insurance and guarantee to exporters.

Dakarai Mashava recently spoke to ECGC Managing Director Sekai Chirume on the  operations ECGC.

Below are excerpts of the interview:

Question: What is the Export Credit Guarantee Corporation of Zimbabwe (ECGC)?

Answer: ECGC is Zimbabwe’s national export credit agency which was formed in 1999 and started its operations in 2000. It is a wholly owned subsidiary of the Reserve Bank of Zimbabwe. 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.

Q: We understand you have put in place an export payments insurance policy, what does it entail and what are its benefits?

A: The export payments insurance policy is a versatile insurance programme offering exporters insurance cover against a wide spectrum of commercial and political risks. The cover offered by the policy protects exporters from unpredictable non-payment risks inherent in export transactions and to assist them in obtaining easy access to post-shipment finance from financial institutions.  In addition, exporters are able to increase their export turnover, unhindered by the fear of loss, consequent upon entering new markets and taking on new buyers.

Q: Are your operations regulated by the Insurance Pensions Commission (IPEC)?

A: Yes, our operations are regulated by IPEC

Q: The Government recently injected $10 million into ECGC, how far will this investment help you promote export trade growth?

A: The injection of $10 million by the Reserve Bank of Zimbabwe will indeed have a positive effect on ECGC’s operations. It will increase our underwriting capacity, which will ultimately benefit the exporting sector. Furthermore, this injection is supporting our credit guarantee scheme under which we are providing guarantees to the financial sector in respect of facilities extended to mostly micro, small and medium enterprises (MSMEs), some of whom may be exporting.  It is all in the spirit of financial inclusion as the MSME sector would normally find it difficult to access these facilities in the absence of collateral security.

Q: Is ECGC adequately fulfilling its mandate? What challenges are inhibiting your work?

A: Yes, ECGC is fulfilling its mandate as it has been able to reach out to exporters through the various industrial associations and a number of exporters have been able to utilise our services. The major challenge inhibiting our work is the country’s low export performance.

Q: What is your view on the country’s current export performance?

A: ECGC is not happy with the current low export performance, which has resulted in a trade deficit, and especially the low performance from the manufacturing sector.  There are several factors affecting performance of this sector and it is our hope that these challenges, which are currently being addressed, will lead to a significant improvement in export performance.

Q: What should be done to make local companies more competitive on the export market?

A:For local companies to be more competitive there should be uninterrupted supply of foreign currency for the purchase of essential raw materials and retooling for most of the companies as they are using outdated machinery. Long term financing options should also be availed to manufacturers. The issue of high interest rates charged by financial institutions continue to be of concern and is a major impediment to growth and competitive production of goods.

Q: Can you share with us plans you have lined up to help local companies export more?

A: ECGC, in partnership with relevant stakeholders such as ZimTrade, CZI, ZNNC, financial institutions, plans to intensify its outreach to local companies to avail them with relevant information to improve export performance.

 

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