afreximbank seminar/workshop 2 december 2010, cairo
DESCRIPTION
Promoting Africa-German Trade: Financing Opportunities under Hermes Cover-Afreximbank Collaboration Andreas Klasen. Afreximbank Seminar/Workshop 2 December 2010, Cairo. Agenda. Introduction and Background German Exports to Africa Hermes Cover Cover Policy for Africa - PowerPoint PPT PresentationTRANSCRIPT
All rights reserved. Copyright © 2010Euler Hermes Kreditversicherungs-AG and PricewaterhouseCoopers AG WPG.
Promoting Africa-German Trade: Financing Opportunities under
Hermes Cover-Afreximbank Collaboration
Andreas Klasen
Afreximbank Seminar/Workshop
2 December 2010, Cairo
page 2
Agenda
1. Introduction and Background
2. German Exports to Africa
3. Hermes Cover
4. Cover Policy for Africa
5. Cooperation Afreximbank/Hermes Cover
6. Conclusion
page 3
Background Germany
►German exports approx. EUR 1,000 bn p.a., thereof approx. EUR 20 bn p.a. to Africa
►Substantial private insurance cover for export economy; restrictions, e.g. regarding risks in emerging and developing countries
►The Federal Republic of Germany is economically interested in promoting German exports
► In 2009, approx. 2.8% of German exports were covered by governmental Export Credit Guarantees
►Approx. 20% of all German exports to developing countries
page 4
Background Crisis Response – Consequences on ECAs I
►During the crisis ECAs were forced to act counter-cyclically and flexible
►Substantial increase in demand for ECA cover in combination with ECA related government action
►ECAs are approached by new customers and are getting involved in new industry sectors and/or buyer countries such as EU and other OECD countries
Cover is sought for risks that used to be perceived as save
page 5
Background Crisis Response – Consequences on ECAs II
►Governments response with new/amended insurance products and cover policies in order to facilitate export finance
►(Re-) Entry of ECAs in the field of marketable risks (short term cover for EU and OECD countries) due to restrictions of the private credit insurance market
ECAs are extending their umbrella – rather than closing it
page 6
Agenda
1. Introduction/Background
2. German Exports to Africa
3. Hermes Cover
4. Cover Policy for Africa
5. Cooperation Afreximbank/Hermes Cover
6. Conclusion
page 7
German Exports to Africa:African Imports / German Exports
► Total German Exports 2009: USD 1,128 bn
Export Growth 2005 – 2009: +3%
► German Exports to Africa 2009: USD 24 bn
Export Growth 2005 – 2009: +16%
► Total African Imports 2009: USD 455 bn
Import Growth 2005 – 2009: +41%
thereof: Northern Africa: +66% Sub-Sahara: +29%
page 8
German Exports to Africa: 2005 – 2009 (m EUR)
5.662
2.662
1.465
1.291
1.276
1.126
1.063
289
209
202
6.672
1.700
1.081
658
926
1.008
760
116
142
229
1. South Africa
2. Egypt
3. Algeria
4. Libya
5. Morocco
6. Tunisia
7. Nigeria
8. Angola
9. Ghana
10. Sudan
2009
2005
Exemplary Composition of Exports to Egypt (2007)
26% Machinery and Equipment
18% Chemicals, Synthetics and Pharmaceuticals
16% Electrical and Optical Devices
14% Vehicles
page 9
German Exports to Africa (m EUR):Top 10 - New Hermes cover volume Africa
7
43
24
23
89
53
88
179
141
299
13
30
35
45
49
72
82
89
256
331
10. Togo
9. Uganda
8. Libya
7. Ghana
6. Nigeria
5. Kenya
4. Morocco
3. Algeria
2. Egypt
1. South Africa
01/2010 - 10/2010
01/2009 - 10/2009
South Africa: Infrastructure deals finalised
Egypt: Investments in manufacturing
Kenya & Ghana: Private sector thriving
page 10
Agenda
1. Introduction/Background
2. German Exports to Africa
3. Hermes Cover
4. Cover Policy for Africa
5. Cooperation Afreximbank/Hermes Cover
6. Conclusion
page 11
Hermes CoverOur business model
We as Export Credit Agency (ECA) act as intermediate between the German government and exporters/ banks located in Germany
Organisation: Agreement of service provision with German private
companies (mandataries)
Mandataries: Euler Hermes Kreditversicherungs-AG and PricewaterhouseCoopers AG
Pure cover for export credits (Export Credit Guarantees)
page 12
Hermes Cover:Risks covered
Political risks General political risks (e.g. war, revolution, nationalisation) Convertibility and transfer risk (impossibility of converting or transferring
amounts deposited into foreign currency) Loss of the right to receive payment due to frustration of contract for
political reasons The loss of goods before the risk has passed to the foreign buyer due to
political circumstances
Commercial risks Irrecoverability of claims (e.g. insolvency) Protected default
page 13
Hermes Cover:Criteria for cover of exports
Eligibility for promotion e.g. job promotion, market entry, promotion of SMEs
Justifiability of the risk e.g. reasonable prospect for the smooth execution of
the project
Terms of contract Conformity with intergovernmental agreements and
international guidelines for transactions
Budgetary restrictions Statutory max. exposure limit: EUR 120.0 bn
page 14
Hermes Cover:International framework
Organisation for Economic Co-operation and Development Applicable to all official support provided by or on behalf of a government
for export of goods and/or services, which have a repayment term of two years or more
Advanced and interim payments of at least 15% of the export contract value at or before the starting point of credit
Maximum credit periods, differentiated by country groups:
High-income: max. 5 - 8.5 years
Low-income: max. 5 - 10 years Limit for local cost – max. 30 % of the export contract volume Semi-annual repayment profile in equal instalments First instalment not later than six months after the starting point of credit
page 15
Hermes Cover:Product portfolio for exporters and banks
Whole-turnover and revolving cover
Whole-turnover and revolving cover Single transaction coverSingle transaction cover Supplementary forms
of coverSupplementary forms
of cover
Whole-turnover Policy
Whole-turnover Policy light
Revolving supplier credit cover
Revolving buyer credit cover
Supplier credit cover Buyer credit cover Framework credit
cover Manufacturing risk
cover Constructional works
cover Airbus Guarantee Project financing Ship financing
L/C confirmation risk cover
Counter-guarantee Confiscation risk
cover Leasing cover Securitisation
Guarantee Securitisation
Guarantee for the KfW Refinancing Programme
Contract bond cover
page 18
1,4%2,2%
3,3%
4,0%
6,2%12,2%
20,1%
19,3%
21,4%
9,9%
Infrastructure
Aircraft industry
Ships
Manufactoring industry
Energy
Papertrade, timber, leatherand textile industryService industry
Mining industry
Agriculture and food industry
OtherSource: Annual report 2009
Award of Excellence – Best ECA2005, 2007, 2008, 2009 & 2010
Hermes Cover:Facts and figures
page 19
Agenda
1. Introduction/Background
2. German Exports to Africa
3. Hermes Cover
4. Cover Policy for Africa
5. Cooperation Afreximbank/Hermes Cover
6. Conclusion
page 20
Cover Policy for Africa:Facts and figures
page 21
Cover Policy for Africa:OECD Country risk categories
LK = Country Risk Ranking Category
LK 1 LK 2 LK 3 LK 4 LK 5 LK 6 LK 7
Algeria
Angola
Cote d'Ivoire
Egypt
Ghana
Gabon
Kenya
Libya
Morocco
Nigeria
South Africa
Uganda
page 22
General Cover Policy for Africa:
Despite Africa’s high market potential, urgent needs still remain unsatisfied
Federal Republic of Germany has opened cover possibilities for Africa
Maximum credit periods, depending on country groups: Some countries were opened up for cover during the last five years
(Nigeria, Libya, Angola) Benchmark countries are even listed without country limits (Algeria,
South Africa)
However, only limited market response
Restrictive approach on local costs and foreign content
Consideration of sustainable lending practices
page 23
Cover Policy for Africa:Sustainable lending
Purpose Lending that supports a borrowing country‘s economic and social progress Without endangering its financial future and long-term development prospects
Transactions concerned Only public buyers Only medium and long term transactions (> 360 days)
Considerations Public debt situation of the respective country according to IMF / World Bank IMF and World Bank conditions (Concessionality Requirement) as of March 1,
2010 (subject to constant change) Kenya and Nigeria are not subject to IMF/WB Concessionality Requirements
Angola => case-by-case approach
Mauretania => case-by-case approach (usually grant element required)
page 24
Cover Policy for Nigeria:
General terms: Short term credit deals with public buyers require guarantees from the
Ministry of Finance or the Central Bank No cover for credit deals with public buyers
Short-term transactions: Strict private buyer audit, in case of doubt bank guarantees required Cover for future deliveries will be automatically suspended if payment is
not received 8 weeks after the agreed due date at the latest
Long-term transactions (credit periods of more than 12 months): Private buyer: EUR 200m ceiling
(Above only for project financed and other structured finance deals) Volume limit EUR 20 m
page 25
Cover policy for Ghana:
General terms: No cover for credit deals with public buyers
Short-term transactions: Strict private buyer audit, in case of doubt bank guarantees required
Long-term transactions (credit periods of more than 12 months): Cover facilities are available on a case-by-case basis for smaller
transactions with private buyers as well as such public buyers which are established as private sector organization without recourse to public funds
Cover facilities available for project financed and other structured finance transactions
page 26
Cover policy for Gabon:
General terms: Reopened cover possibilities for deals with public buyers
Short-term transactions: No restrictions
Long-term transactions (credit periods of more than 12 months): Public buyer: case-by-case basis & major contract values only on the
basis of eligibility for support Cover facilities are available for project financed and other structured
finance transactions; if necessary based on countertrade deals
page 27
Cover Policy for Africa: Hospital facilities in Angola
► Buyer: Angolan Government
► Exporter: Simed International GmbH
► Project:
Set up a dialysis ward in Saurimo
Delivery of medical equipment for another hospital
► Contract value: USD 18.7 m
► Cover: Buyer credit cover (8.5 years)
► Specifics: The order is particularly eligible for cover since it makes an important contribution to the healthcare system of the country, which was severely impaired by the civil war.
page 28
Cover Policy for Africa:Emergency vehicles in Egypt
► Buyer: Egyptian Ministry of Health
► Exporter: Wietmarscher Ambulanz- und Sonderfahrzeug GmbH (WAS)
► Kind of goods: 600 ambulances with high-performance air-conditioning and complete set of medical equipment
► Contract value: EUR 31.4 m
► Cover: Counter guarantee for advance payment guarantee, maintenance bond and contract bond
► Specifics: The order is particularly eligible for cover since the Ministry will deploy the ambulances both in big cities and in rural areas and since it makes a substantial contribution to securing jobs at WAS.
page 29
Agenda
1. Introduction/Background
2. German Exports to Africa
3. Hermes Cover
4. Cover Policy for Africa
5. Cooperation Afreximbank/Hermes Cover
6. Conclusion
page 30
Cooperation Afreximbank/Hermes Cover:Jointly finding business solutions for Africa
Cooperation with Afreximbank will allow:
► Cover for short-term trade and medium- and long-term projects
► Cover of projects in countries where a strong business partner was not available
► Consideration of projects with substantial contract values
page 31
Cooperation Afreximbank/Hermes Cover:Criteria for partnership
Main factors to be assessed:
► Financial Statements, particularly the equity position
► Quality of risk management Quality of the loan portfolio Management of currency risk Management of liquidity risk
► Transparency of business figures
► Shareholder structure
Afreximbank has convinced us
to be a reliable partner
page 32
Cooperation Afreximbank/Hermes Cover:Different types of acceptance
► Acceptance on a case by case basis Specific characteristics and eligibility of the project are evaluated Build up a common business experience
► General acceptance Streamlined procedures up to a certain exposure limit Re-negotiations necessary once exposure limit has been reached
► Most favourable acceptance is yet to be determined
Afreximbank can act as guarantor or as loan and contract partner
page 33
Cooperation Afreximbank/Hermes Cover:Inclusion of further partners
Classical ways of cooperation:►Parallel insurance ►Joint insurance►Reinsurance
Exploration of new types of cooperation:►Cooperation with the private market
page 34
Agenda
1. Introduction/Background
2. German Exports to Africa
3. Hermes Cover
4. Cover Policy for Africa
5. Cooperation Afreximbank/Hermes Cover
6. Conclusion
page 35
Conclusion
Promotion of Africa-German Trade:
►Emerging countries as major partners also in the years to come
►ECA-financing as a factor of stability in an environment of
instable world financial markets
►Hermes Cover is looking forward to a mutual beneficialpartnership
page 36
Thank you for your attention!
Further information is provided under:
Hotline: +49 (0) 40/88 34-90 00
www.agaportal.de
Andreas Klasen
Telefon:+49 (0)40 / 8834 – 9500