Improving the Role of Eximbanks/ECAs in the OIC Member States
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5.3.3. Canada
An ECA that Makes Exports Happen
Export Development Canada (EDC) was established (as a predecessor organization) in 1944 and
is Canada’s official ECA. EDC is financially self-sufficient and operates much like a commercial
institution, and pays dividends to the government out of its profit. Aside collecting interest (from
loans) and premiums (from insurance), EDC has a treasury department that issues bonds and
raises money in global capital markets.
EDC is 100% owned by the Government of Canada and reports to Parliament via the Minister of
International Trade. Although it has a completely private sector Board (apart from the CEO), it
must submit annual corporate plans for approval to the Ministers of Finance and International
Trade, which includes a borrowing limit approved by the Department of Finance. In addition,
EDC operates the “Canada Account”, which is Canada’s National Interest Account, for
transactions too risky or large to take on the corporation’s balance sheet.
EDC is a full service ECA, offering the range of export credit and financing products. In addition
to loans, guarantees and insurance, EDC has an equity program, which is geared towards
investing in Canadian export companies which face a shortage of private equity as well as in
private equity funds both in Canada and in emerging markets.
ECAs typically look at national benefits to determine eligibility of their support, usually in the
form of value-added national content in the exports they support. EDC takes a much broader
view of its mandate, referring to “integrative trade”, which they refer to as “the expansion of the
traditional export model to include direct investment abroad, the integration of imported inputs
into exports and the establishment of foreign affiliates”. With the support of the government,
EDC’s broader definition of eligibility, along with its financing powers, thus permits it to lend to
or invest in companies, projects or funds which may have downstream Canadian benefits.
Consistent with the strategy to support integrative trade, EDC employs a “pull strategy” in which
it lends to borrowers or project, or invests in funds where there is a possibility of influencing the
procurement towards Canadian goods and services. For example, EDC has invested in private
equity funds in China, whose Chinese investee companies have then been introduced to
Canadian technologies. Or, EDC has participated in a syndicated bank loan to a large foreign
corporate, dealing with the CFO for the financing but introducing the company to what Canada
has to offer in terms of expertise. EDC has 16 international offices, with nearly 40 staff working
on the ground and works closely with the Canadian Trade Commissioner Service.
Unlike many OECD ECAs, whose mandates are focused on “market gaps”, EDC is a competitive
player. Although Canada’s financial system is generally very robust and active (showing their
resilience during the global financial crisis), the Canadian commercial banks are less involved in
export finance for large capital goods exporters, unlike their counterparts in the US and Europe,
as this is still largely the domain of EDC, which can lend directly. Meanwhile, in the short-term
credit insurance market, the Big 3 are active in Canada, but EDC remains the largest player in the
market and is highly competitive.
The US is Canada’s largest trading partner, with 73% of exports destined to the US. Oil & gas
contribute 29% of the value of exports, with transportation equipment and machinery combined
at 26%. As a commercially-oriented player, EDC is active in this market and these sectors.