Improving the Role of Eximbanks/ECAs in the OIC Member States

EDC’s commercial approach is a key success factor. If competition with the private market is not

concern for government, it is an appealing business model, provided highly skilled staff can be

retained. Moreover, giving the entity certain autonomy to make its decisions about what

transactions to support, independently of any government influence, provides a better basis for a

viable business. This, combined with access to a national interest account as a “safety valve” for

certain types of transactions, gives the corporation a means to protect its balance sheet.

The EDC model is sophisticated and may not have relevance to the majority of ECAs in the OIC

region. Nonetheless, the mature and well-managed OIC ECAs may look up to emulate EDC in the

future. Some of the lessons to be drawn from the Canadian example include:

Benefits of a commercially oriented ECA:

while this can impede the growth of the

private market sources of finance and insurance, such a focus does allow the ECA the

opportunity to maximize profits and even pay dividends to its shareholder.

Competition with the private sector is not necessarily a bad thing:

EDC seeks to play

in the same space as commercial banks and insurers. It is unapologetic in this role and

has no specific mandate to complement or catalyze the private market.

The role of government should be carefully circumscribed and defined:

In the case

of Canada, government involvement is limited to ownership, approval of annual plans

and limits on borrowings. No government officials are represented on the Board and

there is no risk of political interference.

Innovations in product offering and approach come from thinking about global

supply chains and how national companies fit:

EDC understands how trade is

evolving and the importance of global supply chains. It no longer narrowly defines what

is an “export” and therefore eligibility for EDC financing and instead creates financing

solutions to maximize the downstream Canadian benefits.

5.4.

Best and Worst Practices of ECAs

Analyzing best practices can be highly informative and helpful to learn how and in what ways

other countries’ ECAs have been successful. However, a critical mistake can be made in simply

“cutting and pasting” initiatives that were successful in one country and applying this to another

country and context.

Differing approaches to public finance, national accounting practices, financial systems,

regulations, governance arrangements, variations in domestic economic conditions and export

market requirements all have a role to play in establishing what may be viewed as an

appropriate export credit business model. For example, one oil-producing country that has

significant depth within its financial institutions, and strong history of good public-sector

management and governance will have a different export credit system than another oil-

producing country with a less mature enabling environment.

Therefore while lessons can be learned from best practice examples, applying these lessons must

be done with care. Equally – and sometimes even more so – are lessons that can be drawn from