Improving the Role of Eximbanks/ECAs in the OIC Member States
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are used (open account or letter of credit). A key point will be which banks or financial
institutions are involved and the nature and extent of each of the major financing players
(e.g. are they local or foreign banks). Are factoring, invoice discounting or forfaiting used
and to what extent?
It is also vital to collect information and details of the extent to which exporters and
banks are using credit insurance and on who supplies this insurance.
Another area will be to establish clearly what the government via all its entities and
agencies is already doing to support, promote, encourage and to finance/subsidize
exports either directly or indirectly e.g. via tax concessions.
Much of this work will involve consultations with exporters, trade associations,
chambers of commerce and with banks and financial institutions involved in financing
trade and, in addition, with insurance brokers and with credit insurers operating locally
in the country.
2. Define and analyze the market gap: This implies a comprehensive understanding of a
country’s whole trade cycle, and all those who play in it whether private or public sector
and whether they are potential users or partner/counterpart/competitor. Appropriate
roles for each player (local banks and other private sector financial institutions, host
government, IFIs, etc.) need to be considered. Successful programs are built from the
bottom up; they have tended to be the result of an internal momentum to address a
specific gap in support or a specific problem. A survey of potential users of the programs
(i.e. exporters) is necessary to clearly understand their needs and to develop a strong
database of prospective clients for future marketing once the program is up and running.
The challenge therefore is not only to diagnose accurately the problem (the reason for
the gap), but also to target the solution (product) and its delivery mechanism so that it
hits its mark. And it is only by having a very clear objective that success of the scheme
can be assessed.
Inherent in this research and analysis will be trying to establish with as much precision
as possible whether problems exist – e.g. is shortage of working capital a problem - and
the nature and extent of problems. One exporter’s difficulty in obtaining export financing
on desired terms is not, by itself, evidence of a financing gap, or a problem that needs
fixing. The analysis should look for systemic failures or gaps which can reasonably be
addressed through public policies or institutions.
The end result of this analysis should be to establish with as much detail and clarity as
possible:
a. The nature and extent of the current and future needs/requirements of exporters
in terms of finance and credit insurance