Improving the Role of Eximbanks/ECAs in the OIC Member States
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Banks, in particular, have shown a great interest in using investment insurance to cover the political
risks involved in lending into project finance structures.
2.2.4 Bonding Facilities
For some guarantees, the direct beneficiary of the guarantee is the buyer, especially for overseas
projects which require bonds in the form of bid, performance, retention and advance payment
guarantees. Most ECAs provide cover to a commercial bank that issues a bond facility to a buyer
on behalf of an exporter. The bonds or letters of guarantee can be tender, advance payment, bid,
performance or retention. A performance bond, for example, is a guarantee of the bank that the
exporter will meet the terms of its contract with the buyer.
A call on the bond will result in a claim paid by the ECA and, if the call on the bond is rightful, the
ECA will seek indemnification from the exporter. Alternatively, ECAs will provide insurance to
the exporter against unfair or wrongful calling for political reasons of these bonds or rightful
calling, covering the performance of the exporter.
2.2.5 Advisory and Other Services
Beyond financial services, most ECAs offer some form of advisory or information services. These
are especially relevant with regards to capacity building for new and inexperienced exporters.
These services range from overseas market information and country/buyer risk assessment to
general export-readiness guidelines for small and medium sized enterprises (SMEs). A few ECAs
also have fairly extensive research units and offer consultancy services to other similar official
trade and investment promotion institutions.
In addition, many ECAs offer buyer credit information on their local companies to other credit
insurers.