Improving the Role of Eximbanks/ECAs in the OIC Member States
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Almost 50 percent of countries in the Arab group have an ECA or similar program, compared to
40 percent of countries in the Asia group and about 10 percent of countries in the Africa group.
3.1.2 OIC Countries without ECAs
There are more Member Countries than not within the OIC without such institutions devoted to
financing or insuring exports. The reasons for this may vary from country-to-country, but are
likely to fall into one or more of the following five categories.
A. There may not be a need for ECA facilities or there is lack of demand
The economic context of the country and export profile is such that commercial banks
are able to meet the needs of exporters and exports are to low risk markets. This has
been the case for Singapore, which has not established an ECA largely because of the
nature of their trade flows and the sophistication of their banking system.
B. The needs of exporters are being met by other national entities
It could also be the case that other institutions are sufficiently covering the needs of
exporters. This would include entities such as the National Development Bank, which
lends to all companies, including exporters, and does not distinguish between exports
and domestic companies.
C. There are needs, but there is lack of awareness on the part of exporters, banks
and the government
Exporters may have traditional buyers to whom they sell their products on open
account terms and are not concerned about the potential risks of non-payment. Banks
have insisted on cash collateral against with to lend working capital and have not asked
for guarantees or pledging of accounts receivables insurance as alternative collateral.
And, the government has not sought to understand the dynamics of trade finance and
potential gaps and opportunities that could be usefully covered.
D. There is lack of financial resources from the government to set up a new
institution/facility
Or, it could be that the need is great, but the government does not have the financial
resources or ability to capitalize a new institution or set up a new facility, without
significant donor funds.
E. There may have been an ECA facility in place in the past, but it expired or failed
Some countries may have experimented with having ECAs in the past and either the
pilot was not renewed, funding dried up or the experience failed because it was
improperly conceived and implemented, and the government may have suffered
significant financial and economic costs as a result. Although there is a need, the
government is unwilling to contemplate the possibility again or look at a new design or
structure.