Improving the Role of Eximbanks/ECAs in the OIC Member States
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4.2 Mandates and Operating Principles of OIC ECAs
The date of establishment of most of the entities in the OIC countries reflects the economic
context facing the country at the time, driven an increasing interest by governments to support
export development.
Most of the Arab economies such as Oman, Qatar, Iran and Saudi Arabia, which are highly
dependent on oil exports, recognized the need to diversify into non-oil sectors. Countries such as
Algeria, Jordan, Lebanon, Nigeria and Senegal aimed to increase their national exports and to
promote trade relations with new markets in the region and globally. In this context, Indonesia,
Kazakhstan, Turkey and Malaysia adopted a sector-focused approach by singling out such
sectors as coffee, rubber, manufacturing, industrial goods and other non-traditional markets in
their respective economies for export promotion, while others such as Pakistan and Albania
identified SMEs as instruments for expanding exports and aimed to improve access to SME credit
through their ECAs.
Some of the ECAs receive their mandates via their constitutive documents or Articles of
Association, while others infer their mandates from shareholder directives. Those with clear
legal mandates tend not to lose focus and become involved in extraneous activities, which
distract from the business of providing export credit facilities. A focused mandate with clear
operating principles provides a sound footing for the ECA to build its business.
A number of ECAs have a requirement not to compete with private sector sources of finance and
insurance – either explicitly in their constitutive documents, or as guiding principles. This is
primarily the case with the lenders within the ECA community, such as Turk Eximbank, Nigeria
EXIM, Malaysia EXIM, SEP of Saudi Arabia, and Indonesia Eximbank, which have specific
requirements not to compete with banks. It also applies to ASEI, the Indonesian insurer, but this
is more related to their general insurance business, for which competition exists. In some cases,
the ECA’s focus avoids catering to those markets of primary interest to commercial banks, i.e.
targeting instead the SME market segment, which is high cost and may be higher risk. In the case
of Indonesia, while there is not to be competition with the private sector, both Eximbank and
ASEI offer some overlap in their export credit insurance products.
The issue of competition is also relevant with regards to the multilaterals ECAs (ICIEC and
Dhaman) wherein some markets such as Jordan and Egypt, some large exporters felt that they
cannot be properly served by the national ECA, hence they sought help from one of the two
regional multilaterals. Or, indeed they resorted to the major international providers who are very
active throughout the OIC region and are becoming an important factor affecting the marketing
strategy and even the business model of many ECAs in the region.
Whether this non-competition requirement is theoretical or a practical point may differ by
institution. If practical, how this requirement gets operationalized by these ECAs is not clear, as it
would require a process of conducting regular market soundings to gauge the changing appetite
and capacity of the private sector. Moreover, an ancillary objective to not competing should be to
collaborate with commercial banks or private insurers, either through co-financing or provision
of guarantees, which help catalyse commercial bank involvement.
Although not typically embedded in statutes or legislation, a number of ECAs have some form of
a client service agreement, such as a charter, offering maximum response times.