Improving the Role of Eximbanks/ECAs in the OIC Member States
1
Executive Summary
The Committee for Economic and Commercial Cooperation of the Organization of Islamic
Cooperation (COMCEC) Coordination Office has commissioned this study which is aimed at
increasing awareness of the role of Eximbanks and Export Credit Agencies (ECAs) in supporting
exports. The study also aims to contribute to improvements in the efficiency of these entities in
member states.
ECAs and their role in Trade
ECAs are financial institutions or facilities established by governments to support exports and
investments by providing a range of financing services. An ECA’s basic mandate is to support and
encourage exports and outward investment by providing financial services in support of
international trade and investment transactions. The driving force of any such entity is to grow
and/or expand the export sector or specific exports, promoting trade and ultimately
contributing to a strong economy. In doing so, the focus is on diversification of a country’s export
base and supporting new and existing exporters in developing their businesses.
An ECA’s intervention in the export market aims to meet the financing needs of exporters.
Depending on the business model of the ECA, it may provide financing directly to exporters, or
indirectly through guarantees issued to commercial banks who lend to exporters, and/or credit
insurance to exporters and banks. ECAs may also provide support to importers to facilitate their
payment obligations to exporters. Business models, status, objectives, institutional
arrangements, and government involvement vary widely from country to country, reflecting
their own unique national circumstances.
In a global context, ECAs also play a role of central importance in international trade and
investment flows. In 2013 alone, the members of the Berne Union, the International Credit and
Investment Insurance Association (including both public and private institutions), insured USD
1.9 trillion in credit and investment, the equivalent of more than 10 percent of world trade.
Rationale for Establishing an ECA
There are essentially two main motivations for a government to establish an ECA. The first
reason that governments set up ECAs is for the purpose of diversifying a country’s export base
and export markets. As part of the export promotion policy to broaden their export base beyond
a certain sector or export product, and seek to expand their export markets beyond traditional
buyers, the establishment of an ECA can be an important took to achieve these objectives. The
second reason ECAs are established are to fill market gaps and address market disruptions. The
“market gap” is defined as the part of the market that is not served effectively by the private
sector sources of finance or risk mitigation. As a result, the range of products and support
available from a given ECA usually will depend on what other institutions are able to provide to
the market and where these market gaps occur. Market gaps may occur because there is
insufficient profit or excessive risk to attract private sector financial institutions. Information
gaps and a poor understanding of institutional context are frequently behind these perceptions
of risk.
ECAs in the OIC Member Countries
The OIC countries are relatively new in the business of export credit support, as compared with
the OECD countries. Out of the 57 member countries, only 23 have ECAs, Eximbanks or similar
programs. Among these, Egypt, Indonesia and Iran have both an insurance and lending agency,