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Facilitating
trade and business ties
In 2000, ECGA of Oman became the first Export Credit Agency in the Arab World
and the Africa/Middle East Region to become a member of the Prague Club. Six
years later, Muscat hosted the first meeting of the Club in the Middle East and
Africa region, reports Sunil Kumar Singh
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From L to R:
Ms Kimberley Wiehl, Secretary General, Berne Union Prague Club;
Nasir bin Issa Al-Ismaily, GM, ECGA; and Ms Vida Zabukovec, Chair of
the Conference |
“The bi-annual meeting and workshop of the Prague Club of the Berne Union, also
known as the International Union of Credit & Investment Insurers, was held in
Muscat from December 4 to 6. Hosted by the Export Credit Guarantee Agency (ECGA)
of Oman, the event was important for two reasons. One, it was the first meeting
of the reputed Prague Club in the Arab World and the wider Africa/Middle East
region, and two, the ECGA is the first Arab export credit agency to be a member
of the Prague Club. Representatives of national and multilateral Export Credit
Agencies (ECAs) from 30 countries and 50 participants attended the two-day
meeting, followed by a daylong workshop.
The Prague Club
Berne Union, with its London-based secretariat, is the leading international
forum for both public and private export credit and investment insurance
organisations. It is also a platform for ECAs from different countries to share
experiences and information. It also offers credit insurance and guarantees to
exporting companies, investors and financial institutions against commercial
and/or non-commercial/political risks.
The Prague Club was carved out of Berne Union in 1993 to formalise an
information exchange network for new export credit agencies in Asia, Africa,
Central and Eastern Europe. Today, the Club has 30 member agencies from all over
the globe and seeks to promote best practices in credit insurance by holding
discussions and information exchanges. By the end of 2005, the Club’s credit
insurance volume and premium income had risen to US$ 14.5 billion and US$ 101.4
million, respectively.
Windfall for Oman
Oman’s six-year-old membership in the Prague Club has introduced it to the
latest international regulations such as the OECD Consensus, the Berne Union
Understanding and premium system standardisations among others. This has enabled
ECGA of Oman to streamline its export credit insurance scheme. According to
Nasir bin Issa Al-Ismaily, General Manager of ECGA, the agency has enriched
itself with the international practices and acceptance of sound principles of
credit insurance. It is also well-informed about the rapid changesand new
developments in the industry. It keeps track of the underwriting performances of
other ECAs in the Prague Club, specifically in areas of risk mitigation,
establishing credit limits to exporters, business declarations from exporters,
premium systems, notifications of overdues, claims paid, recoveries as well as
exchange of information on buyers, collections and payment experiences.
The ECGA has also entered into bilateral cooperation agreements with a number of
ECAs of the Prague Club from countries such as Romania, Iran, Slovenia,
Thailand, Jordan, Kazakhstan and lately Uzbekistan. Such bilateral cooperation
entails exchanges of buyer information, sharing experience in payments of claims
on particular debtors/guarantees, assistance in the recovery efforts, or
rendering legal opinion as well as recommending lawyers, visits and training.
Al-Ismaily is also a member of the newly established working group of the Prague
Club that includes representatives from Thailand, Bosnia & Herzegovina, Estonia,
Hungary, Czech Republic, and Africa Trade Insurance Company, a multilateral ECA
for a number of African countries. The ECGA thus has a unique opportunity to
play greater role by contributing and sharing experiences with other
representatives in different geographical regions and convey interest as well as
suggestions on underwriting topics and other important matters for formulation
and inclusion in the agendas for future meetings and workshops.
Talking to OER exclusively, Ms Kimberley Wiehl, Secretary-General, Berne Union
and Prague Club said, “Our experience in the Gulf region has been excellent,
especially in terms of Oman’s representation in the Prague Club. In fact, Oman
was the first member coming from the region. Moreover, both the Berne Union and
Prague Club are facilitating huge investments in the Gulf region in oil & gas
sector, infrastructure, petrochemical, and dredging operations through the ECAs.”
The Prague Club meeting discussed a range of technical and underwriting
questions relating to the business in emerging markets. Topics discussed
included underwriting, buyer scoring, premium pricing, portfolio risk management
besides reinsurance support.
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‘Oman exporters are diversifying into
non-traditional markets’
OER caught up with Nasir Al-Ismaily, General Manager, ECGA, to
know more about the agency’s association with the Prague Club.
Excerpts:
How well has ECGA’s association with the Prague Club worked?
We’re very much pleased to be associated with Prague Club. For us,
it has been a very beneficial relationship in terms of sharing rich
experiences in underwriting for both exports and domestic
businesses, exchanges of information on collections and payment
experiences in different countries, handling of claims and
recoveries, reinsurance and opportunities for training through
various workshops.
Almost 59 per cent of the credit limits issued by ECGA is for GCC
countries and the GCC comprises over 63 per cent of the total number
of buyers. Don’t you feel that in a globalised world, Omani
exporters should look for new markets other than GCC?
Yes, I agree with you. However, ECGA’s credit insurance services
allow Omani exporters to trade at ease and venture into
non-traditional markets, realising that the non-payment risk is
mitigated. And it’s very encouraging that we’ve credit insured Omani
exports to more than 95 countries worldwide. Though the volume of
such exports is low compared to neighbouring GCC markets because of
their geographical proximity, such exports outside the regional
traditional markets are growing.
Does ECGA plan to provide credit insurance to oil exporters also?
Right now we don’t have any such plan. The primary objective of ECGA
is to diversify our economy away from oil and we are encouraging and
supporting non-oil exports by providing valuable credit insurance
and other facilities to Omani exporters.
The value of Oman’s non-oil exports rose to RO 555.3 million in
2005, up by 32 per cent from RO 420.3 million in 2004. It is also
worth mentioning that because of the successes of our export credit
insurance services, ECGA introduced domestic credit insurance cover
on local buyers for exporters so as to allow them to insure their
total shipments – be it export or domestic – so as to cover credit
risks of non payment. This is an acceptable practice by the Berne
Union and increasing number of ECAs within the Prague Club are
providing such cover to their exporters as well.
Apart from credit insurance, what other facilities do you give to
exporters?
In addition to both export as well as domestic credit insurance
services extended to exporters, ECGA also provides financing
facilities on exports through post-shipment by bills discounting
with the commercial banks as well as pre-shipment financing for
working capital needs. We believe the existence of such valuable and
beneficial services extended by ECGA to exporters provide excellent
business opportunities – whether in terms of risk mitigation through
credit insurance or improving liquidity and financing thus
encouraging and supporting Omani non-oil exports. |
Top^
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:: OER - August- 2006 ::
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January -
2007 |
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Cover Story |
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Looking Ahead
New hopes, aspirations, and of course, challenges… Our cover story
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Facilitating trade and business ties
In 2000, ECGA of Oman became the first Export Credit Agency in the Arab
World and the Africa/Middle East Region to become a member of the Prague
Club. Six years later, Muscat hosted the first meeting of the Club in
the Middle East and Africa region, reports Sunil Kumar Singh... |
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productivity and develop human resources, reports Sunil Kumar Singh... |
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Corporate Profile |
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– with transactions touching RO5 million, reports Sunil Kumar Singh... |
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