Increased exports to boost uptake of Export Credit Insurance: CZI
By Insurance24
HARARE, The manufacturing sector is optimistic on increased uptake of the Export Credit Insurance as the sector anticipates growth in exports.
The Export Credit Guarantee Corporation (PVT) Ltd, (ECGC), a wholly owned subsidiary of the Reserve Bank of Zimbabwe and a duly registered short term insurer.
The company provides credit insurance and guarantee services in a manner that enables exporters to manage payment related risks and obtain sufficient credit from banks to meet export orders beyond the limitations of the collateral security available to them.
In an interview, Confederation of Zimbabwe Industries (CZI) President Sifelani Jabangwe said industry’s thrust has been to satisfy local demand but due to the need to generate more foreign currency, focus has shifted to exports.
“Low uptake of the facility has been a result of low exports and bulk of the exports was commodities. The thrust is now on growing manufacturing sector exports which will see increased uptake of the insurance guarantee to safeguard losses,” he said.
He added that in most cases, supplies or buyers offer varying periods of 30 or 90 days for payments upon which several have defaulted.
“Therefore, in that regard, if your exports are covered you will be reimbursed while the insurer recovers your loss. We have witnessed several companies that have had suppliers failing to honour their obligations,” he said.
Exports increased to $3.5billion in 2017 but the country still recorded a trade deficit of $1.4billion, a situation which calls for concerted efforts to enhance export performance.
However, local manufacturing companies have also potential to boost sales locally through the Domestic Credit Insurance offered by the Export Credit Guarantee Corporation (PVT) Ltd, (ECGC) which enables companies to sell on credit.
As a result of increased defaults, several companies adopted cash selling models, restricting credit facilities to as minimum as 10%.
