ECIC and SA exporters revitalise the country’s export effort
SA has a wealth of goods, equipment, expertise and services to offer the rest of sub-Saharan Africa
At the TXF Cape Town conference in October, Kutoane Kutoane, CEO of the Export Credit Insurance Corporation of South Africa (ECIC), spoke to TXF editor-in-chief Jonathan Bell about the corporation’s changing focus and the current push for South African exports, with a greater emphasis on markets across Africa.
“Since the ECIC was formed some 16 years ago, we have worked as a traditional export credit agency with the bulk of our emphasis on sub-Saharan Africa,” said Kutoane. “The emphasis placed on our support for South African exports has changed considerably as the country’s industrial sector has changed over the years. Today, we are more focused, and the onus on exporting has become much more important.”
We now also have a new integrated national export strategy, which is good for SA
South Africa has a wealth of goods, equipment, expertise and services to offer the rest of sub-Saharan Africa, and its drive to make inroads into these markets goes hand in hand with industrialisation programmes. The government is only too aware of the need to develop industries and, in turn, jobs and exports to ensure the country climbs out of the recent recession.
Said Kutoane: “The government’s drive to increase industrialisation and job creation throughout the country is something we are heavily supporting in the push to increase capital equipment exports. But at the same time, this industrialisation also goes hand in hand with more traditional processed goods such as value-added processed foodstuffs, consumer goods and other processed materials.
“We now also have a new integrated national export strategy, which is good for South Africa. This has brought much more clarity into the export framework. The strategy also brings together all participants involved in the export chain or cycle, including those involved in the technical side, policy and financing, to provide a united approach for the promotion of South African trade and exports.”
The diversification of South Africa’s industrial base is an essential element of the industrialisation plan, which helps meet some of the requirements of other sub-Saharan African countries without such an advanced industrial base.
“In the past, we had a heavier concentration of transactions within the mining sector, largely because of South Africa’s competencies in that industry,” said Kutoane. “We have followed South African companies in the building of mines in neighbouring countries, the export of technical and logistical support, the supply of mining-related equipment and dump trucks etc, but you can’t rely on this as the times have changed.
“This has been demonstrated since the 2015–16 crisis and the downturn or severe fluctuation in some commodity prices. However, we cannot rely on mining only; you have to diversify your portfolio. As such, the current strategy has been to look well beyond that and diversify the raft of industries and companies that we are supporting with the aim of the diversification of our portfolio and wider support for South African exporting companies.”
Kutoane added: “In this regard, we are now working with companies in key industrial sectors such as oil and gas, transport and the power sector, for example. Beyond this, we are looking at and already supporting South African exporting companies involved in boat building, telecoms and other new technologies. Recent successes within the African continent have been in a range of markets, including Nigeria, Mozambique, Zimbabwe and Zambia.”
As an example of the development of infrastructure to help boost trade, the ECIC is involved in the long-term financing of the Nacala transport corridor, which runs through Malawi to the Nacala port in Mozambique. The ECIC’s support extends beyond financing and provides support for rolling stock as well.
In Sierra Leone, working in partnership with Standard Bank, the ECIC has provided critical support to Grindrod to enable it to supply locomotives and wagons to the Tonkololi mine. The ECIC is also supporting rail locomotive exports in markets such as the Democratic Republic of Congo, Zimbabwe and Zambia.
“Developing some of the support for these other sectors has allowed us to go into markets that are relatively new for us,” said Kutoane. “We are pushing into the oil and gas sector, construction, telecommunications, transport and, of course, power sectors quite strongly as our companies make inroads in new markets.
“We are looking at power projects in Ghana and Mozambique, and other possibilities in Zambia and Zimbabwe. And in the realm of new technologies, we are working with a number of companies. For example, we are exploring export opportunities with Senet and their technological processing with metals and ores, for example.
He added: “We have some other sectors that are fairly niche, and this includes boat building, for example, which is a national priority as a key industry and a creator of skilled jobs. As an example of work in this sector, we have recently supported the South African boat-building firm Nautic in Senegal in West Africa. We had previously done business with them in Ghana.
Success will lead to further success and a broader spread of new markets for us and the South African companies we are supporting
“In addition, we are looking at some export potential in Côte d’Ivoire. These are all West African markets, which allows us to push into territory where we haven’t had that much of a presence. Success will lead to further success and a broader spread of new markets for us and the South African companies we are supporting.”
These types of project resonate with the mandate of the ECIC to facilitate export trade between South Africa and the rest of the continent, with a clear industrial development agenda that is mutually beneficial to the South African economy and the host countries.
In a regional power-sector example, in Mozambique the ECIC supported South African exporters in the development of the 120MW gas-fired power station near the town of Ressano Garcia. That $200-million investment was also a first step in the harnessing of Mozambique’s huge natural gas resources, not only for the benefit of Mozambique and its people but also for the whole of the Southern African region. The ECIC collaborated with Miga [the Multilateral Investment Guarantee Agency] on the project. Standard Bank was the commercial funder.
The ECIC is keen to demonstrate its competitiveness. Kutoane said: “We can be much more competitive than many other countries outside Africa because we are able to utilise the bilateral relations that already exist with many of our trade partners, particularly where we have a relation through a free-trade zone.
“In addition, we can easily work with other export credit agencies where we could act as co-insurers, and being on the ground it is easier for us to deal with any problems that might spring up.”
In an example of recent alliances involving the ECIC to help further the cause of South African exporters, a tie-up with the African Export-Import Bank (Afreximbank) has been finalised. The ECIC negotiated an agreement with the bank through a shareholding on behalf of the South African government.
Said Kutoane: “South Africa wants to utilise all regional arrangements and agreements to help further the cause of South African investments and exports across the continent. This goes beyond normal cooperation arrangements with Afreximbank. It will allow South African exporters to have much wider access to a broader pool of financing, as well as technical expertise.
“Under this, we will look to work with structured trade finance programmes that Afreximbank has adopted to help promote exports. This is something that we must have, and negotiations are at a very advanced stage.”
This article was paid for by the ECIC.