The Export-Import Bank of the United States (Ex-Im Bank) today announced a three-year renewal of the Bank’s Short-Term Africa Initiative (STAI) that provides export-credit insurance for U.S. exporters selling to 18 countries in sub-Saharan Africa, up to a program limit of $100 million. The initiative is renewed through March 31, 2015.
The Bank also anticipates expanding the availability of its export financing in three sub-Saharan African countries: Cameroon, Ethiopia and Tanzania. Ex-Im Bank’s board of directors is expected to authorize cover-policy expansions for each respective country in May. The changes will be made possible by risk-assessment upgrades that were recently approved through a federal interagency review.
“Sub-Saharan Africa offers great, untapped potential for U.S. companies looking to grow by increasing their foreign sales. Through Ex-Im’s initiative, the U.S. government is opening markets throughout this region,” said Ex-Im Bank Chairman and President Fred P. Hochberg. “We encourage more exporters to enter these markets now to establish a presence that can lead to follow-on business for years to come.”
Hochberg added that the financing risks of many sub-Saharan markets have improved significantly and are lower than commonly perceived. He noted that the Bank has had an excellent experience of repayment in these markets in recent years.
“Since 2002, Ex-Im Bank has authorized $4 billion to support U.S. exports to sub-Saharan Africa, and we’ve netted more than $150 million in fees,” Chairman Hochberg said. “Ex-Im’s net loss rate in the region is 2 percent, with our fees earning 2.5 times more than the claims we’ve received. This is a very solid repayment record. We want more U.S. exporters to initiate or expand their business in Africa.”
In FY 2011, Ex-Im Bank surpassed the $1 billion authorizations mark for the first time in sub-Saharan Africa, with almost $1.4 billion approved to support U.S. exports to the region. The Bank anticipates another strong authorizations year in FY 2012.
Under STAI, Ex-Im Bank provides support for short-term transactions (repayment terms of up to 180 days, exceptionally up to 360 days) in markets where coverage would not be available under the Bank’s standard cover policy, which is normally based upon credit-risk analysis for medium-term transactions (repayment terms up to seven years).
Currently, Ex-Im’s insurance on all short-term STAI country transactions is available only under the Bank’s single-buyer insurance policy, which is a select-risk authorization. Existing Ex-Im multibuyer policyholders with a diverse spread of country and buyer risk are also eligible but must submit separate single-buyer policy applications for each STAI country buyer. However, under the initiative’s renewal, exporters having favorable experience with highly creditworthy STAI country buyers may have these buyers endorsed to their multibuyer policy.
Ex-Im’s insurance is available to support U.S. exports of a wide range of goods, including consumer items, spare parts, raw materials, agricultural commodities, and construction and mining equipment, among others. The insurance covers irrevocable letters of credit, promissory notes and open-account repayment terms that enable the exporter to extend short-term financing to the foreign buyer. Policies are also available for eligible U.S. banks.
About Ex-Im Bank:
Ex-Im Bank is an independent federal agency that helps create and maintain U.S. jobs by filling gaps in private export financing at no cost to American taxpayers. In the past five years, Ex-Im Bank has earned for U.S. taxpayers $1.9 billion above the cost of operations. The Bank provides a variety of financing mechanisms, including working capital guarantees, export-credit insurance and financing to help foreign buyers purchase U.S. goods and services.
Ex-Im Bank approved $32.7 billion in total authorizations in FY 2011 — an all-time Ex-Im record. This total includes more than $6 billion directly supporting small-business export sales — also an Ex-Im record. Ex-Im Bank’s total authorizations are supporting an estimated $41 billion in U.S. export sales and approximately 290,000 American jobs in communities across the country. For more information, visit www.exim.gov