Export Fever Heats Up the Markets

Marks, Jon, MEED Middle East Economic Digest

THE advance of free market thinking leaves few stones unturned. Today, it is the traditional role of the state in business and exporting that is being challenged by the private sector. No longer are big export contracts only struck between public companies and supported by state guarantees through export credit agencies (ECAs). The biggest deals today are just as likely to be signed with private-sector clients, forcing major changes in the way that ECAs do business.

National factors may now be less important than the characteristics of the individual company. For credit analysts, a buyer's balance sheet and cash flow are more significant than the country risk and national ceilings that traditionally influenced their lending decisions.

Agencies such as France's Coface have reacted to the change by developing a range of international partnerships. The hope is that these alliances will better equip the agency to assess credit risks, obtain essential information and recover debt efficiently.

Efforts to make international trade fairer, by removing subsidies and channelling aid to where it is most needed, are also changing the way business is conducted. Sectors such as power and telecommunications have been affected very directly. Both sectors are now dominated by private corporations anxious to strike commercial deals and the exercise of any undue government influence on their behalf will attract the scrutiny of the Paris-based Helsinki rules committee.

As export insurers, banks and other financiers respond to these changes, it is having a major impact on the way they conduct business in the Middle East and North Africa. ECAs are looking for new business and are creating instruments that are better tailored to the export opportunities that exist in the area.

For example, the Export-Import Bank of the US (Ex-Im Bank) has created new aircraft and project finance departments to meet a growing demand. Equally, the UK's Export Credits Guarantee Department (ECGD) has overhauled its overseas investment insurance …

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Publication information: Article title: Export Fever Heats Up the Markets. Contributors: Marks, Jon - Author. Magazine title: MEED Middle East Economic Digest. Volume: 38. Issue: 32 Publication date: August 12, 1994. Page number: 11+. © 1999 MEED Middle East Economic Digest. All Rights Reserved. COPYRIGHT 1994 Gale Group.

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