Workshop on Trade Finance in Africa - World...

Africa’s Export Credit Agencywww.Africa-ECA.com

Workshop on Trade Finance in Africa

Case Study: ATI and Trade Facilitation in Africa

Serena Hotel, Nairobi16th March 2006

Nyang’ate MakhuloUnderwriter/Marketing Officer


Case Studies

• Supplier Credit• Invoice Discounting• Medium Term Asset Finance• Term Loan• Buyer Credit• Structured Trade Commodity

Finance


Case Study 1Supplier Credit


Supplier Credit• TRANSACTION: Introduction of a GSM

network and WLL in the Rural Areas

• VALUE: USD 8.9 million• RISK COUNTRY: Burundi• TENOR: 4 years• INSURED: Huawei Technologies Limited• BUYER: Onatel, Burundi• COVER: Credit and Political risks• INDEMNITY: 90% • PREMIUM: 2.8% pa


Supplier Credit

Supplier Credit

SupplierHuawei Technologies Limited

BuyerONATEL, Burundi

Turnkey Project for GSM and WLL Insurers

ATILloyd’s syndicates

Policy Issued


Supplier CreditRisks Covered

– Non-payment by the Parastatal– Cancellation of Licences and Government

Prohibition – Embargo– Expropriation– Imposition or Increase of Import/Export Taxes,

levies and duties– Inability to Convert and Transfer Currency due to

Government action/inaction– Inability to Convert and Transfer Currency due to

lack of foreign exchange– War or Civil Disturbance or Civil Commotion


Case Study 2Invoice Discounting


Invoice DiscountingTRANSACTION: Sale of Fresh and

Frozen FishANNUAL TURNOVER: USD 2.7 millionEXPORTER’S COUNTRY: KenyaRISK COUNTRIES: Europe & Middle EastTENOR: One year BUYERS: WholesalersCOVER: Credit RisksINDEMNITY: 85% PREMIUM: 0.6% of turnoverADDITIONAL: Assigned to financing

bank


Invoice Discounting ExporterAfro Meat, Kenya

BuyersBelgium NetherlandsGreece SpainIsrael UAEMalta

Exporter’s BankBarclays Bank of Kenya

Exporting Fresh and Frozen fish Insurers

ATIAtradius

Invoice

Discounting

Policy assigned

Policy Issued


Invoice Discounting

Risks Covered– Pre-shipment cover –

unilateral cancellation by the buyer

– Insolvency of the buyer– Protracted Default


Case Study 3Medium Term Asset Finance


Medium Term Asset FinanceTRANSACTION: Finance for the purchase of

Mining Equipment VALUE: $15 millionRISK COUNTRY: Zambia TENOR: 4 years INSURED: Bank Belgolaise, ParisBORROWER: First Quantum Minerals,

ZambiaCOVER: Political RisksINDEMNITY: 100% PREMIUM: 0.775% pa


Medium Term Asset Finance Supplier

BuyerFirst Quantum Minerals, Zambia

Buyer’s BankBelgolaise Bank,Paris

Mining Equipment

InsurersATIAIG

Medium Term

Asset Finance

InsuranceUSD 15 million


Medium Term Asset Finance

Risks Covered– Expropriation– Currency Inconvertibility and

Transfer– Political Violence– War and Civil War– Forced Abandonment


Case Study 4Term Loan


Term LoanTRANSACTION: Construction of apartment

blocksVALUE: USD 1.6 MillionRISK COUNTRY: BurundiTENOR: 3 yearsINSURED: Shelter AfriqueBUYER: Société Immobilière Publique

(SIP)COVER: Political RisksINDEMNITY: 100% PREMIUM: 1.4% pa


Term Loan

InsuranceUSD 1.6 million

LenderShelter Afrique

BorrowerSIP, Burundi

InsurerATI

Term Loan


Term LoanRisks Covered

– Cancellation of Licences and Government Prohibition

– Embargo– Expropriation– Imposition or Increase of Import/Export Taxes,

levies and duties– Inability to Convert and Transfer Currency due to

Government action/inaction– Inability to Convert and Transfer Currency due to

lack of foreign exchange– War or Civil Disturbance or Civil Commotion


Case Study 5 and 6Buyer Credit


Buyer Credit 1TRANSACTION: Bank’s loan for purchase of

equipment for a Brewery VALUE: USD 12 millionRISK COUNTRY: BurundiTENOR: 5 yearsINSURED: PTA BankBORROWER: Brarsseries et Limonaderies du

Burundi S.A. (Brarudi)COVER: Political risks INDEMNITY: 100% PREMIUM: 2.0% pa


Buyer Credit 1

Buyer’s BankPTA, Bank

SupplierHeineken, Belgium

BuyerBrarudi, Burundi

KBC Bank (Belgium)

Brewery EquipmentUSD 12 million

InsurersATILloyd’s Syndicates

Buyer Credit

Line of credit Assignment

of PolicyInsurancePolicy


Buyer Credit 1Risks Covered

– Cancellation of Licences and Government Prohibition

– Inability to Convert and Transfer Currency due to Government action/inaction

– Inability to Convert and Transfer Currency due to lack of foreign exchange

– War or Civil Disturbance or Civil Commotion


Buyer Credit 2TRANSACTION: Sale of GSM equipment VALUE: EUR$ 30 millionRISK COUNTRY: KenyaTENOR: 4 yearsINSURED: Siemens, BelgiumREINSURED: ONDD (Belgian ECA) BUYER: Safaricom LimitedCOVER: Credit and Political Risks INDEMNITY: 90%PREMIUM: 3.6% pa & pro rataADDITIONAL: Assigned to financing banks


Buyer Credit 2

Buyer’s Banks (Kenya)Barclays Bank of KenyaCitibank N.ACommercial Bank of AfricaNational Industrial CreditStanbic Kenya LimitedStandard Chartered

SupplierSiemens, Belgium

BuyerSafaricom, Limited, Kenya

Export Credit Agency (Belgium)Office Nationale duDucroire (ONDD)

GSMEquipmentEUR 30 million

ReinsurersATILloyd’s Syndicates

Insurance coverEUR 27 million

ReinsuranceEUR 14 million

Assigned Policy

Buyer Credit


Buyer Credit 2Risks covered

– Cancellation of the contract– Non-payment of the claims– Insolvency of the buyer– Buyer default– War, revolutions or riots– Natural disasters such as earthquakes,

volcanic eruptions or tidal waves– Foreign currency shortage– Government intervention


Case Study 7Structured Trade

Commodity Finance


Structured Trade Commodity Finance

TRANSACTION: Sale of Crude Palm Oil for manufacturing of edible oils and soaps

VALUE: USD 9.3 millionINTEREST: Supplier from the Far EastRISK COUNTRY : TanzaniaTENOR: 1 yearINSURED: European bank lending to supplierCOVER: Asset Deprivation InsuranceINDEMNITY: 100% PREMIUM: 0.612% flat


Structured Trade Commodity FinanceLender

European Bank

BorrowerMauritian Importer


InsurerATILloyd’s Syndicates

InsuranceUSD 9.3 million



Risks Covered– Confiscation– Interference with Possession or Export

Rights– Inability to Convert and Transfer Currency

due to Government action/inaction– Inability to Convert and Transfer Currency

due to lack of foreign exchange– War or Civil Disturbance or Civil

Commotion


Insurance Brokers/Representatives

Liaison office

Through the ATI’s website www.Africa-ECA.com

via [email protected]

[email protected]

By telephone +254 (0)20 271 9727+254 (0)20 272 6999

ATIContacts

Workshop on Trade Finance in Africa - World...

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