ECAs are part-government or private institutions which provide financial assistance to importing or exporting companies in order to promote trade and export activities. Financial assistance can take multiple forms – insurance, loans or guarantees. Credit can be short term (up to 2 years), medium term (2 – 5 years) or long term (5 – 10 years).
ECAs underwrite commercial risk up to around 85%, and political risk 90% to 100%. This would depend on the mandate given by each government to the ECA. Export credit can be mixed with official development assistance (ODA) to finance the same project – this is called mixed credit. Mixed credit is classified as “tied credit”, as the export credit is tied to purchases in the issuing country, even if the ODA is not. Multiple sectors use export credit, as shown in Figure 2. More Info…
Figure 2: Companies supported by sector – UK Expo1t Finance
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