The facility would
put in place mechanisms to insure commercial risk for imports
and domestic transactions in partnership with European credit
insurance agencies and government supported export credit
agencies, thereby speeding up the process of market entry by
the credit insurance market. Donor and IFI funds would be used
to provide capital to an approved implementing agency in each
participating country that would act as both a domestic and
import credit insurance agency taking credit risk on local
enterprises.
The implementing agencies' role would be:
(i) undertake evaluations of local enterprises requiring
funds for productive activities and provide credit information
on enterprises and banks to potential external partners. The
agency would also be authorized to sell credit information to
any applicant;
(ii) share credit risk on local enterprises with partners.
The activities of the implementing agency as a credit insurer
accepting credit risk on local enterprises would only be
possible in partnership with foreign credit insurance agencies
either reinsuring or co-insuring the risks accepted under the
scheme and local banks and/or local insurance companies
sharing the credit risk with the implementing agency. Since
the role of the implementing agency is to act as a catalyst in
forging partnerships, it would be authorized to assume no more
than one third of the overall risk on any transaction.
Successful implementation of the scheme would:
(i) Help alleviate the limited balance sheets of local
banks and insurance companies;
(ii) Bring in foreign credit insurance companies in
partnership arrangements with the local players;
(iii) Assist in spreading the risk of loss for significant
sized transactions;
(iv) Promote the development of domestic credit insurance ;
(v) Be a source of credit information to interested
parties;
(vi) Promote foreign sourced funding for transactions
supported under the scheme.
The implementing agencies nominated for the role in this
facility could be the same agencies that fulfill the export
support and political risk insurance functions. However, each
implementing agency would need to demonstrate a track record
of success in the other projects before being eligible for
this scheme.
