ECA or the Export Credit Agency has not been defined under the ECB guideline, but a broad definition, based on its working, can be given as, a private or quasi-government institution that acts as an intermediary between national governments and exporters to issue export financing. They finance the goods and services from their home country to a buyer at the other end of the export deal.
ECA financing
It is provided in the form of export credit insurance, financial guarantees of loans and bonds, and direct loans. They complement the private commercial banking and credit insurance markets, offering an additional liquidity source, usually with longer terms and lower costs.
The ECAs are bound by the regulations of the World Trade Organisation, the OECD guidelines, and the laws of the local government.
Generally, the ECAs lend up to 85% of eligible home country content, with 15% being the down payment.
Since ECA financing is stable and reliable, they help domestic industry to take a plunge into riskier overseas markets for their goods and services. This helps local companies tap the untapped niche markets in the foreign countries, without the need to shift operations to that country. Such a proposition is not only beneficial to the company availing ECA finance, but also to the home country, as the increased exports will have a beneficial effect on the economy.
Export Credit Agency financing mitigates commercial and political risks, such as non-payment bankruptcy, political instability, currency inconvertibility, and so on.
To get all the benefits from ECA financing
One has to pass through the bureaucratic and burdensome process of getting the approvals in place. There has to be real-time coordination between the finance, procurement, and the logistics team. It is a full-time job for a person and much more for an inexperienced one.
But, to ease the process for you, our team, with its experience and expertise, is always ready to assist you with all your Export Credit Agency financing needs, by assisting you, supporting, and presenting your case at appropriate levels, and getting the work done for you.
