UK Export Finance is a government department providing vital and timely support for exports. Complementing the role of commercial banks or private sector credit insurers, we make exports happen for businesses of all sizes, says David Godfrey, UK Export Finance chief executive
Last year, the deteriorating security situation in Ukraine posed a problem for Legume Technology. The Nottinghamshire-based small business was unable to find an insurer to cover payment risks for sales of its non-chemical fertilisers to this key market for them. However, UK Export Finance (UKEF) was able to step in to issue an export insurance policy, ensuring the company’s export trade could continue.
UKEF has offered help in hundreds of similar situations in recent years – more than £14-billion worth over the past five years. Interventions vary from offering or guaranteeing loans to overseas buyers, to guarantees supporting working capital or export contract bonds issued by finance providers. We also offer insurance against failure by the buyer to pay. Beneficiaries include exporters of all kinds of goods and services, from educational books to undersea cable systems in the energy sector.
UKEF works alongside commercial banks and private sector insurance brokers to try and ensure where a government guarantee, loan or insurance policy might help to close a transaction and make an export happen that option is available
The government is placing a strong emphasis on help to exporters, co-ordinating support across many departments and agencies. Trade finance is a critical piece of this jigsaw and UKEF, the UK’s export credit agency, is the government’s dedicated support mechanism filling gaps in the private market. UKEF works alongside commercial banks and private sector insurance brokers to try and ensure where a government guarantee, loan or insurance policy might help to close a transaction and make an export happen that option is available.
UKEF seeks to complement, not compete with banks or insurers, often working with them to expand or enhance the support they can provide. In return, the government charges a premium to cover potential losses and protect the taxpayer. In the past five years, UKEF has contributed almost £800 million to the Exchequer.
While we were the world’s first government export credit agency, founded in 1919, our challenge today is to offer products that work in the complex and fast-changing environment of global trade in the 21st century.
Our new direct lending facility for overseas buyers of UK exports, our first Islamic finance product and our guarantee for offshore (Chinese) renminbi loans have been hailed by banks and trade associations as proof of our agility and flexibility. Our growing support for contract bonds and export working capital has made a crucial difference for smaller exporters.
UKEF is currently partnering with the British Business Bank to review the finance challenges facing small and medium-sized enterprises that export or are looking to export. This is part of our commitment to ensure that government support best addresses their needs. With new powers available under the Small Business, Enterprise and Employment Act, UKEF is also working to widen the eligibility for our support, for example to firms which, while not exporters themselves, supply exporters.
UKEF also has a growing track record of providing assistance through its network of regional export finance advisers (EFAs) introduced in 2012. As well as introducing them to UKEF’s schemes, EFAs can introduce companies to a wide range of support and work with existing trade finance and insurance providers, such as banks, to shape the best solution for the exporter. UKEF is part of the Business Growth Service – the government’s one-stop shop for smaller companies with growth potential – alongside the more widely recognised support available via UK Trade & Investment.
With all our partners, we look forward to helping more firms achieve their global trade ambitions in the years ahead.
Task force of smaller firms
NMS International Group, from Leicestershire, is leading a consortium of some 50 UK-based small and medium-sized enterprises to build seven district hospitals in Ghana. The firm won a $175-million (£134.1-million) contract to design, build and equip the hospitals thanks to a bank loan to the Ghanaian Ministry of Finance supported by UKEF. NMS has now established itself as a leading provider of social infrastructure projects in Ghana. The hospitals project has won deal of the year awards from respected publications Global Trade Review, Trade Finance and The Banker.
Historic direct loan
UK Export Finance’s new direct lending facility, offered in partnership with a bank, helped Wolverhampton-based multinational Carillion to win a major new £75-million construction contract in Dubai. This was the first direct loan facility in UKEF’s near 100-year history and its availability gives UK exporters such as Carillion extra confidence when discussing finance with overseas buyers. It is another way UK exporters can differentiate themselves from the international competition.
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