Big Exporters Don’t Need Financial Help Says EFIC

by Jim Wilson - last modified Mar 30, 2012 11:44 AM

More than three-quarters of the value of EFIC’s business was with large corporate clients In 2010-2011. However, the Commission found that it is small and medium-sized enterprises (SMEs) attempting to break into export markets that are more likely to face difficulties accessing export finance from banks.

In 2010-11, 90 facilities were signed with SMEs with a face value of about $135 million. Facilities with SMEs accounted for just over 20 per cent of the total face value of EFIC’s commercial account signings that year.

Around 31% of EFIC’s commercial account facilities outstanding as at June 30 last year were in the ship building and repair services sector.

“Our work to date suggests a substantial reorientation in EFIC’s business is required,” said Presiding Commissioner, Patricia Scott.

“To the extent that market failures may exist because of information problems, these are more likely to affect newly exporting SMEs accessing export finance.”

EFIC provided a US$100 million export finance guarantee for the case of the Wiggins Island coal export terminal. However, there are 19 financial institutions providing finance to the project, and EFIC is providing only a small proportion.

“It is not apparent what impediment to access to private finance or shareholder equity, caused by failures in financial markets, would have stopped the project proceeding,” argues the Commission.

A series of public hearings is now being held and a final report is due on May 21

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