Insure against foreign clients’ nonpayment
Following recent disclosures, South African exports are in fact backtracking, according to Roger Munitich, GM sales and marketing at Credit Guarantee Insurance Corporation (GCIC).
He says it would appear that either SA has lost the ability to innovate or its exports have lost some of their lustre. It is possible that both hold some truth, but we can’t deny that the country, on the global stage, has earned a tainted reputation for political uncertainty, economic instability, state capture and the drain on its fiscus due largely to wasteful expenditure.
“As a consequence, there has to be inordinate pressure on any South African exporter to rigorously perform to contract regarding quality, timeous delivery, and within budget,” says Munitich.
“The worst possible outcome would be not getting paid by the foreign importer.”
He says US and European markets are becoming harder to break into and even harder to retain. China dominates the East so looking to our own continent is probably the most logical expansion option.
“Africa holds promises of vast returns, but there are challenges. Our nearest markets such as Botswana, Namibia, Mozambique, Malawi, Zambia and Angola all provide wonderful opportunities for South African exporters, but you have to do your homework,” he cautions.
“Know the importer, understand the country and its laws, establish relationships but beware of the internet. The old adage holds — if it looks too good to be true, it probably is.
“And unfortunately, there are countless unethical scoundrels who use the web to spin stories, establish dodgy credentials and falsify track records, all to lure you in and then literally take your company to the cleaners.”
Although countries further north also provide massive opportunities, Munitich believes the risks too are significant.
“One is not faced with a mere 90-minute car trip to consult the customer but rather thousands of kilometres and expensive airfares.
“The solution is to seek the expertise of trade credit insurance experts in the field. As the name implies, this insurance is aimed at securing your company against the nonpayment by your foreign customer.
“The real benefit starts with the insurer’s ability to assess the risk, first on the country to which you are exporting and then, second, to assess the ability and willingness of your proposed foreign customer to pay for the import.
“A number of resources are employed to assess these risks, which the average company based in SA is unlikely to have direct access to.
“For example, Credit Guarantee recently seconded an ex-pat to develop business with Kenya and other African countries such as Ghana, Tanzania, and Nigeria.
“The idea is to provide trade credit insurance ‘in country’ for local as well as export business. By training in-country staff of our associate companies, we are expanding the company’s footprint and adding huge value to our holding company’s interests,” says Munitich.
THERE ARE UNETHICAL SCOUNDRELS WHO USE THE WEB TO SPIN STORIES, ESTABLISH DODGY CREDENTIALS AND FALSIFY TRACK RECORDS