Zimbabwe has to encourage and generate trade with different countries. It is said that the only way for Zimbabwe to survive is to bring in foreign currency by reaching new markets as well as producing new products.
For the exporter there is always the concern of dealing with a stranger in a faraway place. Companies looking at exporting locally manufactured produced goods or agricultural products can now have peace of mind as Credsure, the long established and preferred leading Credit Insurer in Zimbabwe, covers credit risks worldwide.
Credsure has international as well as local ties. It will investigate each and every buyer discreetly to check out its credit worthiness. Should Credsure refuse to cover the foreign buyer or perhaps set a limit on the maximum amount it would cover, it is an indication as to what that buyer can afford.
The risks Credsure will cover for exporters include:
- Political Risk – This covers any law or regulation laid down by a foreign Government that may prevent the transfer of the goods into the buyer’s country, or the transfer of payment from the buyer’s country into Zimbabwe.
- Commercial Risk –
a) This includes insolvency or liquidation of the buyer.
b) Protracted Default – Meaning the failure of the buyer to pay an undisputed debt within 4 months after due date of having accepted delivery of the goods.
c) Repudiation – Meaning the refusal by the buyer to accept the goods for no good reason. Where this failure or refusal is not excused by, and does not arise from or in connection with any breach of contract on the part of the exporter or from any other cause within his control.
TYPES OF COVER
There are five types of cover offered on Export Credit Insurance.
- Pre-Shipment Cover – Safeguards an exporter when he/she is prevented from shipping the goods. Political risks are as pointed out except for transfer of payment to Zimbabwe, whilst commercial risk is limited to insolvency.
- Post-Shipment Cover – Provides protection from the moment the goods are shipped until final payment has been received. Both political and commercial risks are covered.
- Consignment Stock Cover – Some exporters do maintain stocks of goods in other countries. This type of cover indemnifies the insured against confiscation or loss due to political causes before the goods are released from consignment.
- Transit Risk Cover – Many exporters ship goods only to associate companies, where there is no credit risk. This type of cover indemnifies the insured against confiscation or loss of the goods due to political causes whilst they are in transit. Transit Risk Cover is also included under Consignment Stock Cover policy.
- Compact Policies – Credsure has a policy designed for the small exporter. This policy has little or no paper work involved and there are no declarations to be made. Once the exporter has accepted the policy, he is required to pay a deposit. This deposit can either be a once off payment or quarterly payments of the deposit premium which covers shipments to those buyers for the whole year.
Exclusions from cover include
- Physical damage to the goods (except Consignment Stock Policy).
- Failure to comply with import procedure or regulations.
- Trade disputes.
Credsure can issue various different types of policies to suit the needs of the exporter.
It also offers a facility to cover a a policyholder requiring a loan for the purpose of buying the materials or machinery to manufacture or produce the goods for export. Credsure will cede the Export Credit Insurance policy to the bank on behalf of the policyholder as collateral. Therefore, should the foreign buyer default, the policyholder will claim the unpaid debt which Credsure will pay to the bank.
CONCLUSION
Export Credit Insurance plays an important role in export trading as it reduces the risk of payment default an exporter is exposed to, particularly in the conditions of intense competition prevailing in international markets. It is an effective credit control tool and compliments good credit management policies. Once in place it gives the policyholder peace of mind.
For more information please visit our Head Office at 69 Sam Nujoma, corner Selous avenue and Sam Nujoma, or call us on +263242738944-7, or email customercare@credsure.co.zw, or visit our website www.credsure.co.zw / dmp.credsure.co.zw