B6 - EDC by liuqingyan


									Export Development Canada

Political Risk Insurance in support of
Canadian Exports and Investments
in Africa

March 8th, 2011
                Presentation Outline

     About EDC

     EDC Involvement in Africa

     The Business Case for Political Risk Insurance

     EDC’s PRI products

     EDC PRI Outlook for Africa

     Q&A

       A Global Financial Services Partner
A Global Financial Services Partner
    Canada’s Export Credit Agency

    Crown corporation wholly owned by
     Government of Canada

    Financially self-sustaining

    Operates on commercial principles

    EDC’s roles is to support and
     develop Canada’s export trade and
     international business efforts
                                         EDC 2009 Business Volume
                                            by Geographic Area
    EDC’s products include financing
     and insurance solutions for
     Canadian exporters and investors

EDC Performance Highlights

                                    2008    2009
    Business Volume*                85.8    82.9
    Business in Emerging Markets*   22      18.7
    Customers                       8,312   8,469
    Number of Markets               184     191

    *CAD billions
Canada’s Trade Diversification toward Emerging Markets

 Canada’s vulnerability – Investment and trade
  concentration in North America

 Exports growth opportunities in emerging markets

 CDIA is critical to Canada’s growth as a trading nation
 EDC and Africa

Long-standing business experience with the continent.

In 2010, EDC supported 476 Canadian companies in
 46 African countries worth C$ 1.9 billion in transactions:

   Sub-Saharan Africa: C$ 1.3bln
   North Africa: C$ 568mln
EDC Volume in Africa – By Product
The Business Case for PRI

 Heightened political risk in the world
 Helping Canadian companies get comfortable with new
  emerging market risks
 Continued tightening of credit conditions globally
 Protecting Canadian balance sheets
 Protecting Canadian shareholder value
  Recent Political Events on the African Continent

 Nigeria – violence and militancy in the Niger Delta
  impacting O&G sector

 Somalia – the destabilizing effect of the failed state of
  Somalia on the region

 Côte d'Ivoire - political system thrust into turmoil as a
  result of a still unresolved dispute over the November
  2010 presidential election results.

 North Africa – wave of protests throughout Tunisia,
  Egypt result in the overthrow of longstanding regimes;
  security and political situation remain uncertain.
EDC PRI Products
                             What do we cover?

Catastrophic losses; Government takes total investment or asset, renegotiates pivotal terms of the
investment preventing ownership and/or control of investment or asset

Creeping Expropriation
Series of actions by governments having same effect as direct expropriation leading to catastrophic
loss. e.g. succession of royalty increases; changing of rules

Political Violence
Acts that destroy assets or stop operations. e.g. locals overrun project and damage property; North
Africa’s recent political turmoil

Transfer & Conversion
Trouble getting money out of the country. e.g. CADIVI in Venezuela

Breach of Contract
Investor submits to arbitration but Government does not pay award. e.g. Many cases in Argentina

Public Sector Credit Risk
Borrower or Guarantor does not pay. e.g. Ministry of Finance guarantees, state bank default

                            Plus many customized variations of the above
                  EDC Pricing

Average per annum premium rates

 PRI - Equity (0.50% - 1.25%)

PRI – Assets (0.25% - 0.75%)

Non-Honouring of Sovereign – (1% - 3%)
 Benefits of EDC PRI

EDC is an important partner in negotiations with foreign

Customized- coverage can be specifically adapted to
company’s individual needs.

Flexible– as business grows, other investments or new
countries can be added to the PRI policy.

Cost efficient - a global PRI policy protects entire
investment portfolio at a minimum cost.
 Benefits - 2

EDC takes a long-term view offering stability and
certainty in coverage

In house experience and ability to analyze political and
economic risks can be helpful for companies at all stages
of expansion into emerging markets

Substantial capacity available directly from EDC and
with partners.

PRI can help banks get more comfortable with a
company’s emerging market exposure
EDC PRI in Africa

                 Country      EDC PRI Exposure
                 ALGERIA            33 M
                   BENIN              0.5 M
             BURKINA FASO             0.5 M
               CAMEROON               0.25 M
           CONGO (KINSHASA)           1M
                DJIBOUTI             0.025 M
                  GHANA            197 M
                  GUINEA            0.320 M
              IVORY COAST          233 M
                  LIBERIA           0.480 M
                   LIBYA            33 M
             MADAGASCAR              0.025 M
                   MALI             0.505 M
                   NIGER            0.480 M
                RWANDA               0.025 M
                 SENEGAL            0.505 M
             SIERRA LEONE           0.480 M
             SOUTH AFRICA          114 M
                TANZANIA            35 M
                   TOGO             0.505 M
                 TUNISIA            43 M
                 ZAMBIA             49 M
Examples of EDC’s PRI Experience in the Mining and
Power Sector of Africa

       Lumwana Mine                              Takoradi Power Project

           ZAMBIA                                       GHANA
      PRI Lead Arranger                          PRI NHS Lead Arranger

                            Bulyanhulu Mine

                          PRI Co-Lead Arranger
EDC’s perspective on Africa

 Markets where political risks are generally viewed as
  acceptable – Angola, Botswana, Burkina Faso, Ghana,
  Mozambique, South Africa, Tanzania, Zambia, Algeria, Morocco

 Markets where political risk levels require enhanced due
  diligence – Central African Republic, Ethiopia, Mauritania, Nigeria

 Markets where current political/investment conditions
  increase political risk levels, rendering EDC support difficult –
  Côte d’Ivoire, Chad, Democratic Republic of Congo, Eritrea,
  Guinea, Madagascar, Tunisia, Egypt, Lybia

 Off-cover countries: Sudan, Zimbabwe
EDC PRI Contacts

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