Meeting financing needs in risky countries has proven increasingly difficult for export businesses. As is often the case, small and medium-sized enterprises (SMEs) are adversely impacted since they have lower amounts of capital and credit to begin with. So exporters tend to avoid granting extended payment terms to their foreign buyers since they don’t feel adequately protected in case of non-payment or termination.

Deepesh Patel (DP), Editorial Director at Trade Finance Global, discussed the topic further with Nabil Jijakli (NJ), Credendo’s Deputy CEO.

DP: Credendo was established in 1921, just over 100 years ago, at a time when the globalised economy was just forming and political risk in the interwar period was heightened. What would you say are some similarities and differences between exporters in high-risk markets, between the 1920s and 2020s?

NJ: When Credendo was founded over a century ago, it was the second export credit agency (ECA) created worldwide, after the UK. This was due to Belgium being a major exporting country then, much like the UK.

At that time, Europe was the dominant economic force globally. However, over the past 100 years, the balance of power has shifted with an increasing importance of the emerging countries, particularly the so-called 5 BRICS countries (Brazil, Russia, India, China, and South Africa, before their enlargement). For instance, according to the International Monetary Fund, the G7’s share of global GDP has decreased from 65% in 2000 to just 45% in 2022. Meanwhile, the BRICS countries have seen their GDP share rise from 27% to 47% in that same timeframe.

Some of the key changes include:

• Increased trade restrictions: In recent years, we have been confronted with increasing trade restrictions. Free trade is sometimes questioned and challenged, including the role of the World Trade Organisation.
• Different parts of the world are subject to war and instability: Africa, the Middle East, and sometimes also Latin America. That’s not even mentioning Europe, where war returned two years ago with the Russian invasion of Ukraine.
• Rising debt levels in emerging markets: We are confronted with higher debt, which is also in danger for global trade. During and after COVID, some countries, Ghana, for instance, stopped paying their debt. 
• Adapting to the energy transition and changing industries: it’s a must and at the same time a challenge. Some industries, companies, and sectors are confronted with the question, “Will I survive or will I disappear?”

DP: How does the shift towards multipolarity, with Europe becoming slightly less dominant and BRICS gaining influence in terms of GDP, impact Credendo’s offering? Does this mean that Credendo needs to become even more relevant to Belgian exporters targeting specific markets?

NJ: First of all, as the Belgian public Export Credit Agency, Credendo has always specialised in ‘zone 2’ countries — those which are not members of the Organisation for Economic Cooperation and Development (OECD) – often considered higher-risk markets. However, markets like China and India have become less risky over time, while our relevance has increased. Businesses looking for growth must engage with these emerging markets, and this is reflected in our portfolio, with the five BRICS countries we cover ranking among the top 10 globally.

DP: Can you talk through your country risk tool? What is its purpose?

NJ: Our Country Risk Assessment Model (macro-economic model) is also used by the OECD. However, each country adds its own assessment. We rely on qualitative assessments made by our market experts, which can introduce some variations. Our experts also assess factors such as sectoral and debtor risk worldwide. This role of providing country, sector, and debtor risk assessments remains central to our work.

We guide corporates interested in exporting by assessing not only country risks but also the specific debtor’s financial situation and capabilities and, in the case of project financing, the overall financial model and associated risks in corporations with other stakeholders (financial institutions, ECAs, etc). This comprehensive risk analysis is key to supporting businesses in their international ventures.

It’s worth mentioning that environmental, social, and governance (ESG) assessment is becoming increasingly important in our evaluations. Alongside these analyses, we offer essential tools such as credit insurance to help mitigate risks and enable businesses to succeed in complex international markets.

DP: Could you elaborate on the kind of credit insurance Credendo offers?

NJ: An important part of our offering is credit insurance against the risk of non-payment and contract cancellation. This insurance can cover not only the corporate providing the buyer credit but also the bank financing the transaction. In these cases, Credendo covers the risk of non-payment for both the commercial contract and the banks involved. 

DP: So, Credendo also provides insurance to banks in addition to corporates?

NJ: Exactly. Besides credit insurance, we offer two other categories of products. First, there’s Political Risk Insurance (PRI), which protects investments abroad. Second, we offer direct financing solutions, primarily for small and medium enterprises (SMEs). We also provide financial guarantees to banks, allowing them to extend more credit to their clients. These guarantees are a straightforward way for banks to increase their lending capacity.

DP: That sounds similar to the role of most ECAs, where guarantees are given to local banks to benefit SMEs. Is Credendo’s cover up to 100%?

NJ: For credit insurance, the maximum coverage we offer is 98%, for PRI 90% and for bank guarantees 50% or even 80% (the maximum percentage authorised by the EU) in case of a project eligible to our Credendo Green Package. 

DP: What are the biggest challenges that Belgian exporters currently face?

NJ: One of the major challenges for Belgian companies is that many of them are part of global value chains. Certain goods, like cars and medicinal products, are already established, but being part of a value chain can expose them to various risks, especially when targeting emerging markets. 

DP: What role does Credendo play in supporting long-term infrastructure projects?

NJ: We’re increasingly active in large-scale offshore wind projects, which are enormous in scope and require long-term financing—sometimes loans are repaid over 15 to 18 years. These projects involve significant capital and risk, and no single entity covers the entire value chain. For example, one company might supply the turbines, another handles the grids and pipelines, and in Belgium, we specialise for instance in dredging, creating the foundation for the turbines, often working over 1,000 meters below sea level. These foundations must withstand extreme weather conditions, adding further complexity.

As an ECA, we, along with other stakeholders, provide substantial financing for these high-value projects. Without ECA support, such projects wouldn’t be viable, as the private market simply doesn’t provide the global long-term financing required for infrastructure of this scale. 

By sharing the risk, ECAs make it possible for private banks and investors to participate, enabling projects that are critical for global infrastructure development, particularly in riskier markets. For instance, Jan De Nul, the Belgian maritime construction company, leveraged Credendo’s buyer credit solutions to secure projects across Africa, Latin America, and Asia in dredging, renewables, and civil construction. Credendo also supported Jan De Nul in Taiwan with the Formosa 2 wind farm; provided over €500 million in financing for port development in Ghana and coastal protection in Benin; and provided long-term guarantees for Jan De Nul’s Panama Canal lock construction project. 

DP: Do you have any specific case studies to share, particularly regarding how Credendo can ensure ESG compliance?

NJ: In 2022, Credendo launched its Credendo Green Package, designed to incentivise transactions that positively impact the environment (more flexible approach to the Belgian content, higher coverage percentage, longer tenor and higher amount for our direct financing solution, higher risk participation in the financial guarantees, etc). One notable project benefiting from this initiative is DEME’s contract for the Greater Changhua 2b and 4 offshore wind farms in Taiwan. In this project, DEME will handle seabed levelling and rock installation, contributing to the overall development led by Ørsted, a global leader in offshore wind energy. With a combined capacity of 920 megawatts, these wind farms are set to play a crucial role in Taiwan’s ambitious green energy goals, expected to be completed by the end of 2025.

In May 2024, Credendo – Export Credit Agency issued a policy to DEME Offshore to cover this important transaction, providing increased coverage specifically for this sustainable initiative under our Green Package. As a global leader in marine engineering and dredging, DEME has extensive experience in offshore wind projects worldwide. We’re excited to continue to drive green investment with such incentive mechanisms.