(ODI Global, London, 14 December 2023) This year old report explores the development of Sinosure as an institution and its involvement in China’s overseas lending and the Belt and Road Initiative (BRI). This report makes two main contributions. First, it examines an understudied aspect of China’s BRI financing to show how the Chinese government uses Sinosure to hedge – or protect from – risk in its overseas lending and investment. Second, it contextualises Sinosure within the wider landscape of financial institutions providing guarantees and risk insurance, and the challenge and change that China’s state-backed finance has provoked. In several areas, development finance institutions (DFIs) and export credit agencies (ECAs) are adapting not only to Chinese competition but also to new demands on their mandates. The use of export credit within China’s wider official financing is a challenge to OECD regimes that separately govern finance for trade and for aid. Sinosure and other Chinese Export Credit Agencies offer highly favourable terms and longer-term finance, potentially undermining the ‘level playing field’ of the OECD.
ECAWatch Newsletter 12
US Sanctions on Gazprombank (Russian ECA?) Imperil Uzbek Copper Mine Expansion
(The Diplomat, Arlington, 5 December) The U.S. Treasury Department’s decision to slap sanctions on Gazprombank poses a potential major headache for Uzbekistan’s burgeoning mining industry, which until now has relied on the Russian lender to finance a $4.8 billion mine expansion set to nearly double the country’s copper production. The U.S. designation of Gazprombank could also result in a major financial hit for European mining and engineering firms, banks, and state-backed export credit agencies active in Uzbekistan, which have thus far continued to transact with entities financed by Gazprombank. Gazprombank has established partnerships with major world financial institutions and leading national import-export agencies. Access to international capital markets helps Gazprombank’s customers attract considerable amounts of funding on convenient terms. UKEF has guaranteed a €12.6m loan to Uzbekistan’s Almalyk Mining and Metallurgical Complex to refinance its purchase of fully automated machinery from the Scottish multinational Weir.
AfDB & SACE sign $6b investment deal
(The Nation Online, Lagos, 5 December 2024) In continuation of existing partnerships between the African Development Bank (AfDB) and the Italian government under the “Mattei Plan”, a $6b investment deal has been signed to sustain the development of initiatives with Africa’s public and private sectors. Specifically, this investment package which gives additional opportunities for Italian businesses in education, agribusiness, healthcare, energy, water and digital economy infrastructure, will provide credit protection to foster investment in Africa. SACE noted the first €3 billion of the plan were under their management and derived from the Italian Climate Fund, “a €4.2B fund created a couple of years ago to help our partners transition their economy into a greener one.”
Africa Investment Forum Market Days 2024: Global Risk leaders gather to unlock Africa’s investment potential
(Africa Development Bank, Abidjan, 4 December 2024) The African Development Bank Group hosted a high-profile meeting of global insurers, export credit agencies and institutional investors to explore innovative risk-sharing solutions on the sidelines of the Africa Investment Forum Market Days 2024. The Insurer and ECA Day on December 3 reinforced the Bank’s commitment to bringing large scale finance into Africa. Participants included representatives of the Berne Union, Axa, Marsh, Allianz, Chubb, Trade and Development Bank, LGIM, Sinosure, JBIC and ICIEC, among others. Presentations highlighted the urgent need to close Africa’s infrastructure investment gap, noting that private investors currently account for just 10% of infrastructure financing on the continent – less than half the level in Asia, with Africa needing $1.3 trillion annually to achieve its SDG targets by 2030.
COP29 outcomes: balancing progress and challenges on the road to climate action
(UN Environment Program, Baku, 4 December 2024) COP29 held in Baku, Azerbaijan, offered an important opportunity for governments and other global stakeholders to put in place the mechanisms, tools and signals required for countries to continue implementing their contributions to the Paris Agreement as urgently needed. The main areas of negotiation were on:
- the design & key elements of future climate financial architecture & the next collective quantified goal (NCQG) on climate finance;
- the rulebook for future international, compliance carbon markets; and
- countries’ collective signaling on mitigation ambition, as follow up to the various energy transition objectives captured in last year’s COP28 ’UAE Consensus’.
As widely reported elsewhere, while opportunities were missed to create the required clarity and determination on finance and ambition, there was some good news, even a breakthrough, on the establishment of government-backed, international carbon markets of the future. This summary highlights the recent, impressive achievements of the UNEP FI-convened net-zero groups, progress on financing climate adaptation, and the implications for financial institutions of some of the summit’s outcomes.
Revisiting the rulebook: Export finance roundtable
(Global Trade Review, London, 3 December 2024) In late October, GTR gathered a group of senior figures from the export and agency finance industry to discuss the market’s ongoing shift towards new product types, the impact of the OECD Arrangement modernisation package, and whether further reforms are required to boost financing for social infrastructure. [Article summarizes participant comments.]
Growth in the Value of Securing Trade, Finance and Investments in the Arab Region
(Union of Arab Chambers of Commerce, Beirut, 23 December 2024) Data issued by the Arab Investment and Export Credit Guarantee Corporation (Daman) showed a growth in the value of outstanding commitments to secure investment, finance, and exports directed to the Arab region by 7% to reach about $260 billion by the end of last year. According to the report, these commitments represent about 8% of the global total. According to the institution, these liabilities were distributed by 83% for export credit insurance destined for the region, 8% for insurance against political risks, and 9% for other cross-border insurance operations.
Before Trump takeover France’s Total wants USEXIM to back its Mozambique gas export plan
(Africa Confidential, Cambridge, 20 December 2024) France’s TotalEnergies is making a final push to win United States funding for its liquefied natural gas project in northern Mozambique before Donald J Trump is inaugurated US President on 20 January. Total wants to restart the project held up after attacks on it by Islamist militias. The political fight over Mozambique’s disputed elections together with uncertainties about the incoming Trump administration’s position on the Total project have further delayed Exim Bank’s decision on financing.
Polish nuclear power plant receives €22bn financial backing from US, French & Canadian ECAs
(EnerData, Grenoble, 17 December 2024) The Lubiatowo-Kopalino nuclear power plant project has collected, based on the letters of intent received so far, declarations of financial commitment for a total equivalent of over PLN95bn (€22bn). The project developer Polskie Elektrownie Jądrowe (PEJ) has received letters of intent from American and French companies to finance Poland’s first nuclear power plant. The French export credit agency Bpifrance Assurance Export and the French public development bank Sfil will provide over PLN15bn (€3.5bn) to the project. In addition, Export Development Canada will finance up to PLN6bn (€1.4bn), on top of commitments from the American International Development Finance Corporation (€17.5bn) and the US Export-Import Bank (€16.5bn). Cooperation with export credit agencies is an important part of the strategy to secure financing for the nuclear power plant.
ICIEC Awarded “Insurance Adviser of the Year – Africa” for Advancing Sustainable Development
(Africa.com, Johannesburg, 1 December 2024) The Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) (https://ICIEC.IsDB.org), a Shariah-based multilateral insurer and member of the Islamic Development Bank (IsDB) Group, is proud to announce its recognition as the “Insurance Adviser of the Year – Africa” at the prestigious IJInvestor Awards 2024. This honor highlights ICIEC’s role in advancing impactful initiatives that drive sustainable development and improve lives across Africa. The award acknowledges ICIEC’s pivotal contributions to two transformative projects in Côte d’Ivoire (€194 million in insurance support for financing ESG projects) and Senegal (€103 million insurance agreement for 50,000 off-grid solar streetlamps in rural areas). ICIEC has also entered into a Service Agreement with the Islamic International Trade Finance Corporation (ITFC), Jef Vincent, and ActorX GmbH to create a three-year business plan for the proposed Africa-Arab Guarantee Fund (AAGF) a collaboration designed to strengthen trade and investment ties between the Arab and African regions, fostering economic integration and mutual growth.
