South Africa’s ECA, the Export Credit Insurance Corporation of South Africa (ECIC), and FirstRand Bank, parent company of Rand Merchant Bank (RMB), have signed a multi-currency guarantee facility worth US$200mn under a risk participation agreement.

This is the first time for an export credit insurer to agree to share the risk of a number of South African corporates’ export guarantees with a bank. The three-year facility, which has an option to be extended, is a 50/50 risk sharing arrangement enabling ECIC to match RMB’s undertaking in every transaction, and enhancing the bank’s risk-bearing capacity.

“The facility will help address demand for the support of local South African companies venturing beyond South Africa’s borders,” says Minos Gerakaris, head of trade finance at Rand Merchant Bank. “It will provide support across vital economic sectors such as industry, services, agribusiness and manufacturing and will foster financial sector development while deepening regional integration.”

“This transaction is aligned with the ECIC’s mandate to facilitate export trade so South African contractors can compete for and win capital goods and services contracts in other countries,” says ECIC chief operating officer Mandisi Nkuhlu. “Through these types of strategic partnerships between the ECIC and the banking sector, we can encourage further debt facilities for our exporters and provide them with additional financing solutions to compete effectively on the international stage.”