The British Exporters Association (BExA) has launched its manifesto for exporters, identifying seven key action areas to improve UKEF and UKTI’s support of UK exporters.
The manifesto, Winning the Global Race, identifies seven key action areas for both UK Export Finance (UKEF) and UK Trade and Investment (UKTI).
On the launch of the manifesto, BExA’s chairman, Jon Coleman, says: “The association believes that its detailed recommendations are both practical and achievable and are based on our members’ views, experience and needs.”
The BExA manifesto states that “UK products and services are in demand overseas, but without support, we will not be able to succeed in the 2011 National Export Challenge (NEC)”, a target to double the value of UK exports to £1tn by 2020.
The chancellor’s ambition to make UKEF the most competitive European export credit agency (ECA) was welcomed by BExA. However, the manifesto questions the level of funding that UKEF and UKTI both receive, adding that this needs to be addressed to ensure that “all UK companies that seek to export can rely on seamless government support as and when required”.
BExA states that if the following actions are acted upon, in combination with the anticipated implementation of the Small Business Enterprise and Employment Act, the UKEF would have the potential to become one of the top tier OECD ECAs.
According to the manifesto, unless investment increases, the ECA will not meet its three-year plan. The following changes have been recommended:
• Accessibility and cutting red tape: a fundamental overhaul of documentation is needed, which includes the implementation of a single universal application form, simplifying trade finance endorsements, and establishing a transactional website.
• Support to SMEs: access to working capital finance and trade finance for this segment is still underserved and BExA recommends a wider range of bank facilities and the use of peer-to-peer lending. A portion of the direct lending facility (DLF) should be solely allocated to fund SME working capital for pre-shipment. It also proposes the introduction of domestic and export contract bond issuance facilities and the re-introduction of tender to contract foreign exchange support. To become less risk averse when underwriting small value SME export contracts.
• Medium-term financing support: to re-introduce fixed-rate export finance support for buyer and supplier credits.
• Co-operation with the private market:
Credit insurance: UKEF could enhance capacity through co-operating, not competing, with the private credit insurance market to enable much larger export contracts to be underwritten. BExA advises UKEF cover and terminology to be aligned with that used in the private market.
Risk: to outsource credit risk assessment to the private market in line with other ECA practices.
• UKEF resourcing: as a result of a number of experienced staff leaving UKEF, a long-term staffing and succession plan to be implemented.
BExA’s manifesto identifies that UKTI “needs to do more to ensure effective support is delivered to exporters of all sizes and at all points in the export winning process”.
• UKTI charging regime and dissemination of information: potential exporters should not be required to pay in advance for support. It should be remunerated on success, for example when an order is won. Access to UKTI’s database of potential target buyers should be free of charge. To replicate France’s ‘Market Survey Insurance’, which underwrites exporter’s export marketing budget prior to winning an order.
• UKTI support for trade shows and delegations: BExA states that “it is anachronistic that long-established exporters wishing to enter new markets are denied support”. For example, with the extension of trade show funding to exporters based on the number of years they have been exporting.
Coleman adds: “Follow through in these areas can only support the objectives of the NEC.”
However, the BExA manifesto infers that the NEC target may be out of reach: “The NEC’s objectives of increasing the number of companies exporting from 1 in 5 in 2011 to 1 in 4 and increasing exports to £1tn by 2020 are necessarily ambitious targets.”