GROWING SME EXPORT BUSINESS IN NIGERIA 4

EXPORT CREDIT INSURANCE SCHEME

The purpose of Export Credit Insurance is to mainly offer offshore protection to exporters of goods and services who sell their products on credit terms. The exporter is insured against losses arising from a wide range of risks, which may be conveniently categorized into either commercial risks, or political risks. The presence of an Export Credit Insurance provides exporters of goods and services with a significant degree of financial security, thus allowing companies to pursue bolder export policies by accepting new purchasers, and entering into new overseas markets, but with a smaller impact from the risks of non-payment and political instability.

TRANSACTION DYNAMICS

1.     Exporter approaches the Bank for post-export financing facility and export contract

2.     Exporter signs the contract and sends it to the buyer.

3.     Exporter submits pre-export documentation and a copy of the signed contract to the Bank.

4.     Exporter applies for export credit insurance with Bank as the first loss payee.

5.     Insurance company forwards the export credit insurance certificate to Bank.

6.     Exporter procures the commodities, arrange for warehousing and inspection and also engage the service of a Freight forwarder for post export documentation and delivery of the commodity to the shipping line.

7.     Exporter submits Bill of lading, SGS report, Invoice and a copy of the export contract to the Bank which verifies the authenticity of the SGS report and also confirms if it is in line with the quality specifications and other terms and conditions of the export contract

8.     The Bank discount the invoice by pre-paying the exporter 75% gross invoice value in the currency of transaction stated on the invoice.

9.     The Bank forwards the documents to the buyer’s bank with a Documentary collection instruction to the deliver documents against payment (D/P) to the importer.

10.  Buyer’s bank delivers documents to the Buyer against payment of the invoice value.

11.  The importer pays the gross invoice value stated on the document

12.  Buyer’s bank transfers the export proceeds to the Bank

13.  The Bank liquidates the post-shipment finance facility and credit the account of the exporter with the balance.