How the UK's credit agency will help turn us into an exporting superpower (Institute of Export Magazine)
UK Export Finance, voted the Best Export Credit Agency in the world year after year, is now more important than ever. Post-Brexit, we are embarking on the most ambitious trade policy of any Western economy in recent times, aiming to expand the reach of UK PLC far beyond current levels. UKEF, working with the Department for International Trade, is vital to achieve this ambition to transform the UK into an exporting superpower.
UKEF is a resounding success story. The world’s first export credit agency, established in 1919, it continues to be a model for other entities around the world. It’s mission is to ensure that no viable UK export fails for lack of finance or insurance from the private sector, thereby working in tandem (not against) the private sector. Amazingly, it operates at no net cost to the taxpayer, making it very distinct from overseas development aid. UKEF can be likened to a leading private sector bank with the mighty balance sheet of the Treasury behind it.
UKEF runs a plethora of products under three categories: helping UK exporters win contracts through loans and guarantees to foreign buyers; providing finance for UK exporters to ensure they can fulfil orders; and ensuring UK exporters get paid for their contracts. In 2019-20, UKEF provided £4.4bn of support to help 339 exporters sell to 69 countries, supporting an estimated 47,000 jobs. The vast majority of exporters benefitting from UKEF are SME’s, most of whom are outside London. This highlights the crucial role UKEF is playing in the ‘levelling-up’ agenda.
UKEF’s balance sheet of £50bn leaves enormous liquidity for UK exporters to tap into. Indeed, the risk appetite for Uganda and Rwanda (two of my markets as Prime Minister’s Trade Envoy) has expanded immeasurably since I took on the role in 2016. Five years ago UKEF was willing to support only £100m for financing of projects in these countries; this limit has now been raised to £2.5bn for each country.
UKEF has been the backbone of my strategy for expanding UK trade in Uganda and Rwanda. One example is a £185m loan for the construction of an industrial park in Uganda, a resounding success which is supporting 200,000 local jobs. This has brought in significant business for the UK, with UK firms leading in areas such as design and construction amounting to roughly 40% of the project. UKEF financing has often been the deciding factor when I have encouraged buyers to purchase from the UK in sectors ranging from agriculture, oil & gas, infrastructure, aviation and more. And, of course, financing covers UK services and intangibles as well as goods. For all these projects, UKEF’s turnaround time has been exceptional. The Chief Executive, Louis Taylor, sets the example by running a well-organised, streamlined and highly effective team around the world.
Going forward, UKEF is expanding and innovating to support UK exporters more fully. There are currently 16 UKEF Regional Heads around the globe who are specialists in the capital markets in their regions, readily identifying potential projects. This is soon to be expanded to 30 Regional Heads, covering nearly all areas of the globe. Local currency financing is now available in 60 currencies, predominantly in Africa, to make financing more attractive to buyers by reducing foreign exchange volatility risk. UKEF is also devoting resources to renewable energy with a recently announced £2bn facility for green projects. Moreover, its spending capability is rapidly expanding, with a 32% boost in the last government spending review.
My strong advice for any UK firm considering exporting is to use UKEF’s capabilities. Their easy-to-navigate website provides all the information you need and can put you in touch with expert advice very quickly. They have been an absolutely essential part of my role as a Trade Envoy. I hope to see our UK firms tapping into UKEF to make us the exporting giant we must be.