Ex-Im Bank Official Says His Job is to Find More Business in Africa

Richter describes export financing at AFCOM meeting

Washington -- Export-Import (Ex-Im) Bank official John Richter says he looks forward to expanding the U.S. government agency's role in sub-Saharan Africa beyond the hundreds of millions of dollars' worth of export guarantees it made there in 2000 -- more business than it did in Russia and Eastern Europe during the same period.

Richter told the 10th annual African Telecommunications and Information Technology Conference (AFCOM), held July 18-20 in Arlington, Virginia, that the bank made 125 transactions worth $914 million in 14 sub-Saharan African countries in 2000.

His job now, he said, is to increase that investment in the development of Africa's infrastructure while carving out a larger share of the export pie for U.S. business. As it stands now, the United States accounts for only 7 percent of all exports into the African market compared to Europe's 40 percent, the official explained.

Richter made his comments at a telecommunications finance and investment workshop held at the AFCOM conference. He told his audience, including representatives of U.S. firms interested in doing business in Africa: "The money's there. Let's try to get a bigger share of the African market."

To that end, he said, Ex-Im Bank seeks to provide "financing solutions" that enable foreign companies to buy U.S. exports, of which telecommunications equipment is a prime product. "You won't find us in Japan or Europe," he said, highlighting the fact that Ex-Im Bank works only with emerging economies.

Joining Richter in the panel discussion were representatives of the Overseas Private Investment Corporation (OPIC) and the Small Business Administration (SBA). Like Ex-Im Bank, both are U.S. government agencies that specialize in supporting projects that match foreign companies with U.S. producers and providers of services.

Richter explained that in order to be eligible for the bank's risk and project financing guarantees, projects must be initiated by a U.S. exporter for business in a region that does not provide similar support. "We can only cover U.S. goods ... [and] we do not compete with the private sector," he said. For example, he said, "If you can get financing in South Africa, we won't go there."

As an example of the business Ex-Im Bank did in Africa last year, Richter said, "Mauritius Telecom wanted to buy some fiber optic cable to connect to the [African] continent." An American company sold them the cable, Equator Bank financed the deal, and "we provided the loan guarantee to the bank."

For a project in Senegal, he said, Ex-Im Bank used a medium-term insurance policy to provide for the sale of $780,000 worth of microwave telecommunications equipment from a company in Minnesota.

Richter said that one of the biggest deals the bank made last year was guaranteeing the financing for a $570 million airplane sale to South African Airways.

With U.S. exports to sub-Saharan Africa amounting to only $5,700 million a year out of a worldwide total of $77,000 million, Richter said another prime goal of Ex-Im Bank is to educate U.S. business about investment opportunities on the continent. To do that the bank has six regional offices in the United States to work with interested U.S. companies.

On the continent itself, Richter said, the bank conducted eight training missions last year "to explain business options" open to African companies in the United States.

Another bank innovation he mentioned was the naming of a special advisory committee on Africa whose purpose is "to take the fear out of doing business in Africa." Explaining why the committee is needed, he said: "Americans are very cautious businesspeople. They'd rather do business in California. We want them to do business in Africa."

Addressing those concerns, Richter said, "If you're a U.S. supplier and you wish to extend open [purchasing] terms to your client in Africa because your European competition is doing that, then it's possible for you to come to us ... and buy an insurance policy."

Getting purchasing terms from the U.S. company enables the African buyer to purchase more U.S. goods, he said, adding, "Even 30 days is a benefit to the African buyer instead of having to open a [banking] letter of credit" to ensure payment after the U.S. company ships the goods.

"Some U.S. suppliers, in a competitive situation, are required to go out [to wait for payment from the African buyer] to 180 days. ... Well, we can go out as far as 360 days with our insurance if you're a U. S exporter. This helps you sell more, and it helps the African importer buy your product."

Richter said many American businesses "think anything in Africa is risky, so we're trying to convince them on a daily basis that they can do good business" on the continent and make good returns on their investments.