1. Presentation to Portfolio Committee on Trade and Industry Export Credit Insurance Corporation of South Africa Limited (ECIC) 12 March 2008

2. 2 Mr. Tladi Ditshego-Chairman Tel: 011 456 6316 Dr Patrick C Kohlo-CEO Tel: 012 394 3510 Mr. Mandisi Nkuhlu-Senior General Manager Tel: 012 394 3513 Mr. Emile Matthee-General Manager Tel: 012 394 3532 ECIC Representatives

3. 3 Export Credit and Foreign Investments Insurance Act, 1957 (as amended). ECIC established 2 July 2001 as a self sustained national export credit agency. Registered insurer subject to supervision by the Financial Services Board (FSB). ECIC Enabling Act

4. 4 Provision of insurance on behalf of Government for contracts in connection with export transactions, foreign investments and loans or similar facilities. ECIC Mandate in terms of the Act

5. 5 Filling the market gap between the requirements of capital goods exporters/investors and the capacity and appetite of private sector insurers (especially in respect of term political risk events up to 15 years or even longer). Essence of ECIC mandate

6. 6 ECIC FUNCTIONS ECIC STRATEGIC GOALS STRATEGIC PLANS AND BUDGET ANALYSIS APEX PRIORITIES ECONOMIC CLUSTER OBJECTIVES Discussion Outline

7. 7 Formulate underwriting policy Evaluate export projects Assess credit risks Structure securities to mitigate risks Manage insurance portfolio Endeavour to diversify portfolio ECIC Functions

8. 8 Focusing on customers Enhancing performance Engaging in strategic alliances Fostering risk orientation Providing effective stewardship ECIC: Strategic Goals

9. 9 Provide high quality service to all clients including manufacturing exporters, export contractors, financial institutions, investors, host country authorities and buyers of capital goods and services. 1) Focusing on Customers

10. 10 Build a high performance organization, operating on an effective and self- sustaining basis through prudent underwriting and sound risk analysis practices. 2) Enhancing Performance

11. 11 Forge partnerships and alliances with other insurers, government agencies and international organizations to complement service and leverage resources. 3) Engaging in Strategic Alliances

12. 12 Create enterprise wide risk awareness and the application of effective risk management techniques. 4) Fostering Risk Orientation

13. 13 Consistently utilise sound business, environmental and social principles, applying international best practice. 5) Providing effective stewardship

14. 14 Sustained growth in insurance portfolio Successful reduction of reinsurance portfolio Efficiently managed claims and salvages Growth in investments to facilitate insurance capacity Achievements to Date

15. 15 31 March 2006 R5,6 billion 31 March 2007 R8,8 billion 31 Dec 2007 R9,9 billion Sustained Growth in Insurance Portfolio

16. 16 Country Exposure

17. 17 02 July 2001R13,8 billion* 31 Dec 2007R2,28 billion *Includes short term transactions which have since been privatised. Successful Reduction of Reinsurance Portfolio

18. 18 ClaimsSalvages 2005/6R 63,1 mR 38,4 m 2006/7R 150,0 mR 64,3 m 2007/8*R 20,8 mR 156,0 m *Up to December 2007 Well Managed Claims and Salvages

19. 19 Investment funds at inception: R 1,083 billion Funds as % of portfolio:7.848% Investment funds at 31 Dec 2007:R 2,282 billion Funds as % of portfolio:18.371% ECIC well placed to accommodate future transactions: total capacity calculated as R30 billion Growth in Investments to facilitate Insurance Capacity

20. 20 Budgeted income statement for the year ending 31 March 2009 Strategic Plan and Budget Analysis

21. 21 Budget 2008/2009 Description Estimated Budget 2008 2009 R'000 Gross Premium 215 372 158 090 Earned Premium 187 893 106 462 Net Claims Rec/(Pd) 129 890 (25 363) Provision - Decr/(Incr) (2 703) 23 750 Commission Rec/(Pd) (2 692) (800) Net Operating Expenses (24 675) (34 113) Underwriting Profit (Loss) 287 713 69 936 Other Income 166 409 171 676 Net Profit before taxation 454 122 241 612 Taxation (131 695) (67 651) Net Profit after taxation 322 427 173 961 Capital Expenditure (CAPEX) 34 871

22. 22 Building on the achievements of 2007/2008; Key priority initiatives targeted for 2008/2009: 2008/2009

23. 23 2007/2008: Comprehensive interrogation of ECIC insurance policy in collaboration with customers and under supervision of local and international Basel II experts. Target for 2008/2009: More consumer friendly policy certified as Basel II compliant by Reserve Bank. Cost: Absorbed in salary expenses. Initiative 1

24. 24 Economic Impact Assessment Model built in collaboration with the dti and National Treasury. Aimed at undisputed economic impact results. Cost: Absorbed in salary expenses. Initiative 2

25. 25 Documentation Training Training of staff on intricate project finance documentation. In previous years external facilitators provided extensive training on project structuring techniques. Total training budget R350,000 Initiative 3

26. 26 Portfolio Management System (PMS) New PMS to enhance effectiveness, efficiency and accuracy of ECIC portfolio administration. Cost: R500,000 Initiative 4

27. 27 Comprehensive and up to date industry and relevant research reports Industries covered / to be covered: aluminium, copper, zinc, cobalt, gold, oil, tourism, global political environment, toll roads, shipbuilding, call centres. Further sectoral research will be driven by global risks identified. Conduct legal reviews of buyer countries. Cost: Industry research cost absorbed in salary expenses; Legal reviews R250,000. Initiative 5

28. 28 International Credit Risk Insurance Forums Active participation in International Union of Credit and Investment Insurers (Berne Union): - Drafting guiding principles – Pricing review team Increased participation at OECD. Budgetary implication (incl. membership fees) R1,581,000 Initiative 6

29. 29 Increased Deal Flow into Africa 62% of ECIC’s current exposure in Africa 89% of ECIC’s deal pipeline of USD 1.4 billion (R ± 11 billion) towards Africa Cost of due diligence expenses = R1,150,000 Initiative 7

30. 30 New Applications

31. 31 Quotations

32. 32 Assistance to SMEs Performance Bond Insurance Developed in partnership with IDC Focus on SMMEs facing financing capacity hindrances Enable SMMEs to participate in exports of capital goods and services Policy Intervention

33. 33 Product Criteria: Bond value to 10% of contract price Bond callable on demand SMMEs to benefit (National Small Enterprise Act, Act 102 of 1996) Export contract value not exceeding USD10 million Credit term two years or more SME Performance Bond Insurance

34. 34 Eastern Cape Development Corporation Trade and Invest KwaZulu Natal (TIKZN) Invest North West Mpumalanga Economic Growth Agency WESGRO SA Boatbuilders Business Association Entrepreneurs Month organised by the dti South African Association of Consulting Engineers Gauteng Economic Development Agency Limpopo Economic Development Agency Khula Enterprises Black Management Forum TIKZN road show (6 workshops) Roadshows done on SME Product

35. 35 APEX PRIORITIES ECONOMIC CLUSTER OBJECTIVES Government Policy Plans

36. 36 Project 13: Assistance to SMEs (ECIC Performance Bond) Project 21: Resolution of challenges facing Zimbabwe, (support dti in finalization of investment protection agreement to facilitate ECIC supported projects). Project 22: Reconstruction in DRC (strong pipeline of ECIC supported projects – mining; scanning equipment for border posts) Project 23: Intensified economic diplomacy (OECD, Berne Union, Prague Club, Conferences – international relations work to benchmark and align ECIC’s business practices). Apex Priorities

37. 37 INCREASE ECONOMIC EFFICIENCIES Basel II compliant policy Conduct host country legal reviews to develop appropriate legal templates to be replicated for future transactions Re-negotiate with banks financing costs pertaining to export credit transactions (utilize OECD studies) Economic Cluster Objectives

38. 38 PROMOTING DYNAMIC SECTORS Conducting research and developing new products for Call Centre Operations, (foreign exchange cover, breach of contract) - labour intensive sector, Shipbuilding industry INTEGRATED SUPPORT FOR SMEs Covered under APEX Priorities Economic Cluster Objectives