Presentation on theme: "U.S. DEPARTMENT OF AGRICULTURE (USDA) FOREIGN AGRICULTURAL SERVICE"— Presentation transcript:
1 U.S. DEPARTMENT OF AGRICULTURE (USDA) FOREIGN AGRICULTURAL SERVICE (FAS)GSM-102 EXPORT CREDIT GUARANTEE PROGRAMDoing Business in Africa – Global Trade ForumNovember 18, 2013Michele Kennedy-KouadioOffice of Trade ProgramsCredit Programs
2 TRADE PROGRAMS FAS works to improve foreign market access, FOREIGN AGRICULTURAL SERVICE (FAS)Lead international agency in the United States Department of Agriculture (USDA)—Represents a network of USDA agencies and private companies through its partnership with U.S. Cooperator GroupsFAS OVERSEAS ATTACHES,COUNSELORS, AND TRADE OFFICESPoint of contact for overseas banks, importers, and governments in overseas markets desiring information about GSM-102 or other programs that help with importation of U.S. agricultural products into their countriesTRADE ASSOCIATE REPRESENTATIVESBy products such as U.S. WheatOr regional such as SUSTAU.S. GOVERNMENT AGENCIES THAT PARTNER UNDER THE NATIONAL EXPORT INITIATIVE (NEI)U.S. Export Import Bank, Overseas Private Investment Corporation, U.S. Small Business Administration/Office of International Trade, U.S. Department of Commerce, U.S. Department of Agriculture, U.S. Agency for International Development’s Development Credit AuthorityFAS works to improve foreign market access,build new markets and improve the competitiveposition of U.S. agriculture in the globalmarketplace
3 GSM-102 CREDIT GUARANTEE PROGRAM Facilitates export financing of U.S. agricultural products by guaranteeing repayment to U.S. banks (or exporters) that extend credit terms to USDA approved banks in the Africa Middle East (AME) region.Buyers of U.S. agricultural products in the AME region seek financing opportunities under GSM-102 when banks in the AME region are reluctant to lendImporters can seek terms through USDA approved banks in the AME region, even when the shipment destination country is not the same as the location of the bank opening the L/C. Not all countries in the AME region are eligible to have banks approved.
4 BANKS: CREDIT TERMS UNDER GSM-102 USDA approved banks in the AME must open an L/C in favor of the exporter of the U.S. agricultural productThe U.S. bank may or may not confirm the L/C as confirmation is not required under the programU.S. bank will negotiate credit terms with the foreign bank in the AME region according to parameters of the GSM-102 programTenor extended to the USDA approved bank in Africa will be limited according to the risk grade of the country where the bank residesThe cost of the program is the fee paid by the exporter to USDA
5 SUCCESS: ALL GSM-102 PARTICIPANTS BENEFIT May help importer obtain attractive loan terms with the USDA approved foreign bankUSDA approved foreign bank receives a dollar trade credit on attractive terms from the GSM-102 guarantee holder (U.S. bank typically)Reduces risk to the U.S. bank (or exporter)Helps exporter of U.S. agricultural products enter new growth markets in the AME region
6 IMPORTERS: STEPS TO PARTICIPATE Learn about the details of participating in GSM-102 through the USDA representative that covers your countryFind an exporter of the U.S. desired agricultural commodityEnter into a firm sales contract with the exporterNegotiate loan terms under GSM-102 with a USDA approved bank who is willing to open an L/CAsk the exporter to register the export sale contract under the GSM-102 programThe exporter will provide a copy of the sales contract to USDA if requiredThe U.S. exporter must pay the GSM-102 fee before shipment of your goods and before a GSM-102 guarantee is issuedNote:As GSM-102 does not cover therisk of the AME bank opening the L/C,the bank is likely to review theimporter’s company financials and cashflow to cover any risk the bank mayassume—
7 FEE PAID BY EXPORTER TO USDA FOR GSM-102 GUARANTEE Based On Tenor (Between Banks), Risk Grade Of Country Where Bank Is Located, Amount Of Sales Contract Covered Under GSM-102, and Repayment IntervalsGSM-102 (Premium per $100 USD of GSM-102 coverage) Semi-Annual Payment of PrincipalRisk CategoryTenor12345690 Days$0.182$0.186$0.196$0.257$0.343$0.463$0.6144 Months$0.211$0.215$0.227$0.296$0.398$0.535$0.7166 Months$0.236$0.241$0.254$0.332$0.445$0.599$0.7969 Months$0.323$0.330$0.347$0.453$0.608$0.819$1.08812 Months$0.350$0.357$0.376$0.491$0.659$0.887$1.17815 Months$0.492$0.503$0.529$0.691$0.928$1.248$1.65818 Months$0.561$0.574$0.604$0.789$1.058$1.424$1.89224 Months$0.686$0.700$0.737$0.963$1.293$1.738$2.310
8 FEE PAID BY EXPORTER TO USDA FOR GSM-102 GUARANTEE Based On Tenor (Between Banks), Risk Grade Of Country Where Bank Is Located, Amount Of Sales Contract Covered Under GSM-102, and Repayment IntervalsGSM-102 (Premium per $100 USD of GSM-102 coverage) Annual Payment of PrincipalRisk CategoryTenor1234569 Months$0.435$0.445$0.468$0.611$0.821$1.104$1.46812 Months$0.464$0.474$0.499$0.652$0.875$1.177$1.56415 Months$0.602$0.616$0.648$0.846$1.136$1.528$2.03018 Months$0.667$0.682$0.717$0.937$1.258$1.692$2.24824 Months$0.851$0.869$0.915$1.195$1.604$2.157$2.866
9 AME BANK PARTICIPATION Importer of U.S. goods will seek loan terms from the AME bankAs the terms extended under GSM-102 to the AME bank occur because the importer is buying U.S. agricultural productsThe AME bank benefitting from the trade credit, will likely be encouraged to extend loan terms to the importerYour bank may receive up to two years (varies by location of the bank in country) in repayment terms to the U.S. bankThe loan you extend to the importer is not guaranteed under GSM-102, and USDA is not involved in the terms between the foreign bank and the importerRead about details of the GSM-102 programContact Credit Program Division Representative for Details -Discuss possible terms that could be negotiated with your U.S. correspondent banks under GSM-102Look at the guidelines to apply for review and approval under the GSM-102Your bank must have a location in an AME bank eligible country
10 Global Usage FY 2011 – 2012 (in USD millions) GSM-102$ USD Millions+Eurasia Region discontinued in 201210
11 AME REGION 10/1 thru 9/30 Shipping Location Announced ($mil) Registered ($mil)Bank Used in the AMEAgricultural Products2011Egypt, Morocco, Saudi Arabia, Nigeria, Guinea Bissau, Iraq, Ghana$350$239Africa Export Import Bank (Multilateral Egypt) , Mashreqbank (UAE), Investec (South Africa),Soybean MealSoybean OilWheatYellow Corn2012Angola, Egypt, Ghana, Morocco, Saudi Arabia, Tunisia$400$246 ** reflects cancellationsAfrexim MashreqbankInvestecMauritius Commercial BankPoultry, Soybeans, Rice, Soybean Oil, Wheat, Yellow Corn, Soybean Meal2013Angola, Egypt, Ghana, Libya,Nigeria,Tunisia$475$173Mauritius Commercial Bank, Africa Export Import Bank, Investec, MashreqbankPoultry, Soybeans, Soybean Meal, Wheat, Soybean Oil, Rice, Yellow Corn
12 U.S. MARKETS – Leading Regional Markets: Sub Saharan Africa ranks 12th North Africa ranks 14thBICO Report through June 2013SubSaharan Africa (BICO – June 2013)Top U.S. Markets – Not in Rank orderGhanaEthiopiaSouth AfricaAngolaKenyaLiberiaCameroonGabonNigeria
13 SubSaharan African Top U. S SubSaharan African Top U.S. Markets by Commodity Category (Tons) BICO Report Oct-Dec 2012CountryConsumer OrientedIntermediateBulkNigeria12,3475,505193,475Ethiopia1,01714950,470Angola65,9381,9022,522Ghana53,0874,49741,085Kenya3,36313,35023,885Cameroon4402,23823,786Gabon18,948202130South Africa12,93110,54521,549CongoBrazzaville13,94552.9Kinshasa11,62421.22.8
14 PRODUCTS COVERED Must be U.S. origin Bulk commodities (wheat, feed grains, soybeans, rice)Intermediate products (oilseed meals, flour, hides, genetics, seeds, saplings)Consumer-oriented products (meat, fruits, vegetables, grocery products)Fiber: cotton and wool, including fabric and yarnsForest Products: Wood and wood products--GSM-102 covers many different types of agricultural products – everything from bulk commodities to consumer-ready frozen foodsFYI - Approximate percentages of commodity types under GSM-102 (for FY 2008 and 2009 to date):--Feed grains = 31%--Meats and products (beef, poultry, pork) = 20%--Oilseeds = 13%--Wheat = 12%--Protein meals = 10%--Cotton = 4%These account for about 90% of total activity. Remaining 10% consists of wood/wood products, rice, tallow, vegetable oils, etc.
15 ELIGIBLE COUNTRIES AFRICA AND MIDDLE EAST REGION Participating Countries Can Receive Shipments; and *Some are also Eligible to Have Banks Approved:Afghanistan, Algeria*, Angola*, Bahrain*, Benin, Botswana*, Burkina Faso*, Burundi, Cameroon*, Cape Verde*, Central African Republic, Chad, Comoros, Cote d’Ivoire, Democratic Republic of the Congo, Djibouti, Egypt*, Equatorial Guinea, Eritrea, Ethiopia, Gabon*, Gambia, Ghana*, Guinea, Guinea-Bissau, Iraq, Israel*, Jordan*, Kenya*, Kuwait*, Lebanon*, Lesotho*, Liberia, Libya, Madagascar, Malawi*, Mali, Mauritania, Mauritius*, Morocco*, Mozambique*, Namibia*, Niger, Nigeria*, Oman *, Pakistan, Qatar*, Republic of the Congo, Republic of South Sudan, Rwanda, Saudi Arabia*, Senegal*, Seychelles, Sierra Leone, South Africa*, Swaziland*, Tanzania*, Togo, Tunisia*, Uganda*, United Arab Emirates*, West Bank/Gaza, Yemen, Zambia* and Zimbabwe. * USDA has determined that the following countries in this region are eligible to have banks approved (as of August 7, 2013):
16 ELIGIBLE BANKS Check Website Routinely for Additions/Deletions Eastern and Southern African Trade and Development Bank (PTA Bank), Burundi/Kenya (Multilateral)African Export-Import Bank (Afrexim), Egypt (Multilateral)Byblos Bank S.A.L., LebanonThe Mauritius Commercial Bank Ltd., MauritiusAttijariwafa Bank, MoroccoBMCE Bank, MoroccoInvestec Bank Limited, South AfricaNedbank Limited, South AfricaAbu Dhabi Commercial Bank PJSC, United Arab EmiratesCredit Europe Bank (Dubai) Ltd., United Arab EmiratesMashreqbank PSC, United Arab EmiratesNational Bank of Ras Al-Khaimah PSC (Rakbank), United Arab EmiratesCheck Website Routinely for Additions/DeletionsBanks interested in becoming approved by CCC should visit the link below for more information.
17 USDA REPRESENTATIVES IN AFRICA ETHIOPIA – American Embassy, Addis Ababa Quintin Gray, Counselor Covers African Union, Djibouti, Eritrea, Somalia, South Sudan, Yemen KENYA – American Embassy, Nairobi Kate Snipes, Counselor Covers Burundi, Malawi, Rwanda, Tanzania, Uganda, Zambia NIGERIA – U.S. Consulate General, Lagos Russell Nicely, Counselor Covers Benin, Cameroon, Ghana, LiberiaSENEG AL – American Embassy, Dakar Joani Dong, Attache Covers: Burkina Faso, Cote d’Ivoire, Mali, Niger, The Gambia SOUTH AFRICA – 877 Pretorius Street, Pretoria Eric Wenberg, Minister Counselor Corey Pickelsimer, Senior Attache Nicolas Rubio, Attache Covers: Angola, Botswana, Lesotho, Madagascar, Mauritius, Mozambique, Namibia, Swaziland, Zimbabwe
18 OFFICE OF TRADE PROGRAMS CREDIT PROGRAMS DIVISION GSM-102 Export Credit Guarantee ProgramAfrica and the Middle EastBusiness Development and Planning