ECIC AR 2024 9TH

E

D

H

S

I

L I

N

B

2

0

A

0

T

S

1

E

Integrated Report 2024

E X P O R T C R E

L T D

O C

A S

C

R I

D I

F

T

A

I

N

H

S

T

U

U

R

O

A

S

N

F

C

O

E

N

C

O

O

I

R

T

P

A

O

R

Legal Proceedings In January 2024 the Corporation received a summons relating to an insurance claim that was rejected during the financial year. ECIC is defending the litigation action.

The salient terms of the agreement are that all four entities will pool their resources to support identified and selected eligible South African companies with different forms of support (within their mandates) in order to enable the selected companies to participate in an exporter incubator programme and/or go straight into the Export Passport Programme, which will provide them with a customised ‘export passport scheme’ that will assist them in either entering the export value chain or increasing their current contribution in the export value chain. In this regard, the Export Passport Programme will focus on potential exporters, emerging and established exporters with a view to enhancing their market access or diversifying their products and potential markets. ‘Export value chain’ means that the participants in the Export Passport Programme may be a sub-contractor to the ultimate exporter, or be the ultimate exporter themselves. Either way, the participants in the Export Passport Programme would be eligible for all forms of support on offer by the programme. The role of ECIC in the Export Passport Programme is to provide insurance cover to NEF and IDC for finance granted to participants under the Export Passport Programme. The maximum insurance cover to be provided by ECIC will be 90% of the export-oriented loans (supply chain finance) or export credit loans. ECIC insurance cover under the Export Passport Programme may include cover for short term loans, working capital facilities, guarantees etc. During the 2024/25 financial year, the Corporation will conduct its biennial Culture Entropy Survey and continue tracking the effectiveness of the AfCFTA media campaign through a Click-Through-Rate measure.

ECIC Tax Leakage on Unrealised Foreign Exchange Gains

ECIC actively participates in the Berne Union (International Union of Credit and Investment Insurers), an international non-profit association and community of global export credit and investment insurers. The ECAs present on the African continent from the USA, UK, Canada, Australia and China do not pay any income tax. The ECIC insurance revenues and liabilities are predominantly in US dollars, therefore, the majority of the ECIC investment funds are held in US dollars as approved by SARB. There is a mismatch between the International Financial Reporting Standards and the Income Tax Act, causing ECIC to pay excessive taxation over the past 15 years. In most of these years exchange losses on the US dollar holdings convert to profits on the income tax calculation, resulting in tax payable on top of those losses. In the few years where the reverse has happened, the tax receivable is a fraction of the tax paid. This puts a strain on the Corporation’s ability to increase its capital base, which would increase the underwriting capacity, enhancing the ability to fulfil the mandate.

YOUR EXPORT RISK PARTNER

15