BExA – UK Export Finance Annual Benchmarking Report 2020

The British Exporters Association (BExA) today launches its 11th annual benchmarking of UK Export Finance (UKEF). The report, titled ‘Exporting in the new “normal”’, provides an analysis of UKEF’s activities and reflects upon the range and quality of support to UK exporters over the period April 2019 to March 2020, and offers comparisons with other countries’ export credit agencies (ECAs).

The benchmarking report notes that while BExA believes that UKEF has developed into one of the world’s leading ECAs, there is “still work to be done”, primarily in terms of UKEF’s interest rate support, accessibility and speed of response, and range of products for the current economic environment. BExA believes that UKEF’s existing products should be extended in order for it to remain competitive with the offerings and risk appetite of other ECAs as they gear up post-COVID.

The report reviews the 11 recommendations that BExA put forward to UKEF in 2019 in that year’s benchmarking paper, analyses the progress made around each suggestion, and makes new proposals based on what growth has been achieved. It also provides two new recommendations for 2020, and presents a series of suggested actions to drive progress in these areas.

One of the new recommendations for 2020 focuses on UKEF’s limited risk appetite, which BExA says restricts its ability to support UK exporters and exports of all sizes, calling on UKEF to adopt a more market-based risk appetite. In the report, BExA outlines that help is needed to get SMEs exporting again and to provide cover for projects of smaller values and those with lower than usual credit quality.

The other new recommendation centres on UKEF’s processes, which BExA believes need to be transformed in order to promote speed, transparency and accessibility. With regards to accessibility in particular, BExA urges UKEF to set objectives and targets around diversity by supporting minority- and women-owned businesses, to be tracked and reported on an annual basis.

In reviewing advancement on 2019 recommendations, BExA notes that progress has stalled on the rollout of the Department for International Trade’s Export Strategy, and calls on the DIT to reinvigorate and implement the Strategy to ensure that the UK is well-placed to repair its economy post-pandemic.

In terms of Direct Lending (DL), BExA welcomes the increase to UKEF’s DL limits but urges continued monitoring of the facility’s use in order to ensure that capacity remains available. It further notes that pressure on DL limits can be alleviated by making fixed interest rates (CIRR) available on other products.

In the report, BExA applauds UKEF’s “excellent and broad” product range, which it scores 9/10. It notes that recently launched products such as the Export Development Guarantee (EDG) and the General Export Facility (GEF) have the potential to be “game-changing financial products for existing exporters and crucial for businesses embarking on exporting”.

The missing mark out of 10 is down to a lack of Tender to Contract (TTC) foreign exchange rate cover. Other areas of improvement could be extending the EDG and GEF so that they are offered on a revolving credit basis to maximise their usefulness and flexibility.