By Taurai Craig Museka

As Zimbabwe looks to map its way to economic recovery with the aim to realise a better balance of payments, export development initiatives have become a priority for both the government and private sector. Zimnat is on an innovation drive to develop insurance products that can assist businesses that have for long struggled to grow their manufacturing base and export markets. With the new products Zimnat hopes to obviate some of the obstacles to development resulting from the lack of funding and working capital.

Businesses operating in any struggling economy are exposed to the harsh reality of limited access to funding, in such fluid environments risk mitigation measures take precedence amongst investors and banks. This desire to reduce risk usually outweighs the appetite for profits on the money therefore making it difficult for businesses to get funding necessary for capacitation to meet export demand. Contrary to developed nations where Export Credit Agencies (ECAs) are given a task by governments to support development of exports through provision of export financing and various insurance and guarantees, Zimnat has taken the task to strengthen the export position of domestic companies. Through the provision of insurance, guarantees and partnerships with various funders Zimnat is able to make life better for all its stakeholders both individual and legal entities.

The foreign currency constraints in Zimbabwe are leaving many businesses with the difficult task of sourcing for funds to pay for their foreign currency obligations to settle input costs. Through the Trade Credit Insurance Division, Zimnat is assisting businesses in entering into more foreign markets, which would normally be difficult or risky to venture into. As an organisation that is associated with Africa’s largest non-banking financial services provider (Sanlam), Zimnat has a rich market intelligence pool on global markets that can assist any business without fear of defaults on exports. Furthermore Zimnat offers export trade credit insurance policies that compensate businesses in the event that the producer’s clients both local and international default payment for goods sold on credit terms.

The goal of any business in any difficult environment is cost containment. Zimnat Trade Credit Insurance policies do not just compensate businesses in the event of a default by their debtors, the policies also offer cost minimisation through reduction of the bad debt reserves. The policy allows the exporting business to share the cost of market vetting with Zimnat to ensure that business minimise their costs and be cost competitive internationally. Zimnat also eliminates the need for hiring lawyers or debt collectors in the event of a default by a debtor, as they take over the credit management and debt collection function at no extra cost.

With the aid of partnerships with strong financial backing, Zimnat is able to provide comfort to trade financiers by making available invoice-discounting arrangements that are also known as factoring. Such arrangements make life better for most Zimbabwean businesses which have low credit ratings, which make it difficult to access funds from banks. Businesses are able to turn what would have otherwise been a credit sale into a cash-upfront sale through invoice discounting. A business can wait for 30 days on a credit sale and risk the loss of value through inflation on a sale made, they receive cash up front by opting to have their invoices discounted by Zimnat. Through the trade credit insurance Zimnat has essentially made it easier for businesses to have funding necessary for restocking. The insurance policy will essentially cover the financier from the risk of losing money when a debtor defaults after the 30 days or the terms of the invoice have ended.

As lending standards get increasingly tighter due to an increase in non-performing loans, Zimnat is encouraging private lenders to provide funding for small, medium and large businesses through the issuance of various credit guarantees. Zimnat will guarantee repayment of borrowed amounts in case the businesses default. Businesses without a credit history or collateral are able to secure funding using guarantees provided by Zimnat. Other guarantees issued by Zimnat have also made it possible for businesses particularly in manufacturing, agriculture, construction and mining to upgrade their equipment, machinery and infrastructure.