Thursday 9 July 2020

ECI reaffirms backing as UAE businesses restart

DUBAI, June 3, 2020

Etihad Credit Insurance (ECI), the UAE’s federal export credit company, has reaffirmed its commitment to support companies operating in the country in order to help them recover from the implications of Covid-19.

During these challenging times, ECI continues to fulfil its mandate to support UAE businesses as the pandemic has caused financial institutions and private insurers to be more risk-averse and reluctant to provide their services to companies due to an environment that is characterised by weak demand, vulnerable supply chain, tight credit, and a weakened capacity to pay, an ECI statement said.

Massimo Falcioni, CEO of ECI, said: “We laud the effectiveness and efficiency of the UAE’s leadership in terms of their response to Covid-19, which ranked amongst the top 10 globally. This includes the UAE’s wise resolve to bolster the economic resiliency of the country amidst the pandemic.

“ECI plays a significant role in restoring confidence in the market by protecting companies from commercial and political risks, and increase their access to finance, new suppliers and frontier markets.”

UAE companies trading in domestic market or exporting in international markets know the importance of insuring their transactions. Through trade risk mitigation tools, they can eliminate the uncertainty in a market that mostly demands for an open credit account transaction, a risky payment option, Falcioni noted.

Under the open credit arrangement, the products or services are shipped and delivered before payment is due, which is typically in 30, 60 or 90 days. In the unfortunate occurrence of a non-payment – whether the customer is unwilling or unable to pay – insurance will take care of the loss and the company is ensured to receive the payment.  

The need for these risk mitigation tools has surged during the coronavirus disease (Covid-19) global pandemic. However, private insurers have become more cautious due to heightened risks. ECI, as UAE’s federal export credit company, plays an important role in areas that the private players cannot or have difficulty in having access, the statement added.

Falcioni said: “As UAE economic sectors restart and borders reopen, more focus will be put on cash-flow by both the buyers and sellers. Buyers will prefer to deal with sellers who can provide more liberal payment terms. Sellers, on the other hand, will also focus on their balance sheets and protect their main assets—their cash receivables.”

“Through ECI, exporters can offer their services on more liberal terms and have the certainty that they will be compensated. I urge companies to reach out to ECI to avoid payment issues and enhance their liquidity position,” he added. – TradeArabia News Service


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