How Close the Aid‐Community and ECA Universes Are
| Published date | 01 September 2019 |
| DOI | http://doi.org/10.1111/1758-5899.12710 |
| Date | 01 September 2019 |
| Author | Ferdinand Schipfer |
How Close the Aid-Community and ECA
Universes Are
Ferdinand Schipfer
Oesterreichische Kontrollbank AG (OeKB)
While backgrounds and motives of Export Credit Agencies and Development Institutions may differ, the countries, projects
and objectives they are working on are very often the same. This calls for much more and better coordinated co-operation.
There are more similarities between the multilateral devel-
opment bank (MDB)/ development finance institution (DFI)
and export credit agency (ECA) universes than meet the
eye. While I have been striving for many years to bring
together the aid community with traditional credit financing
institutions, I consider the time for closer co-operation is
now more opportune than ever. Admittedly, the public per-
ception of export credit agencies is not based on in-depth
knowledge of them. If ECAs are known at all, their reputa-
tion hovers somewhere between ‘sometimes helpful’and
‘problematic in one way or the other’. I do not want to deny
that there are some ECA portfolios heavy on defence, some
support environmentally questionable projects and others
might even burden their national budgets.
What all ECAs have in common is some mistrust on the part
of MDBs, international financial institutions (IFIs), DFIs and civil
society: ECAs are supposed to try to avoid international com-
petitive bidding and to blindly favour their national compa-
nies, thus being ‘egoistic trade distorters’. Not deservedly so!
Very much encouraged by the present discussions within the
OECD, but also by several personal encounters, I would like to
demonstrate how close the ‘two universes’are.
The two universes
What I have gleaned from the ongoing debates and efforts
is the beginning of an increase in co-operation and co-fi-
nancing between the aid world and ECAs, (undoubtedly) to
the benefit of suppliers or foreign sponsors but even more
to the advantage of countries, institutions and companies
investing in infrastructure or industrial projects or attracting
foreign direct investors. True, the broad objective of ECAs is
support for their national companies whether they are sup-
pliers or overseas stakeholders. However, putting aside this
motive and looking at the regions or projects supported, it
is fair to state that, in fact, ECAs are also a sort of develop-
ment institution: The countries, the partners and the pro-
jects we work on are often the same as those of aid
institutions in a broad sense!This applies to both export
credit activities and overseas investment insurance.
Export credit activities
Mandated by a European Union Member State Government,
OeKB is confined to supporting only so-called non-mar-
ketable risks, with the following two consequences: all
short-term business with trading partners in better-off coun-
tries (by and large OECD member states) is catered for by
the private insurance market. OeKB’s activities, in contrast,
focus on medium and long-term credits for exports to newly
industrialised countries, to transition economies and to
emerging markets. Business is basically split into infrastruc-
ture and commercial industrial transactions.
Infrastructure
Very much in keeping with Austria’s industrial structure and
main capabilities, a major portion of OeKB’s portfolio is the
supply of goods and services for basic infrastructure invest-
ments: energy generation and distribution, health, railway
infrastructure or environmental projects –all focal points of
MDBs and IFIs.
Tied aid and soft loans
OeKB’s‘development institution’character is all the more
pronounced as, like some other ECAs, we manage a special
credit programme called ‘soft loans’. In essence, soft loans
are deliberately subsidised funds to make ‘commercially
non-viable’infrastructure projects possible in emerging
regions. As opposed to market-based ‘hard’loans these
credit facilities carry ‘sweetened’terms. They comprise
grants and subsidies resulting in, on a net present-value
basis, concessional levels of at least 35 per cent and at least
50 per cent for LDCs respectively. According to OECD con-
sensus rules, such loans may be made available only to
developing countries. The inhabitants’gross national income
per capita must not be higher than close to US$4,000 per
annum. The object of soft loans is assistance for not-that-
well-off countries and projects and, at the same time, pro-
motion of Austrian exports including Austrian value-added.
©2019 The Authors. Global Policy published by Durham University and John Wiley & Sons Ltd. Global Policy (2019) 10:3 doi: 10.1111/1758-5899.12710
This is an open access article under the terms of the Creative Commons Attribution License, which permits use,
distribution and reproduction in any medium, provided the original work is properly cited.
Global Policy Volume 10 . Issue 3 . September 2019
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