Environmental Technologies Industries
||Environmental Technologies Industries
|South Africa Environmental Export Market Plan|
U.S. and Bilateral Environmental Programs
Foreign assistance can play an important role in helping South Africa meet environmental challenges. South Africa’s leadership is committed to making the lives of all South Africans better through sustainable development programs and has made a commitment to participatory democracy and a free market. This foundation provides a basis for U.S. companies to obtain solid returns on their investments. To enhance the probability of success for U.S. business, the U.S. Government has implemented a number of environmental programs with South Africa. Examples are listed below.
The U.S.-South Africa Binational Commission
U.S. Vice President Al Gore and South Africa’s Deputy President Thabo Mbeki established the U.S.-South Africa Binational Commission (BNC) on Feb. 28-March 1, 1995. They cochair the commission.
The U.S.-South Africa BNC has six standing committees. The committee that covers environment is the Conservation, Water, and Environment Committee. U.S. Secretary of the Interior Bruce Babbitt cochairs this committee with his counterpart, Derek Hanekom, South Africa’s Minister of Agriculture and Land Affairs. The committee has five working groups that cover a wide range of environmental issues, including biodiversity, global warming, ozone depletion, pollution prevention and remediation, and conservation and water protection issues. Another committee, chaired by U.S. Secretary of Commerce William Daley, covers economic issues: the Trade and Investment Committee.
Because of the BNC’s prominence and the commitments of Vice President Gore and Deputy President Mbeki to sustainable development programs that lead to a cleaner environment, environmental issues have been more prominent in the bilateral relationship. Progress within the BNC has fostered U.S.–South Africa cooperation on regional issues and on joint positions on multilateral environmental issues.
U.S. Point of Contact for Conservation, Water, and Environment Committee:
Department of the Interior
U.S. Point of Contact for Trade and Investment Committee:
Department of Commerce
U.S. Agency for International Development
The U.S. Agency for International Development (USAID) program in South Africa seeks to empower the majority population. USAID has funded and been active in a number of programs through several educational and training initiatives, including the following:
--USAID Urban Programs. The strategic objective of this program is to improve access to environmentally sustainable shelter and urban services for the historically disadvantaged. FY97 funding for this project was $8.044 million.
--The establishment of an environmental Internet website for Southern Africa—The Southern Africa Environment Page. This site focuses on environmental and sustainable development issues facing South and Southern Africa. The Internet address for this site is http://www.ru.ac.za/saep/ saep.html.
--Other USAID programs include a social/bio-diversity project involving the restoration of a river system and support for local redevelopment initiatives throughout the country. These ini-tiatives are designed to increase the capacity of municipalities to take into account environmental factors in their community planning process, and to provide training in environmental management to local authorities and technical assistance to municipal officials.
U.S. Point of Contact:
U.S. Agency for International Development
U.S. Trade and Development Agency
South Africa is the largest export market for U.S. goods and services in Africa. Given the profound political changes, the lifting South Africa are extremely good. The U.S. Trade and Development Agency (TDA) has increased its efforts to help businesses tap the growing demand for U.S. technologies. TDA supports a number of activities (e.g., feasibility studies) that support South Africa’s economic priorities and help American companies reenter this market. TDA also sponsors “reverse trade missions” or orientation visits that provide a forum to show South African decision-makers what technologies are available and what U.S. companies have to offer. To date, environmental initiatives have not come to the forefront in light of more pressing South African requirements (e.g., modernization of existing plants and facilities, telecommunications, and housing).
U.S. Point of Contact:
U.S. Trade and Development Agency
National Oceanic and Atmospheric Administration and the National Weather Service
The National Oceanic and Atmospheric Administration (NOAA) has initiated several cooperative projects relating to global climate change, El Niņo, and atmospheric research. The National Weather Service has initiated a river system management project designed to minimize the environmental damage done by unpredicted flooding.
U.S. Department of Energy
One of the evolving projects coming out of the United States-South Africa Binational Commission is the Coalbed Methane Project for South Africa and the Southern African region. The U.S. Department of Energy (DOE), the Northern Province in South Africa, and the Southern African Development Community (SADC) secretariat are principal engineers of the project. This project evolved because of tremendous coal reserves in South Africa and the potential for the development of coalbed methane in the region. Two aspects of this project are the Lebowa Minerals Trust Project and Southern Africa Coalbed Methane Project. DOE will play an advocacy role in support of entities that might be interested in funding or developing coalbed methane projects in South Africa and in all of Southern Africa.
Lebowa Minerals Trust Project: The Lebowa Minerals Trust Project is to supply alternative energy sources and to provide opportunities for gas-fired thermal power generation in off-grid areas. Coalbed methane is a particularly attractive energy source in South Africa because of the lack of other land-based natural resources and the overuse of wood as fuel. Recovery of potable water for household and agricultural use also can be accomplished in conjunction with the coalbed methane recovery process.
The South African Government and the Lebowa Minerals Trust have both taken proactive steps to facilitate the development of this resource. The Lebowa Minerals Trust has selected Advanced Resources International, Inc., a U.S. firm, to evaluate the Lebowa region’s coal-bed methane potential and develop production wells.
Southern African Coalbed Methane Project: DOE has met with relevant South Africa Department of Minerals and Energy Affairs officials and private sector personnel regarding the value of a coal resource evaluation, including coalbed methane resources. During a May–June 1996 trip to Africa, DOE met with the SADC secretariat and provided a draft memorandum of understanding for fossil energy cooperation under which the regional coalbed methane study could be performed.
Coalbed methane technology is essentially a U.S. technology that was developed by DOE. The U.S. Government continues to encourage U.S. companies to participate in these projects. European firms continue to be very interested in assisting with the development of coalbed methane in the Republic of South Africa and the region. They continue to issue country donor funds to their private sectors to facilitate their entry into this potentially lucrative market.
U.S. Point of Contact:
Art Baldwin, Regional Coordinator for Africa
U.S. Department of Energy
Pittsburgh Energy Technology Center
P.O. Box 10940
Pittsburgh, PA 15236 USA
Low Smoke Fuels Project: The purpose of the Low Smoke Fuels Project is to help the Government of South Africa investigate and substitute environmentally superior fuels for high-polluting fuels. The program involves sharing information among the governments of South Africa and the United States and the private sector. Eventually, South African coals and low-smoke U.S. fuels will be exchanged for testing. Reciprocal visits to the United States and South Africa are integral components of the project. The visits enable South Africa to benefit from U.S. experience within the U.S. Government, the coal research and development (R&D) community, and the U.S. private sector. The United States will, on the other hand, see firsthand South African R&D infrastructure and begin to understand the socioeconomic and cultural factors that must be addressed in this project.
Photovoltaics for Lighting, Education, Health, and House-Based Industry in Rural South Africa: The project aims to electrify rural communities in South Africa while reducing greenhouse gas emissions in the environment through large-scale installation of solar photovoltaic systems. A corollary objective is to bring about social and economic benefit to rural communities through improvements in health and education delivery systems by making electricity available. The vision is that avail-ability of electricity will spur rural development by spawning household-based industries.
The project will install individual solar home systems and other communal applications of photovoltaic sys-tems, including battery-charging stations, street lighting, water pumping, health care lighting, and vaccine re-frigeration. A total of 39,000 units of 48 to 75 watt-peak solar home systems will be installed over an eight-year period.
The project is set up as a corporate venture called the Consortium of African Renewable Energy, South Africa Pty. Ltd., organized in 1996 among the following companies:
SOLAR Resources, Inc. (SRI) of Wilmington, Mas-sachusetts: A company engaged in the design, manufacture, sale, distribution, and financing of renewable energy systems and components. SRI also represents U.S. manufacturers of photo-voltaic modules and renewable energy equipment.
SOLLATEK (S.A.): A South African-based company engaged in the fabrication and marketing of solar energy and other electrical control equip-ment.
Three South African institutions--ESKOM, the University of Cape Town, and the Institute for Sustainable Development—are assisting in the project’s implementation.
DOE has hosted several visits to South Africa to focus on developing business opportunities in the energy and environmental fields. As previously mentioned, DOE has also undertaken projects in sustainable energy, energy efficiency in housing, and solar-powered water puri-fication technologies. Continued collaboration between DOE and the South African Department of Minerals and Energy Affairs (DMEA) is occurring in several areas. DOE is assisting in the process to establish consensus-based standards for commercial and other nonresidential buildings. DOE is also working with South Africa to develop demonstration projects in the alternative energy field. The International Institute for Energy Conservation of the U.S. Export Council for Energy Efficiency and the Group for Environmental Monitoring in South Africa signed a memorandum of understanding in August 1995. The purpose of the understanding is to target and ex-pedite partnerships between U.S. and South African companies to develop and demonstrate electric vehicle technologies.
U.S. Point of Contact:
U.S. Department of Energy
U.S. Environmental Protection Agency
The U.S. Environmental Protection Agency (EPA) has sponsored a series of training and research exchanges on water management, park ranger training, and bio-diversity. South African environmental groups from national, provincial, and local levels have visited EPA Regional Centers and environmental installations to garner firsthand knowledge of U.S. techniques, pro-cedures, and methodologies in wastewater management. EPA has also sponsored training in the United States on environmental justice and pollution prevention tech-niques and technologies. In the near future, it will organize seminars in South Africa on solid waste management and water quality. EPA will also provide two grants to U.S. nongovernmental organizations that would—
--Identify technologies required in South Africa and find U.S. companies to demonstrate those technologies on-site in South Africa.
--Sponsor U.S. industrial environmental forums to advise and provide input to various regulatory authorities on the development of environmental policy, standards, and management. The goal is to ensure that environmental policies take into account cost-effective, achievable results.
U.S. Point of Contact:
U.S. Environmental Protection Agency
South African Government
Exports to South Africa are subject to exchange control approval administered by the South African Reserve Bank. Advance payment for imports is severely restricted under the South African Reserve Bank Ex-change Control regulations. The Minister of Trade and Industry is empowered to regulate, prohibit, or ration imports to South Africa; however, most goods can be imported without restrictions. Import permits are avail-able from the Director of Imports and Exports, but are required only for specific categories of goods. In recent years, the restricted list requiring import permits has been greatly reduced; however, failure to produce the required permit could result in the imposition of penalties.
For more information on import permits, contact:
Director of Imports and Exports
Department of Trade and Industry
Private Bag X47
Tel: (27 12) 310-9791
Fax: (27 12) 325-7992
Sources of Finance
South African Financing
The Banking System: South Africa has a well-developed banking system, which resembles the British system. It is composed of three key elements: the South African Reserve Bank (the country’s central bank), private sector banks (commercial, merchant, and general banks), and mutual banks. In recent years, the legal distinctions between commercial, merchant, and general banks have eased, and South Africa’s major bank holding companies typically own several banks geared toward various clienteles. In 1995, South African banks secured the first six places among the top 100 banks on the continent. As of May 1995, 40 deposit-taking institutions were registered, of which four large consortiums dominate the sector. They are (in order of size of assets) Amalgamated Banks of South Africa (ABSA), Standard Bank Group, First National Bank of South Africa Ltd., and Nedcor.
All banking institutions are regulated by the Banks Act of 1990, which stipulates compliance with specific requirements regarding capital, cash reserves, liquid assets, and large exposures. South African banks must maintain a capital-to-risk asset ratio of 8 percent, bringing the country in line with international standards. In 1995, the greater willingness and ability of international investors to offer banks an increasingly diversified stockholder base strengthened the banking system. The restructuring of the Johannesburg Stock Exchange further strengthened the banking system. It allowed banks, for the first time, to enter the securities markets as stockbrokers. At the end of 1995, total bank liabilities aggregated rand 398 billion, of which 89 percent was deposits and savings from the general public and the corporate sector.
Foreign Exchange Controls: The South African Reserve Bank’s (SARB) Exchange Control Department administers exchange controls through commercial banks that have been authorized to deal in foreign exchange. All international transactions must be accounted for through one of these “authorized foreign exchange dealers.” The SARB is expected to adopt a conservative approach to exchange control liberalization. The liberalization process is likely to be gradual and will depend largely on the performance of the domestic economy and the new “unitary” rand. For more information on foreign exchange controls, contact:
John Postmus, General Manager
South African Reserve Bank
Exchange Control Division
P.O. Box 3125
Pretoria, 0001 South Africa
Tel: (27 12) 313-3911
Fax: (27 12) 313-3197
Currency: South Africa’s monetary unit is the rand (R), which is divided into 100 rand cents. In March 1995, the Government of National Unity eliminated the two-tiered currency system of the commercial and financial rand. All foreign exchange transactions--including foreign investment flows, capital gains, and proceeds from the sale of equities and securities by nonresidents--now take place via the unitary rand.
General Financing Availability: South Africa’s financial sector has 15 commercial banks that can provide overdraft facilities and about 13 merchant banks that can provide short- to long-term credit. Only banks that are authorized dealers in foreign exchange can process foreign trade payments. Approximately 40 foreign banks are represented in South Africa. The four key areas of business for foreign banks are trade finance, letters of credit, foreign exchange activities, and services to offshore investors. Several European finance and development institutions--such as the European Invest-ment Bank and the United Kingdom’s Commonwealth Development Corporation--are opening offices in South Africa.
Types of Available Trade, Finance, and Insurance: Both the United States’ Export-Import Bank and the Trade and Development Agency provide programs to support U.S. trade and investment activities in South Africa. The Government of National Unity also has a number of development agencies that provide project financing. As international sanctions against South Africa were lifted, a number of multilateral lending agencies made their financing programs available for South African projects.
Development Bank of Southern Africa: The Development Bank of Southern Africa (DBSA) will play a key role in financing infrastructure development in South Africa. Consequently, it will have a role in environmental impact assessments and other environment-related aspects of infrastructure development. Like all other major South African institutions, it is in a process of transformation to ensure that it meets the needs of the new South Africa. A new chief executive, Ian Goldin, was appointed in April 1996.
DBSA was established in 1983 and the South African Government became its sole shareholder. DBSA’s role is still emerging but basically it is to develop financial institutions and focus on infrastructure funding. The institution’s main clients will be municipalities, pro-vinces, and non-governmental organizations, whose capacity to manage projects it will seek to develop.
DBSA will also play a key role in mobilizing funding from the private sector and from bilateral and multilateral development institutions such as the Overseas Economic Cooperation Fund (Japan), the Japanese Export-Import Bank, the European Investment Bank, and the Caisse Francaise de Development. It is involved in negotiations with other multilateral international institutions to obtain additional concessional sources of funding. Representative infra-structure projects recently financed by DBSA include the following:
--Mpumalanga--Province Roads and Stormwater Upgrading
--Eastern Cape--Electrification Project
--Eastern Cape--Port Elizabeth Water and San-itation
--KwaZulu-Natal Province--Cato Major Develop-ment Project
--Oliphants River to Sand River Inter-basin Water Transfer Project
Upcoming projects in which the bank will be involved include the following:
--Maguga Dam Project—This is a joint project between South Africa and Swaziland for the development of the Komati River Basin (possible investment of R100 million).
--Maputo Development Corridor—DBSA supports the project with development planning, serves as technical coordinator, and encourages private sector investment.
--Transkei Wild Coast, Eastern Cape Province—The project could involve infrastructure expenditure of several billion rands.
--Coega Harbor and Industrial Project, Eastern Cape Province—The project involves a major port and industrial area now in the early stages of development.
The bank’s new approach to environmental sus-tainability is expressed as follows: The Bank sees environmental responsibility as a key development issue.… If projects threaten the environment in any way, an environmental impact analysis is performed to identify mitigatory measures, which then form part of the loan agreements. DBSA and the client jointly ensure these practices are fully integrated into the design and operation of the project throughout its life cycle, DBSA both sensitizing and assisting clients in instituting environmental management systems.… Environmental awareness in Southern Africa, as elsewhere, is growing. Incorporating these concerns into investment decisions to ensure that de-velop-ments are sustainable is an important challenge for DBSA.
Development Bank of Southern Africa
P.O. Box 1234
South Africa 1685
Lever Road, Headway Hill
Tel: (011) 313-3911
Fax: (011) 313-3086
Industrial Development Corporation of South Africa, Ltd.: The Industrial Development Corporation (IDC) provides an import finance program that involves credit and guarantee facilities for local industrialists to finance the importation of capital goods and services. Impofin (Pty) Limited, a wholly owned subsidiary of IDC, can conclude line-of-credit agreements with banks in most of the supplier countries to enable South African importers to purchase plants and equipment on extended credit terms. IDC has established a special Black Em-powerment Scheme to make its financing programs available to black South African enterprises, en-trepreneurs, and employer organizations. The program can finance the creation of a new enterprise; the ex-pansion of an existing enterprise; or the acquisition of control or a significant stake in an existing enterprise. For more information on IDC programs, contact:
Carel van der Merwe
Industrial Development Corporation
19 Fredman Drive Sandton
P.O. Box 784055
Sandton, 2146 South Africa
Tel: (27 11) 269-3000
Fax: (27 11) 269-3113
Small Business Development Corporation: To obtain a comprehensive listing of organizations in South Africa that support small and medium business development, refer to the Overseas Private Investment Corporation (OPIC) publication entitled Africa: A Guide to Business Finance for U.S. Firms. For more information, contact the U.S. Agency for International Development at:
U.S. Agency for International Development/South Africa
P.O. Box 55380
Arcadia, Pretoria 0007 South Africa
Tel: (27 12) 323-8869
Fax: (27 12) 323-6443
The Black Integrated Commercial Support Network
81 William Nicol
Stand #1, Bryanston, South Africa
Tel: (27 11) 706-8507
Fax: (27 11) 706-8508
African Development Bank: The African Development Bank (ADB), an international financial institution, was founded in 1962 to promote the economic and social development of its African member countries. Established with initial capital resources of $250 million, it has authorized capital of more than $22.3 billion. The bank is the property of the African Development Bank Group (ADBG), which includes the African Development Fund (ADF) and the Nigerian Trust Fund (NTF). NTF was established in 1976 by the Nigerian Government to assist in the development efforts of the poorer ADB members. The ADB provides financing for development on concessionary terms to the poorest African member countries. The ADB has 21 nonregional members, including the United States, which joined in 1982.
U.S. Government Financing
Export-Import Bank of the United States: All programs of the Export-Import Bank of the United States (Ex-Im Bank) are available to finance the sale of U.S. goods and services to South Africa. Exports of raw materials, consumer goods, and spare parts are on terms up to 180 days. Agricultural commodities and quasi-capital goods, on terms up to 360 days, can be supported under Ex-Im Bank’s short-term credit insurance policies. Exports of capital equipment and related services can be financed for up to ten years through Ex-Im Bank’s long-term loans and guarantees of commercial bank financing. Medium-term loans, guarantees, and insurance can be financed for up to five-year repayment terms.
Repayment of loans to the South African Government and its parastatals (i.e., government-owned companies) must be guaranteed by the “full faith and credit” of the Republic of South Africa. Ex-Im Bank will contemplate financing many of the large private-sector companies in South Africa based on their current audited financial statements. The South African banking sector may be able to guarantee repayment of smaller firms’ obligations arising from the importation of U.S. goods and services.
A number of South Africa’s large private banks and Ex-Im Bank have entered into credit guarantee facilities to expedite the financing of capital goods and services. On average, the repayment term is five years. American exporters may approach the funding banks regarding use of these facilities, and South African importers should contact their local banker for assistance. A list of these facilities is available from Ex-Im Bank.
When negotiating a sale of capital goods and services, exporters can apply for a letter of interest (LI). The LI will be issued within seven business days and indicates Ex-Im Bank’s willingness to finance a potential sale. The bank is also very interested in considering acceptable forms of limited recourse project finance in South Africa, where reasonable assurance of repayment is based on the project’s cash flow rather than guarantor.
Contacts for Credit Guarantee Facilities
South African Banks
Amalgamated Banks of South Africa
Standard Bank of South Africa
Industrial Development Corporation
First National Bank of Southern Africa
U.S. Funding Banks
Westdeusche Landesbank, NY
First Union National Bank, Charlotte, NC
ABN-AMR. O Bank NV Los Angeles, CA
The First National Bank of Boston
For more information on Ex-Im Bank programs, contact:
Export-Import Bank of the United States
811 Vermont Avenue, NW
Washington, DC 20571-0999
Tel: (800) 565-EXIM or (202) 565-3946
Fax: (202) 565-3931
U.S. Trade and Development Agency: The U.S. Trade and Develpment Agency (TDA) provides grants to fund feasibility studies and other planning services for major projects that are economic development priorities of the host government. However, only U.S. companies or consortia are eligible for TDA-funded studies. A prerequisite of TDA-funded projects is an opportunity for substantial sales of U.S. goods and services relative to the cost of the requested assistance. U.S. companies also must show that they face strong competition from foreign companies that receive subsidies or other government support. TDA is involved in the following sectors: agriculture, aviation, energy, environment, health care, manufacturing, mining and mineral developments, telecommunications, transport, and water resources. For more information, contact:
John Richter, Regional Director
U.S. Trade and Development Agency
African Division, SA-16, Room 309
Washington, DC 20523-1602
Tel: (703) 875-4357
Fax: (703) 875-4009
The U.S. Overseas Private Investment Corporation: The Overseas Private Investment Corporation (OPIC) is an independent agency for the U.S. Government that sells financial services to American companies making long-term investments in South Africa and other developing nations. Vice President Al Gore announced on July 23, 1996, that OPIC is backing a new $120 million fund that will make equity investments in South Africa and other nations in the continent’s southern region.
The $120 million fund, called the New Africa Opportunity Fund, is backed by an OPIC investment guaranty and is being privately managed by New Africa Advisors (NAA), a subsidiary of Durham, North Carolina-based Sloan Financial Group. With managed assets of more than $3.5 billion, Sloan is the largest African-American-owned investment firm in America.
The fund, one of 23 OPIC-backed investment funds, will focus on the development of businesses that are owned by the region’s majority population. It is expected to increase the level of U.S. goods and services flowing to southern Africa and to generate significant regional economic development. In addition, it will support the return to South Africa of American companies that left during the apartheid era boycott. For further information, contact:
President and CEO
New Africa Advisors
103 West Main Street
Durham, NC 27701
Tel: (919) 688-8092 Fax: (919) 688-9095
U.S. Government Export Assistance Programs
U.S. Department of Commerce
Environmental Technologies Exports
The U.S. Department of Commerce’s office of Environmental Technologies Exports provides U.S. firms with counseling, and market and project information. It also promotes U.S. environmental exports by leading environmental business missions around the world. The office publishes Environmental Technology Exports: A Guide to U.S. Government Resources. For more information, contact: Tel: 202-482-5225; Fax: 202-482-5665.
Multilateral Development Bank Operations
The Multilateral Development Bank Operations (MDBO) staff within the International Trade Administration of the U.S. Department of Commerce (DOC) offers counseling and referrals for businesses seeking contracts with the Multilateral Development Banks (MDBs). Some of the services they provide are:
Current projects worldwide--information on approved projects and downstream financing plans
Guidance--tips on how to pursue opportunities with the MDBs
Advocacy--assistance with pre-award support and procurement disputes
Online information--a guide to electronic media providing up-to-date information relating to projects
Future opportunities--an edge into the pipeline for future projects
MDBO draws upon the DOC’s global network of commercial experts dedicated to finding international business opportunities for U.S. firms. In 71 U.S. cities and 134 locations abroad, trade professionals work closely with the MDB offices, government agencies, multiplier organizations, and private businesses to secure the latest information on overseas contracts and export financing options.
The MDBO has representation in both the World Bank and the Asia Development Bank.
Contact: Multilateral Development Bank Operations, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Room H-1806, Washington, DC 20230; TEL: (202) 482-3399; Fax: (202) 273-0927.
Export-Import Bank of the United States
The Export-Import Bank of the United States (Ex-Im Bank) is an independent U.S. Government agency that helps finance the overseas sales of U.S. goods and services. Its mission is to create jobs through exports. It provides guarantees of working capital loans for U.S. exporters, guarantees repayment of loans, and makes loans to foreign purchasers of U.S. goods and services. Ex-Im Bank also provides credit insurance that protects U.S. exporters against the risks of nonpayment by foreign buyers for political or commercial reasons. It must always have a reasonable assurance of repayment.
Ex-Im Bank provides short-, medium- and long-term programs to support U.S. exports to Thailand. It’s exposure in Thailand is currently over US$1.1 billion, concentrated in power, transportation, telecommunications, and manufacturing. For public sector transactions, Ex-Im Bank generally requires the guarantee of the Ministry of Finance, but it will accept public sector entities on their own if they are creditworthy. For private sector transactions, Ex-Im Bank may require another financial institution to act as either the guarantor or obligor.
Medium- and Long-Term Guarantee Program
This program offers coverage of up to 85 percent of the U.S. export value. In general, medium-term transactions have repayment terms of 2 to 5 years and an Ex-Im Bank liability of up to US$10 million; long-term transactions have payment terms of 5 years or more and an Ex-Im Bank liability in excess of US$10 million.
Ex-Im Bank’s insurance programs protect U.S. exporters from loss if a foreign buyer defaults for political or commercial reasons. With an Ex-Im Bank policy, exporters can also obtain financing more easily because, with approval from Ex-Im Bank, the proceeds of the policy can be assigned to a financial institution as collateral. For more information, see http://www.exim. gov/minsprog.html.
Working Capital Guarantee
Repayment guarantees of 90 percent of the principal and interest on secured, short-term working capital loans are provided to lenders. The loan can be approved for a single loan or a revolving line of credit. The loan may be used for pre-export activities such as the purchase of inventory, raw materials, or manufacture of a product. For more information, see http://www.exim.gov/ mworkcap.html.
Projects that are dependent on project cash flows for repayment are financed. These projects do not rely on the typical export credit agency security package that has recourse to a foreign government, financial institution, or established corporation to meet payment requirements. For more information, see http://www.exim.gov/ mpfprogs.html.
Environmental Exports Program
This program provides enhanced levels of support for a broad range of environmental exports. The main features of the program are a short-term environmental export insurance policy that will provide enhanced short-term, multibuyer and single-buyer insurance coverage for small business environmental exporters. Features of the program include policies that deliver 95 percent commercial coverage and 100 percent political coverage with no deductible. Another feature is enhanced medium- and long-term support for environmental projects, products, and services, including local cost coverage equal to 15 percent of the U.S. contract price, capitalization of interest during construction, and maximum allowable repayment terms permissible under the guidelines of the Organization for Economic Cooperation and Development. For more information, call Ex-Im Bank or see http://www.exim.gov/ envprogs.html.
Contact: Sources of Information: The environmental export program’s point of contact is Craig O’Connor, Environmental Liaison Officer, (202) 565-3939. Ex-Im Bank has a special U.S. toll-free number—(800) 565-EXIM—to provide information on the availability and use of its programs. The worldwide number is (202) 565-3946, and the local number is (202) 565-EXIM. The bulletin board server number is (202) 565-3826. The fax retrieval number is (800) 565-EXIM. The internet address is www.exim.gov. Ex-Im Bank offers briefing programs that are available to the business community. The program includes regular seminars, group briefings, and individual discussion held both at Ex-Im Bank and around the country. For a seminar brochure and scheduling information, call (202) 565-3912 or fax (202) 565-3723.
Overseas Private Investment Corporation
The Overseas Private Investment Corporation (OPIC) supports, finances, and insures projects that have a positive effect on U.S. employment, are financially sound, and promise significant benefits to the social and economic development of the host country.
OPIC assists American investors through four principal activities designed to promote overseas investment and reduce the associated risks:
--Financing overseas business through loans and loan guarantees
--Supporting private investment funds that provide equity for U.S. companies investing in projects overseas
--Insuring investments against a broad range of political risks
--Engaging in outreach activities designed to inform the American business community of investment opportunities overseas
Loans and Loan Guarantees
Project Finance. OPIC can provide medium- and long-term project financing in countries where conventional financial institutions often are reluctant or unable to lend on such a basis. OPIC will not participate in projects that can secure adequate financing from commercial sources.
Loan Guarantees. OPIC’s loan guarantees are best suited for projects over US$10 million. These loan guarantees cover 100 percent of both commercial and political risks.
OPIC finances several privately owned and managed direct investment funds that can provide equity capital for business formation and expansion. Additionally, the Environmental Enterprises Development Initiative fund invests solely in new or expanding companies that improve the natural environment.
OPIC provides political risk insurance to U.S. investors, contractors, exporters, and financial institutions involved in international transactions. OPIC insures U.S. investments in developing countries against three types of political risks: (1) political violence, (2) expropriation without fair compensation, and (3) inconvertibility of currency. OPIC also provides coverage for institutional loans, leases, and technical assistance rights and property, as well as contractors’ exposure in connection with bid and performance bonds, custom bonds, equipment, and other risks.
Environmental Enterprises Development Initiative
This initiative, funded by the U.S. Agency for International Development (USAID) through the United States-Asia Environmental Partnership is intended to promote environmental improvement in Asia through the creation of environmental enterprises, technology transfer, and capital mobilization. The initiative provides pre-investment assistance to U.S. companies to establish or expand environmental operations in Asia. The initiative provides for evaluating the commercial viability of proposed investments throughout the region, including market-entry assessments, business plans, investor reviews, technology checks, and prototype implementation. OPIC’s maximum participation is limited to US$100,000 per project, and the project sponsor is required to contribute at least 50 percent of the cost of the study.
Contact: For more information on the Environmental Enterprises Development Initiative, contact Richard Greenberg, Manager, Investor Services, at (202) 336-8616. OPIC maintains an automated system to provide callers with general information on OPIC’s programs 24 hours a day. For information, call OPIC InfoLine, (202) 336-8799.
The U.S. Trade and Development Agency
The U.S. Trade and Development Agency (TDA) is a small, commercially oriented foreign assistance agency focusing on middle-income and developing countries. TDA promotes the use of American goods and services in capital infrastructure projects. It funds studies to determine the technical, economic, and financial feasibility of major development projects. U.S. companies or consortia must perform the studies, and U.S. companies must have an opportunity to bid on procurement contracts associated with the projects. The projects’ potential for increasing U.S. exports is a critical criterion in determining whether fundingof the feasibility study is approved. Additionally, TDA has trust funds at the World Bank and the International Finance Corporation.
U.S. Company Involvement: TDA’s primary activity is to provide grants for feasibility studies of major infrastructure projects. These studies must be carried out by U.S. companies, thus positioning them from the early stages of project development to win contracts on the project. Two primary ways of using this program are to bid on and obtain a contract to do a feasibility study, or to follow the progress of a study to determine procurement opportunities within the project.
Procurement Opportunities: If a study is being performed on a project that might call for your product, contact the company performing the study and ascertain that written specifications allow competition for procurement contracts. Additionally, feasibility studies often include procurement plans and equipment lists which can be used to target marketing efforts on a particular project or evaluate the potential market in a particular country.
Contact: To learn about upcoming feasibility studies, subscribe to the TDA Pipeline by calling Applied Logistics International, (540) 720-2129 or the Congressional Information Bureau at (703) 516-4801. It is also available free from the TDA home page at www.tda.gov.
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