1. Export Credit Insurance Corporation of South Africa SOC Limited (ECIC)
Presentation to the Portfolio Committee on Trade and Industry ECIC Corporate Strategic Plan 2017/18 – 2019/20
28 MARCH 2017

2. Ecic representatives Kutoane Kutoane – Chief Executive Officer
Tel: or
Mandisi Nkuhlu –Chief Operating Officer
Tel: or

3. ECIC MANDATE
ECIC mandate:
Facilitation of SA export trade and cross-border investments with the rest of the world – regional bias
Enabling Act is the Export Credit and Foreign Investments Insurance Act, 1957, as amended. Presently, under review by the dti.

4. LEGISLATIVE AND REGULATORY FRAMEWORK
Companies Act
Income Tax Act
Public Finance Management Act and ECIC is designated as a Schedule 3B entity.
Short-Term Insurance Act.
In order to protect the interests of its clients and ensure that it is actuarially sound, ECIC is subject to the supervision and regulation by the Financial Services Board (FSB).

5. Ecic’s vision and mission
We are committed to sustainable business growth through innovative solutions, operational and service excellence, business development and strategic partnerships.
Mission
Our mission is to provide export credit and investment insurance solutions in support of South African capital goods and services by applying best practice risk management principles.

6. Ecic’s vision and mission
Values
The Corporation has five values being:
Accountability – we accept transparency and responsibility for our decisions and actions.
Excellence – We are committed to the highest level of performance through continuous improvement of our skills and business practices.
Innovation – We encourage open-mindedness and support innovation and the development of new ideas and processes for the continued improvement of our Corporation.
Integrity – We strive to conduct every aspect of our business with honesty, integrity, and fairness.
Teamwork – We work together as a team internally and collaborate externally with our stakeholders and customers. We appreciate that as a team, we can achieve much greater things than as individuals.
These values are reinforced by the Code of Ethics and Business conduct “the Code” and are also reflected in our policies and procedures.

7. Key strategic goals Improve knowledge & skills;
In the effort to achieve its mission, the ECIC is driven by ten (10) strategic goals:
Improve knowledge & skills;
Improve product offering;
Increase strategic partnerships;
Improve business processes;
Improve communication and stakeholder/customer management;

8. Key strategic goals cont
Improve Business Development;
Decrease Cost to Revenue Ratio;
Increase Revenue;
Increase Capital Base;
Increase in Stakeholder/Customer Satisfaction.

9. Improve knowledge & skills
Output
Medium Term Targets
2017/18
2018/19
2019/20
Skills Audit and implementation of annual training plans (key areas of focus will include international trade finance, investments etc)
90-100% implementation of training plan for 2017/18
90-100% implementation of training plan for 2018/19
90-100% implementation of training plan for 2019/20
Total Expense Budget (Rm)
R10.8m
R12.9m

10. Improve product offerings
Output
Medium Term Targets
2017/18
2018/19
2019/20
Develop and/or review products (the anticipated transition into an Eximbank would widen the scope of product offering)
1 new product developed
Review product offerings in terms of relevance to customers
Implement revised products
Total Expense Budget (Rm)
R9.2m
R9.9m
R10.8m

11. Increase strategic partnerships
Output
Medium Term Targets
2017/18
2018/19
2019/20
Leverage existing partnerships to generate knowledge sharing initiatives (This will encompass sharing info on new products, pricing methodologies, training sessions with other Export Credit Agencies etc.)
8 knowledge sharing initiatives
Total Expense Budget (Rm)
R8.6m
R9.3m
R10.1m

12. Improve business processes
Output
Medium Term Targets
2017/18
2018/19
2019/20
Implement new business systems plan
100% Implementation of the MIS System
40-60% adoption, monitor usage
60-80% adoption, monitor usage
Total Expense Budget (Rm)
R9.8m
R10.5m
R11.4m

13. Improve communication and stakeholder/customer management
Output
Medium Term Targets
2017/18
2018/19
2019/20
Improve and enhance brand visibility
Implement % of 2017/18 marketing and communications campaigns
Implement % of 2018/19 marketing and communications campaigns
Conduct new survey
Baseline to be determined by survey
Implement % of 2019/20 marketing and communications campaigns
Total Expense Budget (Rm)
R19.8m
R23.5m
R27.4m

14. Improve Business Development Total Expense Budget (Rm)
Output
Medium Term Targets
2017/18
2018/19
2019/20
Research and identify new opportunities (country/sector research studies to identify business opportunities for SA companies)
2 research reports to identify new opportunities
Total Expense Budget (Rm)
R12.7m
R13.5m
R14.5m

15. Decrease Cost to Revenue Ratio
Output
Medium Term Targets
2017/18
2018/19
2019/20
Drive revenue growth and cost containment to maintain Cost to Income ratio below 35%
Develop appropriate reports to track the cost income ratio on a periodic basis
Management Accounts
Budget Variance Reports
Cost to Income ratio not exceeding 35%
Total Expense Budget (Rm)
R79.0m
R82.4m
R83.3m

16. Increase Revenue Output Medium Term Targets 2017/18 2018/19 2019/20
Increase premium revenue – project application approvals
USD 400m– USD 500m
 USD 450m – USD 550m
USD 500m-USD 600m
Execution of the investment strategy
Perform within 3% of the weighted ZAR and USD portfolio benchmark as per the IPS*
Perform within 1,5% of the weighted ZAR and USD portfolio benchmark as per the IPS*
*Investment Policy Statement

17. Total Expense Budget (Rm)
Increase Revenue cont
Output
Medium Term Targets
2017/18
2018/19
2019/20
Achievement of profit target
Achieve 90% of budgeted NPBT
NPBT: Is Net Profit Before Tax. It excludes Salvages, It is to be calculated on the Rand functional currency, i.e. foreign currency gains or losses are excluded
Total Expense Budget (Rm)
R50.8m
R54.7m
R57.9m

18. Total Expense Budget (Rm)
Increase Capital Base
Output
Medium Term Targets
2017/18
2018/19
2019/20
Increase in capital base (this is key in enhancing ECIC’s underwriting capacity and driving its mandate)
5% increase in equity
Total Expense Budget (Rm)
R199.8m
R300.0m
R49.5m

19. Increase in Stakeholder / Customer Satisfaction
Output
Medium Term Targets
2017/18
2018/19
2019/20
Improved customer Satisfaction
Implement 90%-100% survey findings
Conduct survey
Implement 80% new survey findings
Total Expense Budget (Rm)
R7.5m
R8.1m
R8.9m

20. Alignment with government objectives
NDP Target
the dti Strategic Outcomes-Orientated Goals
ECIC Goal / Outcome
Exports (as measured in volume terms) should grow by 6% a year to 2030 with non-traditional exports growing by 10% per year
Facilitate transformation of the economy to promote industrial development, investment, competitiveness and employment creation
Increase ECIC’s product range to cover customer needs, address market gaps and remain competitive
Proactively attract business from new and existing customers to facilitate more exports and cross border investments
South Africa’s trade with regional neighbours should increase from 15% of our trade to 30%
Build mutually beneficial regional and global relations to advance South Africa’s trade, industrial policy and economic development objectives.
To access new markets through collaboration by leveraging on our partners resources and knowledge base as well as removing constraints

21. Alignment with government objectives
NDP Target
the dti Strategic Outcomes-Orientated Goals
ECIC Goal / Outcome
A capable and effective state, able to enhance economic opportunities, support the development of capabilities and intervene to ensure a rising floor of social rights for the poor
Promote a professional, ethical, dynamic, competitive and customer-focused working environment that ensures effective and efficient service delivery
To develop a competent and competitive workforce that is able to deliver on the business strategy and the achievement of ECIC’s objectives.
To access new markets through collaboration by leveraging on our partners resources and knowledge base as well as removing constraints.
Improve Business processes to promote efficiencies in delivery of services and products cost effectively

22. Facilitate Export trade and CROSS- BORDER investments
GLOBAL TRADE OUTLOOK
KEY CHALLENGES
The outcome of the US elections, BREXIT and the fragility within the EU has made the global trade outlook more uncertain.
The likelihood of an increase in trade protectionist measures could lead to trade disputes and possible “trade wars” among major trading powers. This could have a significant impact on trade prospects for South Africa and sub-Saharan Africa.
Downward growth prospects in developed economies, slow global investment and uncertainty about trade policy in the US and the EU does not bode well for global economic prospects.
Fiscal vulnerabilities and current account deficits remain very high for commodity-dependent sub-Saharan economies. Falling capital inflows put pressure on currencies and reserves.

23. Facilitate Export trade and cross - Border investments
IMPACT OF ECIC ON THE SOUTH AFRICAN ECONOMY
FOR THE PERIOD 2013/14 – 2015/16
Total project expenditure on SA content
R6.9 billion
GDP Impact
R5.4 billion
Employment impact
Annual average
20,520 man-hours
Tax revenue impact
R1.4 billion

24. SOUTH AFRICAN EXIMbank
The Shareholder is considering the conversion of ECIC into a fully fledged SA Eximbank
The business case due for completion in June 2017 in collaboration with external consulting experts
Will require new legislation – currently being considered by the dti

25. AFREXIMBANK
The dti and National Treasury are supportive of South Africa (ECIC) taking equity in the African Export Import Bank (Afreximbank) in order to promote expansion and diversification of Africa’s trade.
Based on the outcome of the due diligence exercise, the ECIC Board of Directors decided to recommend US$40 million paid-up equity investment in Afreximbank. The requisite Ministerial approval is still pending.
ECIC regards this investment as being a major catalyst for the collaboration with Afreximbank in promoting intra-regional trade.

26. Projected Portfolio Concentration kept within risk appetite level

27. Budget 2017/18 – 2019/20
ECIC, as a schedule 3B entity is run on a financially self-sustainable basis by generating its revenue stream from premiums and investment income.
ECIC does not receive transfer payments from the Government to fund its operations.
The projected growth in ECIC’s capital base will enhance its capacity to underwrite more insurance and pursue its mandate.
The expansive approach in the budget such as the increase in operating costs and staff complement is to fund and enhance capacity to implement the corporate strategy and support expansion of product offerings.

28. Budget 2017/18 – 2019/20
The projected average annual gross premium over the next three years of the strategic plan is R537m.
Operating expenses will average R189 million pa, which represents a growth of 18% over the budget period.
Claims incurred is anticipated to fall by 122% mainly due to a positive claims outlook.
Total assets will increase by 7% to R10.3 billion.

29. Capital expenditure
Planned capital expenditure(CAPEX) amounts to R2.5 million over the budget period.
CAPEX spend is mainly on IT infrastructure to modernise business processes and enhance operational effectiveness and efficiency.
With increased staff complement the ECIC is looking for new premises that will cater for its growth over the next 5 years and may opt to purchase an office building during the 18/19 financial year.
However, in the current budget ECIC has continued with the rental lease option and the option to buy the building and relocation costs will be considered as part of the budget revision exercise next year.

30. Projections of revenue, expenditure and borrowings

31. Projections of revenue, expenditure and borrowings
2017 R'000
2018 R'000
2019 R'000
2020 R'000
STATEMENT OF FINANCIAL PERFORMANCE
Profit Before Tax (before CSI)
-1,551,925
888,694
925,555
624,405
Corporate Social Investment (3%)
-21,239
-22,552
-23,131
-19,715
Profit Before Tax
-1,573,165
866,141
902,424
604,689
Taxation
440,486
-242,520
-252,679
-169,313
Profit/(Loss) After Tax
-1,132,678
623,622
649,745
435,376

32. Concluding remarks
ECIC is committed to work towards a prosperous and equitable South Africa, a better Africa and a better world.
Working together as South Africa Inc. we can achieve more exports and broader economic development.
ECIC is committed to contributing towards radical economic transformation of the SA economy.

33. THANK YOU