Financing the future of British exports

Financing the future of British exports
Financing the future of British exports

One of the most challenging aspects of exporting for SMEs has to be obtaining the appropriate financial advice and support. Here, the newly appointed Chief Executive of UK Export Finance, Louis Taylor, talks through the help that the agency can provide

How important is the role of the UKEF in helping to support British businesses which are aiming to enter overseas markets?

If you look at our case studies you’ll hear how important it is from the exporters themselves. We’ve had examples where our support for new export contracts has almost doubled a company’s turnover. These contracts would most likely have been turned down without our guarantees. So it can make a huge difference to a company’s exporting ambitions, transformative in some cases.

At the same time, we have a particular space in which we operate, which defines our addressable market. We are there when private sector financing is not, meaning that we tend to be counter-cyclical in our volumes. Also, we are focused on ensuring that each incremental export happens. We’re not here to chase our own market share – we’re here to assist British exporters’ pursuit of their market share. We want to support a level playing field for companies in the UK as they compete overseas; we want to complement, but not compete, with finance providers and insurers to make sure we bridge any gaps in capacity, without ever displacing private sector support for exports.

Are you able to share an example of a successful international trade deal that has been facilitated by the UKEF?

There are plenty to choose from. Our recent support for the Emirates sukuk rightly got a lot of attention, as did our first direct lending transaction to help Carillion secure a contract with the Dubai World Trade Centre in Dubai.

But I would like to highlight a case where we were able to help a consortium of small UK businesses, led by a British company called NMS International, which won a project to build seven hospitals in Ghana. Our support meant the company was able to offer a competitive finance package to the Ghanaians while securing payment for its work, all of which enabled NMS to bring this fantastic consortium of small UK firms to the project, thereby supporting £134 million of exports.

What pointers would you give the UK’s small and medium-sized businesses looking to access export finance?

There is no single magic bullet, which is why I’d point them towards our team of Export Finance Advisers. The advantages for an SME are clear. Our adviser is someone they can meet face-to-face, who is independent and does not charge them for advice. Our adviser is also someone with good experience, who can signpost them to the best sources of support, whether that involves us, or commercial sources, or a combination of both.

The Small Business Enterprise and Employment Act became law earlier this year; how has this influenced the powers granted to the UKEF and the scope of its work?

It has given us much greater flexibility in providing support for British exports. We can now support exporters rather than only specific export contracts, opening up the possibility of working capital products that were not previously possible. Further, we are able not only to support exports, but potential exports. Our powers are also widened to include areas such as intellectual property and other intangible exports. For overseas buyers, we have flexibility to meet their financing preferences with an integrated package, positioning UK companies better when bidding as prime contractor.

We are also working with the British Business Bank to review the financing challenges facing SMEs who export or are looking to export, to ensure that government support best addresses their needs. The new powers open up more options that we can explore. We have already committed to working with partner banks to broaden the eligibility of our export working capital facility beyond the final exporter, to include those who supply the final exporter.

Can you comment on the proposed changes that seek to simplify and modify the agency’s anti-bribery and corruption policy and explain how these will benefit the export supply chain?

The benefit is not so much in the changes themselves – although simplification will be welcomed, I’m sure. Instead it is in making it more feasible for us to develop our products for smaller exporters, while still applying the anti-bribery and corruption assurance the law and the OECD requires and to which we are committed.

Part of the role of the UKEF is to provide risk protection – can you talk us through why this is so crucial?

We are managing about £20 billion of contingent liabilities for the taxpayer, so we pride ourselves on our ability to manage risk. All our products are designed to mitigate risk in a way that that both helps UK exporters to conduct business in emerging markets, and protects trade during times of market disruption.

But for businesses it is simply about increasing capacity and providing access to cash flow. If we can turn a loan from being a BB- corporate risk to AAA-rated sovereign risk (whether that credit risk is on the exporter or its buyer) it is naturally going to open up the financing possibilities.

How will your co-operation with other agencies such as the UKTI develop in future?

Ministers are clear: they want nothing less than to mobilise the whole of government behind exporting. So our close working with UKTI, the British Business Bank and other parts of government will continue. There is no lack of ambition across government to support companies in identifying and taking export opportunities. During Export Week (from 9 November) we will hear more about that ambition for exporting and UKEF is excited to be at the heart of it.

Louis Taylor
Louis Taylor

Louis Taylor will be addressing the BCC International Trade Conference on 3 November alongside Tim Davie of BBC Worldwide, Ian Davis from Rolls-Royce and Trade Minster Lord Francis Maude among others. Readers of Global Trader can access special pricing on tickets to next week’s British Chambers of Commerce International Trade Conference: Trade the World – Accessing High Growth Markets. The annual event is fast becoming known as one of the UK’s premier export conferences. Join in at London’s Grand Connaught Rooms for a day of insights and debate on growing UK exports. Claim your 20% discount by registering at www.bccexport.co.uk/attend using the promotional code 9TD1M.