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Export credit

The Organisation for Economic Co-operation and Development (OECD) notes that ‘export credit’ is an insurance, guarantee or financing arrangement which enables a foreign buyer of exported goods and/or services to defer payment over a period of time. Export credits are generally divided into short-term, medium-term (usually two to five years repayment) and long-term (usually over five years). Export Credit Agencies (ECAs) provide these financial services to companies that do business abroad, particularly for business activities in the Global South. Most Global North countries have at least one ECA, which is usually an official or quasi-official branch of their government.

Today, ECAs are collectively among the largest sources of public financial support for foreign corporate involvement in industrial projects in the Global South. For example, ECAs are estimated to support twice the amount of oil, gas and mining projects as do all Multilateral Development Banks such as the World Bank Group. They are thus extremely important sources of finance and insurance for the private sector. According to OECD data, in 2015 alone, ECAs in OECD member nations provided US$125 billion in credit, insurance, guarantees and interest support. ECA Watch has noted that as projects funded by ECA “are high risk due to their environmental, political, social and cultural impacts, most would not come to life without the support and financial backing of ECAs.” Therefore, as highlighted in the UN Guiding Principles on Business and Human Rights, Guiding Principle 4:

“States should take additional steps to protect against human rights abuses by business enterprises that are owned or controlled by the State, or that receive substantial support and services from State agencies such as export credit agencies and official investment insurance or guarantee agencies, including, where appropriate, by requiring human rights due diligence.”

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What National Action Plans say on Export credit