The Agency’s credit insurance, guarantee and financing services are effective means of promoting Omani non-oil exports. It services include the following:-

Export Credit Insurance 

The Agency provides its export credit insurance support to a large number of Omani exporters against the risks of non-payment of exports due to commercial and political (non-commercial) risks. With its credit insurance scheme, the Omani exporters are provided not only protection against payment risks but also the Agency advises exporters on credit worthiness of overseas buyers and guides the exporters on their collection and recovery of bad debts. Credit insurance is considered an essential and important tool for exporters in mitigating the risks of non-payment. It allows the exporters to sell safely on credit terms and compete effectively against other suppliers. It also gives them the confidence of selling to new and far away or non-traditional markets. By insuring their exports with ECGA, it gives the policyholders better control on their export receivables by keeping tab of the buyers and credit limits approved for cover by the Agency.

Export Credit Insurance provides cover to Omani exporters against both commercial and non- commercial risks for their exports. These include buyer’s insolvency/bankruptcy, buyer’s failure to pay, buyer refusing delivery of goods, foreign exchange transfer delay, import bans or cancellation of import licence, payment moratorium, war, civil disorder, natural disasters.  ECGA’s guarantee minimize the risk and maximize the opportunities of exporters selling in foreign markets. ECGA indemnifies exporters if they are not been paid by their buyers abroad. 

ECGA offers two types of cover under its export credit insurance services to exporters shipment policy and contract policy. Under shipment policy, credit insurance is effective once the goods are shipped. The goods are standard products, which can be easily marketable. Under contract policy, it applies for specially designed goods made as per the request of the buyer.  Such goods are catering for a specific market, with cover commencing from the date of contract.

Under both policies, the buyer risks as well as political or country risks are covered. The former risks for which the exporter is covered include insolvency of the buyer, non-payment of goods accepted by the buyer or refusal by the buyer to accept the goods, which comply with the contract. Cover of the political or country risks also known as non commercial risks provides protection to the exporters against the risks of non-payment that include intervention to prevent transfer of payments, cancellation of license, civil commotion or acts of war or any action of government of the foreign country which wholly, or partly, prevents performance of the contract, or imposition of new restrictions on exports after date of contract and the failure or refusal on the part of a public buyer to fulfill any of the terms of the contract where ECGA has agreed that the buyer is a national government authority.

Under both policies the Omani exporters are covered up to 80% of loss from commercial risks and 85% from political risks. However, when the buyer fails to accept the goods, the exporter bears the first loss of 20% and ECGA bears 80% of the balance.

Apart from the risk minimization, which the exporter benefits through payment of claim by ECGA in case of non-payment by the buyers, the Export Credit Policy can also be assigned to the exporter’s banker as collateral. Such assignment provides the opportunity for the exporters to obtain new or enhancement of existing post shipment financing facilities on better or concessional terms than the banks might otherwise have been prepared to offer if the exporter was not credit insured or the policy is not available. Thus, the Export Credit Policy does not only minimize the risk of non-payment to the exporter but also assists him to obtain necessary and better export financing terms.  Hence it provides the exporters with greater financial liquidity in managing their foreign receivable portfolios.

Domestic Credit Insurance 

Domestic Credit Insurance Scheme was introduced by the Export Credit Guarantee Agency of Oman since September 2003. Increasing number of key Omani exporters are availing the facility. It provides additional protection to the credit insured exporters against the risk of protracted default and insolvency of domestic buyers as well as ease the exporters cash flow constraints and liquidity problems. In order to avail domestic credit insurance, the suppliers of Omani produced products should also insure their exports by taking the Export Credit Policy of the Agency.

Domestic Credit Policy is very useful for the Omani suppliers as it is considered an extension of the same service as export credit insurance because the benefits which the exporters derive will apply for domestic sales as it will also provide protection against the risks of non-payment from domestic buyers against goods supplied on credit. Furthermore, this would help the exporters in their liquidity and debt management as well as mobilize resources in their export efforts. The domestic credit insured bills can also be discounted by the commercial banks by assigning the benefits under the Domestic Credit Policy thus obtaining needed facilities by the local suppliers.

Post-shipment Financing 

Under the post-shipment financing scheme, the credit insured exporters can discount their export bills through commercial banks at a concessional interest rate thus reducing their post-shipment financing cost. The Agency has entered into a Memorandum of Understanding with the commercial banks for discounting such export bills for credit insured exporters. 

Pre-shipment Export Credit Guarantee Scheme

The Pre-shipment Export Credit Guarantee Scheme is primarily aimed at small sized exporters who lack the necessary adequate security, which the commercial banks normally require. The guarantee issued by the ECGA to banks fills the security gap needed by them for extending pre-shipment financing to the credit insured exporters. It has been designed for exporters to obtain timely and adequate credit facilities from banks at pre-shipment stage for purchasing of raw materials, manufacturing, processing and packing of goods to be exported, against contract for sales i.e. irrevocable letter of credit or confirmed purchase order. Hence the scheme allows the credit insured exporters to obtain the necessary working capital financing from their banks in order to execute export orders abroad and avail more export business opportunities.

Hence the guarantee issued by the Agency allows the banks to finance the exporters at liberal terms as it covers the non-payment of advances granted to the exporters against the risks of insolvency or from protracted default of the exporter.  Each guarantee issued indicates a permitted limit up to which advances granted by the banks to the credit insured exporters are covered by ECGA. The permitted limit operates on a revolving basis and therefore allows the exporter continuous financial support needed in executing its export orders.

This working capital financing of exports is highly useful for small sized exporters that is SMEs who lack necessary traditional collateral of their own which normally commercial banks demand from them. Thus the guarantee issued by ECGA substitutes such collateral and provides opportunities for the exporters and SMEs to avail pre-shipment financing.