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Exporters beware election violence

26 February 2013 Credit Guarantee Insurance Corporation

General elections in African countries have generally had the tendency of increasing the tension and apprehension on the part of exporters doing business with countries going into an election year.

There is so much uncertainty as to whether a country will emerge on the other side of an election peacefully and without conflict in order to allow the various pillars of that society, including business, to continue either as, or better than, before but in any event to continue making a meaningful contribution.

“A specific general election that comes to mind and which highlights the fact that these fears are not unfounded, is the 2007 Kenyan election when we witnessed unprecedented levels of violence and lawlessness,” says Theo Reddi, General Manager Exports at Credit Guarantee Insurance Company. “Exporters who had credit insured their shipments rested a little easier in contrast to those who had not and who were forced to face an uncertain, drawn out and possibly detrimental outcome.”

The issues that gave rise to such upheaval in Kenya have not been resolved as yet and we hope that a similar situation does not hamper a peaceful election in 2013.

As there are a few African countries scheduled to hold elections in 2013, Cameroon and Togo to name but two, it would not be out of place for any exporter to these countries to consider what potential and unplanned for risks that changes in the country could pose pre, during and post-elections. Without a crystal ball, it is virtually impossible to determine the effects on the business community both before and after an election. “Will a new government change the laws regarding trade; will it make amendments to the manner in which banks operate; will it honour payments for imports concluded during the tenure of the former government?? These are just a few of the imponderables that an exporter might have to face at these times, and which reinforce the need for export credit insurance,” continues Reddi.

“In today’s volatile global environment, country risk should be prominent on the radar of all exporters, irrespective of whether a country is scheduled to have an election or not, and securing their transactions with credit insurance cover.”
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