Afreximbank Seminar/Workshop 2 December 2010, Cairo

1. Promoting Africa-German Trade: Financing Opportunities under Hermes Cover-Afreximbank CollaborationAndreas Klasen Afreximbank Seminar/Workshop 2 December 2010, Cairo

2. Agenda • Introduction and Background • German Exports to Africa • Hermes Cover • Cover Policy for Africa • Cooperation Afreximbank/Hermes Cover • Conclusion

3. Background Germany German exports approx. EUR 1,000 bn p.a., thereof approx. EUR 20 bn p.a. to Africa Substantial private insurance cover for export economy; restrictions, e.g. regarding risks in emerging and developing countries The Federal Republic of Germany is economically interested in promoting German exports In 2009, approx. 2.8% of German exports were covered by governmental Export Credit Guarantees Approx. 20% of all German exports to developing countries

4. Background Crisis Response – Consequences on ECAs I During the crisis ECAs were forced to act counter-cyclically and flexible Substantial increase in demand for ECA cover in combination with ECA related government action ECAs are approached by new customers and are getting involved in new industry sectors and/or buyer countries such as EU and other OECD countries Cover is sought for risks that used to be perceived as save

5. Background Crisis Response – Consequences on ECAs II Governments response with new/amended insurance products and cover policies in order to facilitate export finance (Re-) Entry of ECAs in the field of marketable risks (short term cover for EU and OECD countries) due to restrictions of the private credit insurance market ECAs are extending their umbrella – rather than closing it

6. Agenda • Introduction/Background • German Exports to Africa • Hermes Cover • Cover Policy for Africa • Cooperation Afreximbank/Hermes Cover • Conclusion

7. German Exports to Africa:African Imports / German Exports • Total German Exports 2009: USD 1,128 bn • Export Growth 2005 – 2009: +3% • German Exports to Africa 2009: USD 24 bn • Export Growth 2005 – 2009: +16% • Total African Imports 2009: USD 455 bn • Import Growth 2005 – 2009: +41% • thereof: • Northern Africa: +66% • Sub-Sahara: +29%

8. German Exports to Africa: 2005 – 2009 (m EUR) 5.662 1. South Africa 6.672 2.662 2. Egypt 2009 1.700 2005 1.465 3. Algeria 1.081 1.291 4. Libya 658 1.276 5. Morocco 926 1.126 6. Tunisia 1.008 1.063 7. Nigeria 760 289 8. Angola 116 209 9. Ghana 142 202 10. Sudan 229 • Exemplary Composition of Exports to Egypt (2007) • 26% Machinery and Equipment • 18% Chemicals, Synthetics and Pharmaceuticals • 16% Electrical and Optical Devices • 14% Vehicles

9. German Exports to Africa (m EUR):Top 10 - New Hermes cover volume Africa South Africa: Infrastructure deals finalised Egypt: Investments in manufacturing Kenya & Ghana: Private sector thriving

10. Agenda • Introduction/Background • German Exports to Africa • Hermes Cover • Cover Policy for Africa • Cooperation Afreximbank/Hermes Cover • Conclusion

11. Hermes CoverOur business model We as Export Credit Agency (ECA) act as intermediate between the German government and exporters/ banks located in Germany Organisation: Agreement of service provision with German private companies (mandataries) Mandataries: Euler Hermes Kreditversicherungs-AG and PricewaterhouseCoopers AG Pure cover for export credits (Export Credit Guarantees)

12. Hermes Cover:Risks covered • Political risks • General political risks (e.g. war, revolution, nationalisation) • Convertibility and transfer risk (impossibility of converting or transferring amounts deposited into foreign currency) • Loss of the right to receive payment due to frustration of contract for political reasons • The loss of goods before the risk has passed to the foreign buyer due to political circumstances • Commercial risks • Irrecoverability of claims (e.g. insolvency) • Protected default

13. Hermes Cover:Criteria for cover of exports • Eligibility for promotion • e.g. job promotion, market entry, promotion of SMEs • Justifiability of the risk • e.g. reasonable prospect for the smooth execution of the project • Terms of contract • Conformity with intergovernmental agreements and international guidelines for transactions • Budgetary restrictions • Statutory max. exposure limit: EUR 120.0 bn

14. Hermes Cover:International framework Organisation for Economic Co-operation and Development • Applicable to all official support provided by or on behalf of a government for export of goods and/or services, which have a repayment term of two years or more • Advanced and interim payments of at least 15% of the export contract value at or before the starting point of credit • Maximum credit periods, differentiated by country groups: • High-income: max. 5 - 8.5 years • Low-income: max. 5 - 10 years • Limit for local cost – max. 30 % of the export contract volume • Semi-annual repayment profile in equal instalments • First instalment not later than six months after the starting point of credit

15. Hermes Cover:Product portfolio for exporters and banks Whole-turnover and revolving cover Single transaction cover Supplementary forms of cover • Supplier credit cover • Buyer credit cover • Framework credit cover • Manufacturing risk cover • Constructional works cover • Airbus Guarantee • Project financing • Ship financing • L/C confirmation risk cover • Counter-guarantee • Confiscation risk cover • Leasing cover • Securitisation Guarantee • Securitisation Guarantee for the KfW Refinancing Programme • Contract bond cover • Whole-turnover Policy • Whole-turnover Policy light • Revolving supplier credit cover • Revolving buyer credit cover

16. Award of Excellence – Best ECA2005, 2007, 2008, 2009 & 2010 Source: Annual report 2009 Hermes Cover: Facts and figures

17. Agenda • Introduction/Background • German Exports to Africa • Hermes Cover • Cover Policy for Africa • Cooperation Afreximbank/Hermes Cover • Conclusion

18. Cover Policy for Africa:Facts and figures

19. Cover Policy for Africa:OECD Country risk categories LK = Country Risk Ranking Category

20. General Cover Policy for Africa: • Despite Africa’s high market potential, urgent needs still remain unsatisfied • Federal Republic of Germany has opened cover possibilities for Africa • Maximum credit periods, depending on country groups: • Some countries were opened up for cover during the last five years (Nigeria, Libya, Angola) • Benchmark countries are even listed without country limits (Algeria, South Africa) However, only limited market response • Restrictive approach on local costs and foreign content • Consideration of sustainable lending practices

21. Cover Policy for Africa:Sustainable lending Purpose • Lending that supports a borrowing country‘s economic and social progress • Without endangering its financial future and long-term development prospects Transactions concerned • Only public buyers • Only medium and long term transactions (> 360 days) Considerations • Public debt situation of the respective country according to IMF / World Bank • IMF and World Bank conditions (Concessionality Requirement) as of March 1, 2010 (subject to constant change) • Kenya and Nigeria are not subject to IMF/WB Concessionality Requirements • Angola => case-by-case approach • Mauretania => case-by-case approach (usually grant element required)

22. Cover Policy for Nigeria: General terms: • Short term credit deals with public buyers require guarantees from the Ministry of Finance or the Central Bank • No cover for credit deals with public buyers Short-term transactions: • Strict private buyer audit, in case of doubt bank guarantees required • Cover for future deliveries will be automatically suspended if payment is not received 8 weeks after the agreed due date at the latest Long-term transactions (credit periods of more than 12 months): • Private buyer: EUR 200m ceiling (Above only for project financed and other structured finance deals) • Volume limit EUR 20 m

23. Cover policy for Ghana: General terms: • No cover for credit deals with public buyers Short-term transactions: • Strict private buyer audit, in case of doubt bank guarantees required Long-term transactions (credit periods of more than 12 months): • Cover facilities are available on a case-by-case basis for smaller transactions with private buyers as well as such public buyers which are established as private sector organization without recourse to public funds • Cover facilities available for project financed and other structured finance transactions

24. Cover policy for Gabon: General terms: • Reopened cover possibilities for deals with public buyers Short-term transactions: • No restrictions Long-term transactions (credit periods of more than 12 months): • Public buyer: case-by-case basis & major contract values only on the basis of eligibility for support • Cover facilities are available for project financed and other structured finance transactions; if necessary based on countertrade deals

25. Cover Policy for Africa: Hospital facilities in Angola Buyer: Angolan Government Exporter: Simed International GmbH Project: Set up a dialysis ward in Saurimo Delivery of medical equipment for another hospital Contract value: USD 18.7 m Cover: Buyer credit cover (8.5 years) Specifics: The order is particularly eligible for cover since it makes an important contribution to the healthcare system of the country, which was severely impaired by the civil war.

26. Cover Policy for Africa:Emergency vehicles in Egypt Buyer: Egyptian Ministry of Health Exporter: Wietmarscher Ambulanz- und Sonderfahrzeug GmbH (WAS) Kind of goods: 600 ambulances with high-performance air-conditioning and complete set of medical equipment Contract value: EUR 31.4 m Cover: Counter guarantee for advance payment guarantee, maintenance bond and contract bond Specifics: The order is particularly eligible for cover since the Ministry will deploy the ambulances both in big cities and in rural areas and since it makes a substantial contribution to securing jobs at WAS.

27. Agenda • Introduction/Background • German Exports to Africa • Hermes Cover • Cover Policy for Africa • Cooperation Afreximbank/Hermes Cover • Conclusion

28. Cooperation Afreximbank/Hermes Cover:Jointly finding business solutions for Africa Cooperation with Afreximbank will allow: • Cover for short-term trade and medium- and long-term projects • Cover of projects in countries where a strong business partner was not available • Consideration of projects with substantial contract values

29. Cooperation Afreximbank/Hermes Cover:Criteria for partnership Main factors to be assessed: • Financial Statements, particularly the equity position • Quality of risk management • Quality of the loan portfolio • Management of currency risk • Management of liquidity risk • Transparency of business figures • Shareholder structure Afreximbank has convinced us to be a reliable partner

30. Cooperation Afreximbank/Hermes Cover:Different types of acceptance • Acceptance on a case by case basis • Specific characteristics and eligibility of the project are evaluated • Build up a common business experience • General acceptance • Streamlined procedures up to a certain exposure limit • Re-negotiations necessary once exposure limit has been reached • Most favourable acceptance is yet to be determined Afreximbank can act as guarantor or as loan and contract partner

31. Cooperation Afreximbank/Hermes Cover:Inclusion of further partners Classical ways of cooperation: • Parallel insurance • Joint insurance • Reinsurance Exploration of new types of cooperation: • Cooperation with the private market

32. Agenda • Introduction/Background • German Exports to Africa • Hermes Cover • Cover Policy for Africa • Cooperation Afreximbank/Hermes Cover • Conclusion

33. Conclusion Promotion of Africa-German Trade: • Emerging countries as major partners also in the years to come • ECA-financing as a factor of stability in an environment of instable world financial markets • Hermes Cover is looking forward to a mutual beneficial partnership

34. Thank you for your attention! Further information is provided under: Hotline: +49 (0) 40/88 34-90 00 www.agaportal.deinfo@exportkreditgarantien.de Andreas Klasen Telefon:+49 (0)40 / 8834 – 9500