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"I call on Israeli exporters who want to enter new and challenging markets to come and use our services" - Walla! Of money

2021-09-19T05:23:06.326Z

Ashra is a government company for foreign trade risk insurance, which allows Israeli entrepreneurs and exporters to take part in international projects thanks to convenient financing options: "Every billion shekels of exports contribute 2,500 jobs in the country," says CEO Nissim Ben Eli



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"I call on Israeli exporters who want to enter new and challenging markets to come and use our services"

Ashra is a government company for foreign trade risk insurance, which allows Israeli entrepreneurs and exporters to take part in international projects thanks to convenient financing options: "Every billion shekels of exports contribute 2,500 jobs in the country," says CEO Nissim Ben Eli

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Walla!

Money, Walla!

In collaboration with Ashra

Sunday, September 19, 2021, 7 p.m.

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Export (Photo: ShutterStock)

If there is one thing we have learned in the last year and a half it is that the world is an unexpected place.

Of course what is true of far-reaching international changes taking place under the auspices of the corona is also true of political fluctuations, which are not always predictable, especially in certain regions across the globe.



This reality often conflicts with the aspirations and initiatives of Israeli exporters, who are leading new projects in foreign countries.

As befits a developed country, Israel and its entrepreneurs have quite a bit to offer developing countries in Eastern Europe, Latin America, Asia and Africa, for example.

However, at all times there is a possibility that a deal concluded with one administration will not stand the test of time if that administration is suddenly replaced, which of course will leave the Israeli exporter in a problematic situation.



So what's the solution?

credit insurance.

Here, too, it is important to stand on the differences and subtleties in order to make the right choice.

With regard to short-term projects, which last less than a year, the private insurance market in Israel knows how to provide a solution, whether through banks that approve credit or private credit insurance companies, from which credit insurance can be purchased. Economic or political problems and we can not pay.

Nissim Ben Eli, CEO of Ashra (Photo: Tamar Mitzpi)

However, in the medium-to-long-term projects (over a year and sometimes even long years), the existing political risk in foreign trade and the private market remain helpless. This is where Ashra - a government company for foreign trade risk insurance - enters the picture. Or in simpler words: a significant tool for encouraging exports from the State of Israel.



"Because of a built-in market failure in the field of credit insurance for foreign trade risks, all over the world and not just in Israel, if we do not offer this option, no one else will be able to offer it to exporters," explains Nissim Ben Eli, CEO of Ashra. Take, for example, an Israeli exporter who knows how to set up agricultural farms with smart irrigation, using Israeli water technology. The same exporter turns to the Ministry of Agriculture in a third world country and offers a deal. "The local government is interested, but the project costs money and has two options - to budget the project and pay everything within a defined and relatively short time as the length of the delivery period, or to raise external debt."



This is where the second most notable advantage of credit comes in, apart from credit insurance - the issue of financing. If the same government applies to an international bank and requests a loan to carry out the project, it will be required to pay very high interest rates (due to the economic and political instability in that country), which could harm the viability of the entire venture and hence the initiating Israeli exporter. On the other hand, by applying for credit, the exporter can present to the government in front of which he operates both the project and the possibility of a financing package in the form of a loan from an Israeli bank, in the scope of the project and in the long term.



Why would the Bank of Israel be interested in this? "Because credit provides credit insurance backed by a state guarantee provided by the Accountant General," explains Ben Eli. "Therefore, the level of risk inherent in the transaction is the level of risk of the State of Israel and not of the other state and therefore the interest rate is priced accordingly and much cheaper."



Bottom line, while the country that conducts the project vis-à-vis the Israeli exporter benefits from both the project itself and the low interest rate given through credit, Israel benefits from the export: Of Israel, "adds Ben Eli." Beyond that, of course, there is also a contribution to the foreign relations of the State of Israel, to the state's revenues, to the balance of payments and more. "



Ashra, which insures transactions mainly with countries and government companies, focuses on long-term transactions in the areas of infrastructure, electricity, construction of hospitals, agriculture, water and more - complex and budget-intensive projects. The company has been around since 1957 and has ties to insurance and business communities around the world, with the state currently allocating $ 3.5 billion to the company: "Thanks to the use of reinsurance, we are leveraging it for much higher amounts," says CEO Ben Eli. And to allow Israeli exporters to increase their export markets and reduce the possible risks that arise from it, the state, through the Accountant General in the Treasury, provides the state guarantee that backs the credit insurance for the export transactions.



"We insure in many countries around the world, where it is impossible to get credit on a green route and this leads to billions of dollars every year of Israeli exports and all that that implies regarding the labor market and contribution to the economy - something that would not be possible without credit insurance," concludes Ben Eli.

"It is an effective tool that offers a boost to Israeli exports and I call on Israeli exporters who want to enter new and challenging markets to come and use our services."



To check financing and insurance options, please click here

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Source: walla

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