Many UK exporters are already active globally. With Brexit on the way, they have even more reason to think and act, beyond Europe’s borders. What’s more, UK Export Finance has just given their activities a boost by extending its trade support in over 100 countries.
UK Export Financing provides guarantees, insurance and loans to support UK companies working on international projects with ethical/sustainable aims. In particular, it provides low-cost financing to overseas companies which want to partner with companies in the UK.
UKEF and the green industrial revolution
Many of the projects UKEF supports are at the junction of commerce and sustainability. For example, last year (2019-2020), it provided £40 million in financing to rehabilitate 83 kilometres of road in Gabon and over £300 million for wind farms in Taiwan. Some projects are more of a social nature. For example, it also provided £110 million for a new maternity hospital in Ghana.
In total, it provided £4.4 billion of financial support for UK exports. Furthermore, its supplier fair programme connected more than 500 UK suppliers with international projects around the world. These connections indirectly benefited a far greater number of suppliers, including smaller ones.
For example, UKEF provided £70 million of support for the building of the Kumasi market in Ghana. This enabled Contracta Construction UK to bid successfully on the project. Contracta Construction UK then subcontracted parts of the contract to other firms. These included UK-based small businesses such as BHC Ltd. This family-run company gained access to a £20 million export contract.
UKEF’s plans for the future
With Brexit almost upon us, it’s arguably never been more important for the UK to be ready to pull its weight on the global stage. Fortunately, UKEF is stepping up its activities. In particular, it is preparing to offer up to £2 billion of direct lending to finance green projects Although it will remain fully compliant with the OECD’s Sustainable Lending Principles, it is now open to accepting somewhat more risk than previously.
As a part of this, it is also now open to increasing its activities in certain, key, countries. These include Egypt, Paraguay, Serbia, Uganda and Vietnam. All of these countries have a significant need for infrastructure (re)development and UKEF can make it easier for British companies to be at the heart of this.
Benefits for all UK exporters
Although UKEF’s efforts are likely to be of most direct benefit to the construction industry, the “ripple effect” should spread them throughout the UK’s economy as a whole. The most obvious example of this is that construction companies need supplies, hence some of UKEF’s funds will be channelled into suppliers and their suppliers and so on.
On a broader note, and admittedly over time, these infrastructure projects will help to build up the economies of their host countries, thus creating even more opportunities for UK businesses. In fact, UK exporters might want to start thinking about which markets are showing the most growth potential and consider how they might expand into them.
The customs issue is being addressed
Although there has been widespread, and valid, concern about managing customs processes after Brexit, this should be a fairly short-term issue. Essentially, it’s one of recruiting and training large numbers of staff. Once the staff are in post, it will simply be a matter of standard recruitment and retention.
It’s worth remembering that the UK ran its own customs successfully for many years before joining the EU. It still does run massive and highly-complex organizations like the NHS. It, therefore, appears perfectly reasonable to suppose that any issues with implementing a new customs system will be resolved throughout 2021, after which we can all move on.