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BACK             Issue No. 3/2003
ECGA's Contribution in Supporting Omani Non-Oil Exports

The export credit insurance cover provided by the Agency also supports and follows the trade pattern between Oman and other GCC countries. As of 31st of December 2002, GCC countries represent 56.8% of credit limits issued or RO.77 million. This is very encouraging considering significant portion of Omani non-oil exports are to the neighboring GCC countries while in the case of most other Arab countries such exports among themselves constitute less than 10% of trade. Within the GCC countries, UAE represents 50.7% of total credit limits followed by Saudi Arabia, Kuwait, Bahrain, and Qatar. This is illustrated by the Pie Chart below:


Credit Limits issued by ECGA as of 31/12/2002
Total business declared by exporters for exports insured as on December 2002 amounts to RO.51.4 million which represents 19.6% of total non-oil exports (excluding re-exports) during the same period which was RO.261.6 million. Such percentage of credit insurance cover to national export is highly significant compared to an average of 10% to most other Export Credit Agencies in other countries. Services of ECGA have provided excellent opportunities for existing and new exporters to utilize them effectively. During 2002, ECGA has issued a credit limit of RO.143.8 million compared to RO.138.5 million in 2001 or an increase of 3.8%. The number of credit insured exporters in year 2002 rose to 144 compared to 134 in 2001. Moreover, number of overseas buyers rose from 2711 in year 2001 to 3057 in year 2002 while number of countries of credit insured exports reached 89 by the end of the year 2002.

The requirement for export credit insurance has been characterized by an upward trend with continuous increases of the need by Omani exporters to avail credit insurance services to many buyers world-wide so as to support higher exports as well as at the same time lessen the risk of non-payment and enjoy other related benefits such as post-shipment financing by way of export bills discounting with the commercial banks at concessional interest rates and availing pre-shipment financing for working capital financing.

With the increases in the number of Omani exporters availing ECGA’s credit insurance services, this has in turn contributed tremendously to the growth of the Omani non-oil exports through the last 10 years which has grown from RO.79.1 million in 1991 to RO.261.6 million in the year 2002 an encouraging growth rate of more than 230%. Based on the total credit limits issued by ECGA up to the year 2002, this constitutes nearly 47% of total Omani non-oil exports which is very encouraging as compared to scope of cover of other ECAs to their national exports to other countries. If compared to business declared by exporters to ECGA for the year 2002 which was RO.51.4, this represents 19.6% of the total non-oil exports. Hence apart from the tangible benefits that the exporters obtain from the credit insurance services, it has been an effective tool in encouraging and promoting Omani non-oil export sector which ECGA of Oman has to certain extent contributed its share for such remarkable growth.

The data and charts below reveal and depict the historical statistical trend of Omani non-oil exports as well as the operational indicators of the Agency’s export credit insurance services from its inception in 1991 to the year 2000.
Years
Omani Non-oil Exports
(in Million RO)*
Credits Limits Issued
(in Million RO)*
Number of Exporters
Number of
Countries of Exports
Number of Foreign
buyers insured to
exporters by ECGA
1991
79.1
3.6
4
10
43
1992
96.6
10.2
30
23
154
1993
122.5
22
38
34
410
1994
145.4
30.3
50
39
696
1995
182
38.2
60
50
952
1996
173.3
49.7
68
58
1198
1997
203.3
63
81
64
1412
1998
199.3
86.7
89
70
1757
1999
201.4
98.7
97
76
2077
2000
247.8
117.1
110
80
2310
2001
265.8
138.5
134
89
2711
2002
261.6
143.8
144
89
3057


The level of total Omani non-oil exports for the year 2002 is encouraging. The Export Credit Guarantee Agency of the Sultanate of Oman has to certain extent contributed to such growth by continuing to provide export credit insurance support and other valuable services to large number of exporters. Thus such beneficial services to credit insured exporters is instrumental to higher growth of non-oil exports. Omani non-oil exports are predominately to the Arab countries that is almost 58.8%. This is very unique considering the Inter-Arab trade constitutes less than 10% of the total. The Agency has continued to play an important role by extending export credit insurance cover against both commercial and non-commercial risks (political risks), financing and guarantee services to exporters. Such services provided by the Agency will further add impetus towards increases in the level of Omani non-oil exports to non-Arab countries as well as far away or non-traditional markets in the future considering the number of such countries provided credit insurance cover by ECGA has been increasing every year .
   
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