Published on 21 Jun 2022

The role of EXIM bank in promoting trade and investments in Africa

A case for Singapore to establish one

By Ronak Gopaldas with additional input from Amit Jain

An Export-Import Bank (commonly referred to as an EXIM bank) is a powerful export credit agency that extends Lines of Credit (LOCs) to overseas financial institutions, regional development banks, and sovereign governments to enable buyers in those countries to import equipment, goods, and services. The number of EXIM banks has expanded 35% over the past five years and there are now more than 115 such export credit agencies around the world facilitating. Despite their importance there remain several unexploited gaps in the trade finance arena for Asia, particularly in and with Africa, where credit risk is generally considered higher.

The Asian EXIM Banks Forum is comprised of 10 member states (figure 1), the biggest of which are China, Japan, and India. Conspicuous by its absence is Singapore, a strong goods and services export nation, which has in the past floated the idea of establishing its own export-import bank.

With intra-African trade expected to expand significantly under the African Continental Free Trade Agreement (AfCFTA), there are several opportunities for Singaporean companies to capture a larger slice of the market and facilitate trade. This piece looks at the success of the three biggest Asian EXIM banks in penetrating the African market, and the merit in Singapore revisiting the creation of its own EXIM bank.

  1. The genesis
  2. How do EXIM banks work?
  3. Criticism of EXIM banks
  4. Supply meets demand: trade between Asia and Africa
  5. Making the case for Singapore to establish an EXIM bank

The Genesis

EXIM banks have a long history. The United Kingdom established the first one in 1919 'to ensure that no viable UK export fails for lack of finance or insurance from the private sector’'.[1] Simply put, the British government set up a state-run bank to finance exports that commercial banks deemed too risky. But this was to be done in a commercially responsible way so as not to subsidise exports through tax.

The United States established the EXIM Bank of Washington in 1934 to facilitate export of American goods to the USSR, which it had officially recognised a year earlier. It created a second EXIM bank just a month later to grow exports to Cuba.[2] The decision to establish the two banks was a response taken by the Roosevelt Administration to spur economic growth in the wake of the great depression.[3] The EXIM Bank of Washington ultimately became the US EXIM bank of today and has in its time helped finance post-war projects such as the Pan-American Highway, which extends from Canada all the way to Chile passing through 14 countries along the way.[4] In 1945 and 1946 US EXIM bank offered credit to a number of countries (mostly western) devastated during the Second World war to purchase goods from the United States. In Asia, Japan’s Bank of International Cooperation (JBIC) was established in 1999 through a merger between the Overseas Economic Cooperation Fund (OECF) and the Export-Import Bank of Japan (JEXIM), itself created in the 1950s. India and China established their own EXIM banks in 1982 and 1994 respectively and Africa’s very own EXIM bank (Afrexim) was established as a pan-African multilateral trade finance institution in 1993.[5] Afreximbank’s mandate is to help grow intra-African trade and boost exports.

The number of EXIM banks surged 35% between 2015 and 2019. As noted earlier in the introduction there are currently more than 115 export credit agencies facilitating trade but also serving the economic interests of their respective sovereign states. But as one country attempts to better the terms of credit against the other fears of a ‘credit war’ brewing between competing states has been raised. In order to pre-empt a self-defeating trade war EXIM banks are loosely governed by the Berne Union, which was established in 1934. It lays out certain principles that export credit agencies are expected to follow such as lending in a responsible manner that contributes to global trade stability, respecting international laws and agreements and supporting international anti-corruption and money laundering efforts.[6]

How do EXIM banks work

EXIM banks are typically state-run financial institutions[7] that provide instruments such as government backed loans, guarantees, export credits and insurance to private exporting companies (or their customers and financiers) in their home country and are among the largest sources of funding for industrial projects in developing countries.[8] Their mandate is to promote and fund the export of locally produced goods and services, support industrial growth, and protect domestic industries and employment. EXIM banks usually have a strong focus on developing small and medium sized enterprises and funding is usually contingent on local content requirements being met by the exporter. In this way, they pave the path for their exporters to enter foreign markets and generate foreign exchange.

The three primary financial instruments they offer exporters are:

  • Credit – loans to importers
  • Insurance – against buyer default, foreign exchange risk, transport, or political risk
  • Guarantee – extended to commercial banks should a buyer default

EXIM banks have two distinct advantages over traditional funders. One, access to cheap funding and two, scale. EXIM banks can access larger pools of funding at much lower interest rates than commercial banks. This allows them greater risk appetite, particularly on more marginal deals that would not pass return on asset (ROA) hurdle rates at traditional banks with a higher cost of capital. It also allows them to fund exports that commercial banks may consider too sensitive – such as arms or fossil fuels (especially now in the context of a green energy). In principle, EXIM banks do not compete with private sector lenders. EXIM banks typically operate in conjunction with commercial lenders as a financial backstop.

Not beyond reproach

Critics argue that the role of EXIM banks in promoting exports may be overstated. Despite the hundreds of billions of dollars extended and guaranteed by EXIMs around the world, it is estimated that they finance just 1% of the world’s US$28.5 trillion annual trade (figure 4). In the US, only 2% of US exports are backed by US EXIM.[10]

Further, since they are backed by governments EXIM banks are inherently political.[12] It is not uncommon for EXIMs to help their corporates gain market share abroad, particularly in strategic sectors. In 2004, Huawei received a US$600m from the Export-Import Bank of China (EXIM bank of China) to fund its foreign expansion. In the same year, Nigeria obtained a US$200mn loan from China Development Bank to buy Huawei equipment at almost 500bps below the benchmark lending rate.[13]Critics allege that it allowed the company to undercut competitor bids by as much as 70%. Huawei has strongly refuted claims of an unfair advantage and has instead pointed fingers at countries like Sweden and Finland who also support their respective technology firms similarly. Huawei’s technology now accounts for 70% of Africa’s telecommunications network.[14]

In the US, the US EXIM has been the target of congressional battles, so much so that their charter was allowed to lapse in 2015[15] bringing new funding to a halt for almost five years until it was renewed in 2019. Opponents of the US EXIM argue that the agency is beholden to big business who do not need such funding. They say US EXIM effectively subsidises exports using tax payers money. Its activities, they say, go against the principle of free markets. US EXIM also stands accused of not doing enough to fund and develop small and medium sized American enterprises. In 2015, 65% of US EXIM loans benefitted just 10 large corporates. In 2012, 82% of its guarantees were to Boeing customers and by 2019, just 27.5% of its loan book was assisting small businesses.[16]

Finally, EXIM bank transactions sometimes lack transparency often with only a fraction of the loan book made public. In their defence EXIM banks say their interventions level the ‘playing field’ for exporters who are often competing against foreign firms backed by their own EXIM banks.[17] Instead of displacing private lending institutions, they argue that their guarantees complement commercial bank activities[18] allowing them to do more business. They also defend their role in promoting exports and protecting producers at home from unfair foreign competition.

Notwithstanding all the criticism levelled at EXIM banks they are a critical part of the global trade machinery today. EXIM banks play an important role in financing trade and development, particularly when private sector lenders are unwilling or unable to bridge the financing gap. They played a crucial, countercyclical role[19] in financing exports during the 2007 global financial crisis and more recently through the Covid-19 pandemic.[20] Private sector lending appetite evaporated during both those events which could have all but brought global trade to a grinding halt had it not been for the timely intervention by EXIM banks. The US$250bn pledged by G20 nations in trade finance helped mitigate the pain of the global financial crisis.  More recently, a survey conducted by the OECD showed that export credit agencies around the world moved swiftly to put measures in place that supported their domestic exporters[21], including more flexible loan terms and conditions, payment deferrals and additional financing support for SME exporters.[22]

As EXIM banks graduate from simply facilitating trade to financing large infrastructure projects around the world their role is becoming even more critical in business as well as economic development. Herein lies the opportunity for both African and Asian economies.

Supply meets demand: Trade between Asia and Africa

Africa has long been identified as the next frontier growth market with enormous potential for countries to grow their exports and influence. The continent is a strategic and growing trading partner for Asian countries in particular. Collectively, China (US$200bn[23]), India (US$60bn[24]) and Japan’s (US$20bn[25]) bilateral trade with Africa totals almost US$300bn annually. The sheer scale of this growing trade volume places Asian EXIM banks in a unique position to help their exporters take greater advantage of the economic momentum in Africa. With a young and fast growing population the continent offers a vast market for consumer goods, energy, infrastructure, healthcare, and financial services. The African Continental Free Trade Agreement (AfCFTA) is also expected to boost Africa’s exports by US$560bn by 2035. Achieving this, however, will require extensive investment in infrastructure and capital goods. This is where Asian EXIM banks come in.


Founded in 1994 by the Chinese government to boost the state’s trade, industrial and foreign policy objectives, the EXIM Bank of China has grown to become the world’s largest export credit agency. Between 2000 and 2019, Chinese loans to sub-Saharan Africa totalled US$140.9bn, nearly 60% of which was extended by the EXIM Bank of China.[26] China’s success in penetrating markets in Africa can be distilled down to three key traits. First, the sheer scale of its financial fire power. With over US$610bn in its war-chest the EXIM bank of China is in a league of its own. That makes it four times larger than its nearest Asian competitor – the Japan Bank for International Cooperation (JBIC) (US$141bn). Second is the flexibility of its approach - a willingness to accept natural resources as collateral or repayment. Third is that its finance often comes with fewer strings attached. China, for example, does not insist on recipients demonstrating progress on political freedom, rule of law or human rights. This has made it a preferred partner for many, particularly those with poor governance records and loose fiscal controls. A notoriously corrupt MPLA regime in Angola under Eduardo dos Santos, for example, turned to China in 2002 after it rejected the IMF’s conditional assistance – the country still owes the EXIM Bank of China US$5bn and the China Development Bank US$14.5bn.

African states view China as being invested for the long-run and see the benefits to their own exports. In 2021, trade between China and Africa reached an all-time high of US$254bn, a 35% year-on-year increase. Africa imported US$148bn of Chinese goods (29% y/y) and exported US$106bn worth of African goods to the country (43.7% y/y)[27] (figure 6).

China and African countries are working on reducing the trade deficit African states run with China, with countries like Rwanda and Ethiopia tapping the enormous Chinese e-commerce market on platforms like Alibaba to sell coffee[29] and other African agricultural products.[30] Reducing the trade deficit will take time as much of the investment China is making in Africa through its export credit agencies in road, rail, port, and energy infrastructure will make African exporters more efficient and reduce the cost of production allowing them to produce more high-quality goods, more efficiently and more cost effectively.

China’s has been deliberate in its Africa investment strategy. It is neither entirely mercenary nor altruistic and demonstrates that EXIM relationships can be symbiotic and this is borne out in the trade and investment data. CEXIM has helped finance hydroelectric dams and plants in Mozambique, oil projects in Nigeria and Angola as well as renewable energy and transport routes across the continent (figure 7).[31]

Questions about debt sustainability have been raised but the net effect on Africa has been shown to be positive.[33] That said, China does appear to be slowing project finance growth on the continent as it re-evaluates its domestic and international agenda.[34] Chinese President Xi Jinping in 2021 said that his country would reduce the amount of funding it supplies to Africa by a third (to US$40bn) and redirect lending from large infrastructure projects toward small and medium enterprises and green projects.[35]


The Export-Import Bank of India (later renamed India EXIM Bank) was set up in 1982 by an Act of Parliament for ‘financing, facilitating and promoting India’s foreign trade’. It is the principal financial institution in the country responsible for the financing of exports and imports. In 2020 the Bank approved US$991 million in export credits and guarantees to support to Indian firms trading and delivering projects overseas.[36] During the same year, the Bank extended US$2.23 billion in lines of credit to foreign governments in a bid to encourage them to contract Indian firms and buy Indian. These included the Governments of Angola, Eswatini (Swaziland), Guinea, Kenya, Mauritius, Nigeria, and Sierra Leone. 

Trade between India and Africa rose to US$60bn in 2017 from just US$7.2bn in 2001, making India Africa’s fourth largest trading partner accounting for more than 6.4% of total African trade.[37] The impressive growth in trade between Africa and India stems from a mix of factors, including growing foreign direct investments undertaken by corporate entities, duty-free tariff preference schemes, and strengthened cooperation with Afreximbank.[38] Africa’s exports to India, however, are still primarily commodity and natural resources (75%) while India’s exports to Africa are dominated by refined petroleum and pharmaceutical products which make up 40% of its exports to Africa (figure 8).

India EXIM is working closely with both Afreximbank and the African Development Bank (AfDB) to increase its telecommunications and financial services presence on the continent and increase sector linkages to take advantage of the opportunities under AfCFTA.[39] It is, in fact, a significant lender to AFRIEXIM bank. According to India EXIM Annual Report 2020-21 it lent US$323.3m to its African counterpart. Historically, India has concentrated trade and investment efforts in the eastern and southern parts of Africa where there are large Indian diaspora communities but is now actively expanding its footprint as it tries to reel in China’s dominance on the continent.[40] India Exim Bank has extended a buyer’s credit facility under of US$245.74m to the Government of Zambia for the design and construction of Lusaka City Decongestion Project. A similar credit facility worth US$200m was extended to the Government of Senegal for the construction of the 225 KV high-voltage transmission lines.

There is a tangible difference between the investment approaches of China and India, and India EXIM prides itself on developing and funding value added investments in goods and services. As an economy with strong professional and creative services sectors, particularly in consulting and information technology, India is looking to export its expertise to Africa across a host of sectors. In 2013, India EXIM even helped fund and develop a “film city” in Nigeria, joining the two countries creative and film industries, Bollywood and Nollywood.[41]

To be sure, India is serious about extending its industrial footprint on the continent too, leveraging its large manufacturing sector through companies like Mittal Steel, Tata Automotive, Tata Power and ONGC Videsh (oil). Indian companies are beginning to gain more traction in Africa and a slowing of Chinese credit growth on the continent could give the country’s EXIM an important boost. India EXIm bank has funded Tata Group’s vehicle manufacturing plant and Suzlon Group’s wind turbine venture in South Africa as well as electrification projects in the DRC, and Mozambique and assisting the sugar industry in Ethiopia.[42]


Japan’s EXIM foray into Africa has been less effective. In 2018, Japanese exports to Africa totalled just US$7bn (a third of it to South Africa), down from US$14bn in 2008. Founded in 1999, the Japanese Bank of International Cooperation has had a narrow geographical focus and limited traction on the continent - 97% of JBIC’s 2020 US$3bn loan and equity participation in Africa was directed to Mozambique.[43] The country’s lending activities in Africa have been overshadowed by the rise of its Asian peers, China and India. Trade, however, continues at a steady, albeit muted level[44] (figure 9). This is despite former Prime Minister Shinzo Abe pledging US$60bn in financial support to Africa during his term in office. Over the last few years, Japan’s policy shifted from official development assistance to a private-investment-based approach as part of its economic diplomacy.[45]

Despite infrastructure financing from the Japan Bank for International Cooperation (JBIC) and extensive risk coverage offered through Nippon Export and Investment Insurance, Japanese companies appear reluctant to invest on the continent whose challenges and complexity present an unfamiliar terrain from the traditional Japanese way of doing business (figure 10).

Of the 796 Japanese companies operating in Africa, most of them are concentrated in Kenya, Ethiopia, Uganda, Mozambique, Tanzania, South Africa, and North Africa. Apart from the geographic and cultural differences, many Japanese companies still perceive Africa as too risky a place to do business. In 2019 interviews conducted by JETRO with Japanese companies in Africa, the primary difficulties Japanese companies face in Africa were identified as:

  • Problems applying the legal and regulatory framework – 80%
  • Political and social instability – 75%
  • Financial and exchange rate issues – 67%
  • Poorly trained local workforce – 60%
  • Poor infrastructure – 57%

Unable to compete with the scale of Chinese investments on the continent, Japan instead chose to focus on the quality of infrastructure and offerings and investment in skills transfer, but on a continent with such an infrastructure deficit, the quality of infrastructure is less of a concern than the speed with which it can be built.

Japan’s presence on the continent is unlikely to grow significantly as there appears to be a disconnect with the stated objectives of strong growth on the continent and actual levels of investment by the government. Given that it cannot (few if any can) compete with the scale of Chinese trade and finance, Japan is likely to focus its investments in the rest of Asia as it has done in the past.

A case for Singapore to establish an EXIM bank

From the three examples. it is clear that having a strong EXIM bank is an important tool through which sovereign states can grow their export sector and exert economic and even political influence. China and India are the two clearest examples. Both countries have seen strong export growth into Africa, broadening markets for their domestic companies and generating valuable trade revenue. The limited success of Japan’s JBIC on the continent, however, demonstrates that large balance sheets alone are no guarantee of trade and economic spin-offs. There must be a willingness by the private sector to seize the opportunities Africa presents and adapt to the associated challenges.

In 2010, Singapore’s Economic Strategies Committee recommended the establishment of an export-import bank to help its SMEs access export opportunities in foreign markets. The recommendation was ultimately rejected as the risks of establishing an EXIM bank were judged to outweigh offerings already available through International Enterprise Singapore and its Political Risk Insurance and Loan Insurance Schemes.[48] Singapore’s trade with Africa makes up less than 2% of the country’s total international trade, the bulk of which are oil-based products. Like Japan, the country’s trade focus with Africa has historically been narrow, having agreements with Nigeria, Ethiopia, and Mozambique.[49]

With African growth expected to rebound strongly through the easing of Covid lockdowns, the commodity price upswing, and reduced trade costs associated with the launch of the AfCFTA, it may be time for the nation to revisit the establishment of its own export-import bank.

Similarly, for Africa to truly attract sustainable and mutually beneficial investment it must improve the ease of doing business, develop a clear investment policy framework, and reduce investment risk. Africa must also shift its focus from the quantum of investment to the quality of investment. On a continent with extensive fiscal constraints, this will require significant compromise from both Africa countries and the investing agencies. It is clear, from the rhetoric at least, of countries like the US, Japan, and European nations that Africa is a coveted investment and trade frontier, but it is difficult for these countries to compete against the investment and trade heft of China. That is not to say that these countries cannot play an important role in Africa’s development. Rather, they are being crowded out by cheaper funding from EXIM bank of China and its development partners in China. For Singapore to meaningfully expand its exports into Africa, it will have to play to its strengths in niche sectors such as the supply of machinery and equipment which already makes up 43% of its export products. A state-owned EXIM bank could accelerate export growth, and its offerings would be a good fit for Africa’s infrastructure drive and provide the island state with an enormous and largely untapped market.



[1] Archer, Adrian Lawrence and Ffion. Export Credit Agencies and Insurers. Lexology. [Online] August 24, 2021. 

[2] Whittlesey, Charles R. Five Years of the Export-Import Bank. Jstor. [Online] 1939. 

[3] Shayerah Ilias Akhtar, David H. Carpenter, Grant A. Driessen, Julia Taylor. Export-Import Bank: Frequently Asked Questions. Congressional Research Service. [Online] April 13, 2016. 

[4] Patel, Deepesh. Export-Import Bank of the United States (Ex-Im Bank) | Export Credit Agency (ECA) in USA. Trade Finance Global. [Online] 2022. 

[5] Several African countries like Algeria, Egypt, Tanzania, Uganda and Nigeria, Ghana, Morocco, Senegal, Sudan, South Africa and Tunisia have established their own Export Credit Agencies

[7] OECD. Export credits work at the OECD. OECD. [Online] 2020. 

[8] ECA Watch. What are ECAs? ECA Watch. [Online] 2010. 

[10] Rugy, Veronique de. Memo to Team Biden: Rein in the Export-Import Bank. Discourse Magazine. [Online] February 3, 2021.

[12] Mr. Jian-Ye Wang, Mr. Yo Kikuchi, Mr. Sidhartha Choudhury, and Mr. Mario Mansilla. Officially Supported Export Credits in a Changing World. IMF. [Online] July 1, 2005. 

[13] IDE-JETERO. The Role of China's Financial Institutions. Institute for developing Economies: Japan External Trade Organization. [Online] September 2009. 

[14] Obiezu, Timothy. Some Nigerian-based Experts Warn of China's Growing Influence in African Technology. VOA News. [Online] September 2, 2021. 

[15] Wilkinson, Philippa. US Exim Bank shutdown affects Middle East projects. Meed. [Online] August 26, 2015. 

[16] ugy, Veronique de. Memo to Team Biden: Rein in the Export-Import Bank. Discourse Magazine. [Online] February 3, 2021. 

[17] Johnson, Bo. A Look at the Contr A Look at the Controversies of the United States Expor ersies of the United States Export-Impor t-Import Bank. Digital Commons. [Online] May 2016. 

[18] James, Sallie. Time to X Out the Ex‐​Im Bank. CATO Institute. [Online] July 6, 2011. 

[19] Smallridge, Diana. The role of export credit agencies in post-pandemic recovery. Trade Finance Global. [Online] March 16, 2021. 

[20] Palesa Shipalana, Cyril Prinsloo and Zinhle Ngidi. Does South Africa need its own export-import bank? SAIIA. [Online] October 17, 2018. file:///Users/jsnmsct/Library/Mobile%20Documents/com~apple~CloudDocs/Project%20Files/Articles/NTU/EXIM/Occasional%20Paper%20289%20(1).pdf 

[21] Trade finance in the COVID era: Current and future challenges. OECD. [Online] March 23, 2021. 

[22] OECD. Trade Finance in Times of Crisis - Responses from Export Credit Agencies. OECD. [Online] May 25, 2020. 


[27] Nyabiage, Jevans. Trade boom with China makes Africa one of world’s strongest performers. South China Morning Post. [Online] January 21, 2022. 

[30] Mureithi, Carlos. Trade between Africa and China reached an all-time high in 2021. Quartz. [Online] February 8, 2022. 

[31] McDonnell, Tim. China has invested more in Africa than the other top eight lenders combined. Quartz. [Online] February 10, 2022. 


[33] McDonnell, Tim. China has invested more in Africa than the other top eight lenders combined. Quartz. [Online] February 10, 2022. 

[36] India EXIM Bank Annual Report 2020-21

[38] Gokarn, Shruti Gakhar and Subir. India-Africa trade and investment: A backdrop. Brookings Institute. [Online] October 20, 2015. 

[39] Goyal, Tanu M. The African Continental Free Trade Area: Opportunities for India. Observer Research Foundation. [Online] February 7, 2022. 

[40] Schwikowski, Martina. India makes a comeback in Africa. DW. [Online] December 6, 2019. 

[42] Economic Times India. Exim Bank identifies 15 African countries for good investment Read more at: Economic Times India. [Online] November 10, 2013. 

[44] Maliki, Anthony. Can Japan catch up in the economic scramble for Africa? Lowy Institute. [Online] September 5, 2019. 

[45] Pajon, Celine. Japan’s Economic Diplomacy in Africa: Between Strategic Priorities and Local Realities. IFRI. [Online] December 2020. 

Subscribe to Newsletter