Trade credit insurance company Euler Hermes officially launched its local operations and services for the South African market in Johannesburg, Gauteng, last month.
Euler Hermes’ operations include a re-insurance agreement with insurance company Allianz Global Corporate & Speciality (AGCS) South Africa.
The collaboration combines Euler Hermes’ global market presence and trade credit knowledge with AGCS’s existing South African business relationships and in-depth knowledge of the local business community.
Euler Hermes South Africa country manager Gregory Nosworthy said at the launch that the company’s proprietary intelligence network tracks and analyses change in corporate solvency of more than 40-million businesses globally.
“This means that we cover more than 200 countries representing more than 92% of the global gross domestic product (GDP), and we are now making that knowledge available here.”
During the event, Euler Hermes presented its study, titled ‘South Africa: Rainbow – after or before the rain?’ which provided a detailed focus on growth opportunities in Africa in 2015 and 2016.
“We forecast that South African GDP will rise to 2% this year and to 3% in 2016. South Africa could unleash its growth and jobs potential by bridging its infrastructure and manufacturing gaps,” said Euler Hermes chairperson Wilfried Verstraet.
He noted that South Africa also had key strengths, such as advanced service platforms, enabling companies to function as connectors between continents, especially to untapped African markets.
“The business climate for South African companies has improved, payment terms are relatively low and stable, and insolvencies posted a fifth consecutive year of decrease in 2014,” said Euler Hermes chief economist Ludovic Subran. However, he added, this declining trend had softened in recent months.
The drop in oil prices benefits South Africa’s trade balance, in contrast to the decline in gold prices. Euler Hermes estimates that $68-billion is needed in the next 15 years to fill the infrastructure gap in South Africa.
“In the medium term, good demographics and firmer commodity demand globally could continue to create opportunities for South African businesses,” stated Subran.
Euler Hermes expects that additional exports from South Africa will amount to R26-billion in revenue this year, adding that jewellery and nonferrous metals have the highest export potential. Food and beverage exports are also increasing at an estimated R3-billion this year.
“The US and China should drive export growth in 2015, with 61% of additional demand generated by these two countries,” Subran said.
He noted that intra-Africa trade flows would remain strong and South Africa, with its comparatively better transport infrastructure and links with the global economy, would be pivotal in maintaining the momentum of intra-sub-Saharan trade flows almost having doubled since 2007.
“While Europe and North America remain important trade partners, Euler Hermes expects more commercial transactions across the Indian Ocean, particularly with India, which currently accounts for 6% of South African exports and an anticipated additional R2.3-billion worth of exports,” Subran concluded.