The role of officially supported export credits in sub-Saharan Africa's external financing

Abstract

This paper addresses the question of how important officially supported export credits (OSECs) were, both in quantity and quality, in Sub-Saharan Africa's (SSA) external financing during the last two decades, and examines the prospects for the 1990s. The paper begins by briefly explaining the financial structure of foreign trade, the role of export credits in this context, and the basic functions of export credit agencies (ECAs). It goes on to present the trends in OSECs during the 1970s and the 1980s as a source of external finance for developing countries in general, and for SSA in particular. The authors deal with some of the distortions caused by export credit subsidies, including the problems of"moral hazard"and"adverse selection". The paper looks at the current need and prospects for external finance in the 1990s and addresses how to enhance the efficiency of OSECs, emphasizing the cooperation between ECAs and multilateral development agencies, an issue which is particularly important for poorer developing countries such as those found in SSA.Economic Theory&Research,Banks&Banking Reform,Environmental Economics&Policies,Financial Intermediation,International Terrorism&Counterterrorism