The US Export-Import Bank (US Exim) faces a crunch vote in the US senate this week, with the bank’s authorisation set to expire on Thursday.
After a four-year hiatus caused by political deadlock in congress, the US export credit agency regained its full lending powers when it was reauthorised in May.
However, if congress fails to pass the latest bill, US Exim could be hamstrung once again, leaving it unable to sanction big-ticket loans or transactions with tenors of more than seven years.
At the GTR Africa London 2019 event last week, conference chair and independent consultant Edward George sat down with US Exim board member Judith Pryor, a Trump appointee who worked under the Obama administration for the Overseas Private Investment Corporation (Opic), before her position at the bank was confirmed in May this year.
In this condensed version of the on-stage conversation, she discusses the future of US Exim, the work it has been doing in Africa, and how the bank’s focus has changed under President Donald Trump.
George: It would be good to start off with a history of US Exim in Africa.
Pryor: I’ve been with Exim six months now, so am fairly new. It’s been an exciting journey. And many of you probably know that the US Export-Import Bank has been shuttered for quite some time. So, we’re glad to be back and happy to be here.
Our first project in Africa was in 1942, in what’s now Angola, for a US$300,000 project. Since then, we’ve done over US$20bn in business on the continent.
There’s so much potential on the continent. We know this, it has six of 10 of the fastest-growing economies, a burgeoning middle class, and a population that’s going to double in the next 30 years. They need power, infrastructure, jobs.
Prosper Africa is the Trump administration initiative. Each administration has recognised the potential to participate and lean in on the continent. And this is the current administration’s way of doing so. It’s a whole of government approach, focused on two-way trade and investment. New items will include embassy deal teams, USAID – our international aid organisation – will have trade and investment hubs.
George: What are the key sectors or areas that Prosper Africa is going to be aimed at?
Pryor: I want to say it’s Africa at large. Exim, as you know, is trying to lean in to the continent, as we have been for many for many years, but absent a functioning board, it has been a little bit difficult. So now that we’re engaged again, we’re probably the biggest, brightest, shiniest tool in the toolbox to help with certainly exports. It could be infrastructure, education, health, wherever the need. Exim is agnostic to whoever comes to it.
George: Provided it affects American jobs obviously?
Pryor: Well that’s it. I mean, of course, the mission of the Exim Bank is to support US jobs through exports.
George: It sounds like a real time of renewal when it comes to the US engaging in Africa. Could you talk us through what has happened at the bank over the last year or so?
Pryor: So, for the past four-plus years, Exim has been shuttered because we have not had a functioning board or what we call a board quorum. It’s a bipartisan board by law. Five members, three makes a quorum. It took two years for me, for our chairman, Kimberly Reed, and for my fellow board member and former congressman Spencer Bachus, to be voted off of the senate floor to get in.
Frankly, the bank has been not completely inoperable, but has focused on small business because it has been unable to process or transact anything over a US$10mn limit. 90% of the of the work being done was with small businesses. Which is a good thing. It’s also one of our congressional mandates.
Three of the first four projects that came to board for approval, which is anything over US$25mn, were in Africa. So, two preliminary commitments which will enable US companies to continue forward with a bid process: one in Senegal, for distribution and off-grid in rural communities, the other in Cameroon for civil engineering equipment. The third project, which I would imagine many of you have heard about was the Anadarko LNG project in Mozambique. At US$5bn it’s the largest transaction that the US Exim Bank has ever undertaken.
George: What do you think is going to happen next?
Pryor: November 21st is our new D-Day for the bank. And while we have a board quorum, this is yet another hurdle. But what’s different this time around then from what happened four years ago is that we have the support of the White House for a 10-year clean authorisation, which means ‘just leave the charter of the bank as it is, and give them authorities for 10 years’. We have agreement in the senate and legislation introduced in the senate, which is the same. There is a little bit of a back and forth in our house of representatives, a little disagreement – something we’re all used to. But it does seem that the momentum is here. So, I’m going to be glass half-full and say that we will be here on November 22. So, fingers crossed everyone.
George: Let’s take some questions from the audience: is the bank open to non-US exporters for projects with US export content? What would the requirements be for that?
Pryor: It is a requirement that a certain percentage of the content for us to fund the whole project be US content, and it must be shipped from the United States. If it’s over 85%, we can fund the whole project, or 85% of 100% of the projects. We want you to have some skin in the game. If it’s lower than that, we can fund just the US portion of the content.
George: Are sectors like coal and mining off the cards?
Pryor: We are agnostic. It is written into our bylaws that we will look at every project that is brought to us and will not discriminate one industry over the next. I probably shouldn’t add this, but if I have a choice, would I rather see LNG projects instead of coal? Yes. But it doesn’t mean that we won’t look at them if they’re viable projects, if they’re creditworthy. We’re required by law to look at them and we will as a board.
George: Perhaps one of the unintended positive outcomes of the shuttering of Exim for that period is that there was a lot more focus on SMEs. What exactly have you been doing with SMEs and how do you plan to build that over the coming years?
Pryor: We help very small US businesses. It takes a lot of work: marketing and outreach. As a government agency, we don’t really have an advertising budget. It’s a lot of people on the road at conferences like this, throughout the United States, spreading awareness about the services that we do offer like export credit assistance, export credit insurance, working capital guarantees.
But we’ve done bridges to water treatment plants, fire trucks, surgical equipment. Since 2009, we’ve supported about US$7bn with small businesses. Two of the projects I mentioned in Africa are both preliminary commitments, so they’ll come back to board for final approval. One company based in Chicago, Illinois, is 15 people. And they’ve done a project and it passed in Ghana for rural electrification – and now in Senegal. So I’m hoping that comes back to board soon. And then the same with Cameroon: that’s a very small company out of Parsippany, New Jersey, that makes and supplies and services civil engineering projects and equipment. So the desire is there, but it’s the large projects that enable us to do more with the smaller companies. It’s creating that balance and stability. Our congress also says that 25% of our book, as a target, has to be with US small business.
November 20, 2019