In order to promote the use of this export credit and to allow the South African exporter to offer competitive financing in its bid, interest rate support is required to compensate Participating Financial Institutions. This interest rate support compensates the Participating Financial Institutions for costs incurred that are not covered by the interest rate paid by the borrower. This interest rate support is the Interest Make-up (IMU) Scheme. This support incentive scheme is provided by the dti through ECIC.
The IMU support scheme is not offered on a stand-alone basis. It is linked to projects that are eligible for ECIC support. The relevant eligibility criterion is that the exporter must achieve South African Content requirements (See SA Content)
The IMU scheme is currently being reviewed.
Libor + 180 bps – 5yr Repayment
Libor + 220 bps – Repayment between 5yrs → 8.5yrs
Libor + 250 bps – Repayment period over 8.5yrs
Financial institutions need a banking license issued by the South African Reserve Bank. A banking license to operate a representative office in South Africa is not sufficient to be eligible for the IMU support scheme.
Guaranteed Rates of Exchange
ECIC covers export credit loans denominated in South African Rands and US Dollars, as well as the SA Rand and US Dollar value of foreign investments. In the case of export credit loans denominated in US Dollars, South African contractors who are the beneficiaries of drawdowns under export credit loans for work completed face exchange risks in so far as their expenses are Rand denominated. Guaranteed Rates of Exchange (GRA) obtained from the South African Reserve Bank are available to the contractor to eliminate the impact of currency fluctuations on their pricing during the delivery phase of the project. For this cover an exchange risk cover premium administered by ECIC is payable to the South African Reserve Bank. The South African contractors/exporters may benefit from this product provided they obtain contractors cover from ECIC.