Jerusalem – Israeli exporters are facing a potential trade crisis with South Africa as the country heads towards a pivotal election, warns Ashra, Israel’s government-owned foreign trade risk insurance company. Citing rising political instability and echoing the recent trade boycott imposed by Turkey, Ashra is urging exporters to prepare for potential disruptions.
South Africans will cast their votes on May 29th. Polls suggest that the ruling African National Congress (ANC), founded by Nelson Mandela, may lose its 30-year majority, potentially triggering political and economic instability.
Ashra CEO David Klein stated, “In response to concerns that Israeli exporters will be harmed, and in light of growing demand, Ashra is working on increasing the scope of state-guaranteed credit insurance for exporters.”
Fueling Ashra’s concerns is South Africa’s increasingly critical stance towards Israel. Last week, South Africa appealed to the International Court of Justice (ICJ) to order Israel’s withdrawal from Rafah amidst the ongoing conflict in Gaza. Ashra believes that this action, along with South Africa’s previous accusations of Israel being an “apartheid state” and accusations of “genocide” at the ICJ, are partly fueled by anxieties surrounding the upcoming election and a desire to shift focus from domestic economic woes.
While bilateral trade volume with South Africa pales in comparison to the $7 billion trade with Turkey, Israeli exports to South Africa still exceed $200 million annually, with imports amounting to $150 million. These exports primarily consist of manufactured goods like scrap copper and chemicals, along with agricultural products like pesticides and fertilizers.
Ashra, established in 1957, is tasked with promoting Israeli exports and mitigating political and commercial risks. The company offers credit insurance services to secure large export transactions, primarily with foreign nations, for durations extending up to 15 years. This insurance safeguards exporters and lending banks against non-payment due to economic hardship or political upheaval.
State-guaranteed credit insurance provides exporters with financial security even in the event of political sanctions that prohibit payments to Israeli companies. Additionally, “pre-shipment” insurance ensures that exporters receive compensation for incurred expenses if an order is cancelled before delivery, as witnessed in the Turkish case.
Eligibility for state-guaranteed insurance and financing mandates that at least 30% of the export deal involves Israeli components.
Klein revealed a surge in demand for state-guaranteed credit insurance among exporters since the escalation of the Gaza conflict, a trend that accelerated in early 2024. During the first quarter of 2024, Ashra witnessed a 10% increase in the scope of in-principle approvals for credit insurance granted to Israeli exporters compared to the same period last year.
This surge in demand spans across various sectors, including energy, infrastructure, agriculture, security, and health, with a focus on African markets like Angola, Togo, the Ivory Coast, and Uganda, as well as other nations such as the Dominican Republic, Kazakhstan, and Georgia.
As of the end of 2022, Ashra’s insurance portfolio encompassed over $2.5 billion in export transactions, covering diverse sectors like manufacturing, infrastructure, medical equipment, energy, communications, agriculture, security equipment, planning, and engineering services.
