Gauteng Business News

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ECONOMY: Emerging Markets Become Global Growth Solution


Recent Gauteng Business News

Trade openness is one of the factors contributing to economic growth in emerging markets and certain Asian countries.

Sub-Saharan Africa’s growth for 2012 was 4,4% increasing to 5,2% in 2013, as forecast by Coface. China’s estimated growth for 2012 was 7,7% rising to 8,5% in 2013 and India grew an estimated 5,5% in 2012 with projected growth of 6,0% in 2013.

“Trade openness gives easier access to markets and involves less government restrictions,” says Jacqui Jooste, Operations Director at the South African office of Coface, the international credit insurer.

“Turmoil in the European markets has moved the focus to emerging markets, but exporting to these regions has its risks,” says Mrs Jooste.

“Because trade with emerging markets is now a global growth focus, it is important that exporters know the financial health of companies with which they trade. Emerging markets remain risky because customers may sell into unfamiliar countries and debt collection could be difficult,” she says.

“Laws pertaining to emerging countries could add to these challenges. The first step is to manage credit risk and focus on financially healthy customers and business prospects.”

“An international credit insurer like Coface provides credit risk information in over 170 countries. Credit information can be provided on specific companies and collections done on behalf of the client, avoiding the minefield of collecting money in another country.”

“If an exporter partners with an international credit solution provider it places them in a stronger position in assessing the risk profile of the new buyer rather than relying on limited or outdated information. It avoids having to appoint your own lawyer in the case of a bad debt.”

“But the real test of a credit insurance policy is whether claims are processed efficiently and the client receives payment in good time. In this way, the impact of a bad debt is reduced if not eliminated and the entire supply chain is potentially covered.”

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