KUKE’s vision
KUKE's primary mission is to empower companies to engage confidently in global trade, fostering sustainable economic growth and job creation. "Our vision is to be a linchpin in enabling safe and secure trade and investments," says Katarzyna Kowalska, Deputy CEO and CRO of KUKE. "In an era of decreasing predictability in the economic environment and rapid changes in business conditions globally, our services are not just optional; they're critical."
The challenge of multi-regional risk assessment
One of the most significant challenges KUKE faces is the risk assessment of businesses operating across various geographies. Each region comes with its unique economic landscape, legal regulations, and business cultures. "Traditionally, assessing the creditworthiness and reliability of international businesses has been a time-consuming and resource-intensive task," stresses Grzegorz Kwieciński, Head of Risk Department at KUKE.
The need for digitisation
Given new challenges ahead of Poland’s economy and the growing needs of local businesses, KUKE recognises the necessity to amplify the digitisation of its operations to ensure agility, competition edge and customer satisfaction. "In today's fast-paced business environment, relying on manual processes and fragmented data is a roadblock to growth," ads Grzegorz Kwieciński. "That's where our partnership with Wiserfunding becomes invaluable".
As international trade continues to become more complex due to geopolitical shifts and market volatility, the partnership between KUKE and Wiserfunding offers Polish businesses a modern solution to an age-old problem. This collaboration aims not just to minimise risks but also to create new opportunities for growth and expansion.
The Wiserfunding solution
Wiserfunding offers an advanced suite of credit risk intelligence tools, tailor-made to tackle the complex challenges of global business. "We're excited to provide our risk intelligence and insights to KUKE’s internal platform," says Gabriele Sabato, CEO and Co-Founder of Wiserfunding. "Through our joint efforts, we aim to substantially streamline and enhance the evaluation process for international businesses, marking a significant improvement in operational efficiency and accuracy in risk management"
"Our partnership with Wiserfunding is yet another important step in digitising KUKE which brings us to top league of trade insurers after introducing in late 2023 up-to-date electronic platform for customers. Risk assessment in international markets has always been a complex task. This partnership enables us to offer an advanced, data-driven solution to Polish exporters, helping them make more informed decisions. It also can impact KUKE’s efficacy which enables us to stay competitive both locally and internationally as well as achieve satisfactory financial results.”
Katarzyna Kowalska, Deputy CEO and CRO of KUKE
"KUKE is one of the top European ECAs and has an exceptional track record of supporting businesses in their global endeavours. We are honoured to be able to support their mission with our powerful technology and unique expertise. Thanks to our solution, KUKE will be able to increase the speed and the availability of their support to Polish exporters by analysing all their buyers in few seconds and monitoring them frequently. Full automation of the digital lending process and early-warning system is a key success factor in today’s digital economy."
Gabriele Sabato, CEO and Co-Founder of Wiserfunding
About Wiserfunding
Founded in 2016 by Prof Edward Altman and Dr Gabriele Sabato, Wiserfunding is a London-based fintech company with a focus on leveraging advanced analytics to assess the credit risk of small and medium-sized enterprises (SMEs). Created by experienced academics and professionals in the finance sector, the company was established to address the existing gaps in the SME credit risk intelligence.
Wiserfunding strives to become the go-to platform for credit risk intelligence, bridging the gap between SMEs and financial institutions and enabling healthier, more sustainable business relationships.
This is subsequent analysis of business opportunities for Polish companies, which takes into account macroeconomic as well geopolitical factors and changes in the global economy.
The study includes:
- ranking of investment destinations,
- analysis of key market trends,
- results of survey conducted among entrepreneurs,
- analysis of the Ukrainian market, including impact of the war and the planned reconstruction process,
- review of foreign investment financing instruments offered by development institutions.
This year's edition of the ranking includes two categories of destinations - obvious and known (1st circle) and less known, but very promising for FDIs (2nd circle). The demarcation line is the value of capital invested by Polish companies (EUR 100 million). In the first group - mainly geographically and culturally closer CEE countries, top spots are held by Czechia, Romania and Ukraine, where potentially great opportunities may open up for Polish enterprises as part of the country's reconstruction process. Within the second circle countries, Japan, Kazakhstan and Malaysia are on the podium.
"There is a chance for our business to be finally more active abroad. So far, although we have been successful in attracting investments from other countries, our regional neighbours have been better at outbound capital expansion. We want to share knowledge about the benefits and opportunities of international development and show Polish entrepreneurs specific markets worth considering when looking for investment opportunities. At KUKE, we see a growing interest among Polish businesses in going international. To reinforce this trend, we offer attractive instruments to secure the investments themselves as well as their financing, which significantly increases the security of foreign investment."
Janusz Władyczak, CEO of KUKE
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“We have significantly strengthened our presence in over 20 of the fastest growing renewable energy markets in Europe. Many of them are countries of Central and Eastern Europe or not belonging to the European Union. The use of the deferred payment option is crucial for the development of the activities of installation and distribution companies that are just entering the market”.
Marcin Ślęzak, Chief Commercial Officer at Menlo Electric
KUKE supports the green transformation
Cooperation with Menlo Electric is in line with KUKE's policy of supporting domestic companies in their foreign expansion, and at the same time contributing to the green transformation of the Polish and European economy.
“We are delighted to support Menlo Electric, which, thanks to its rapid development, is playing an increasingly important role in providing users across Europe with access to the latest and more efficient renewable energy technologies. KUKE enables Polish companies not only to safely offer deferred payment terms in relations with domestic and foreign buyers, but our insurance and bonding facilities also enable exporters to conduct investments, acquisitions and increase their payment credibility in the eyes of their suppliers”.
Janusz Władyczak, President and CEO of KUKE
Financing through factoring
Financing under domestic and export factoring will be provided by KUKE Finance, a subsidiary of KUKE.
“We see the progressive concentration of entities operating on the photovoltaic market, and Menlo Electric, due to its position, is one of the most important beneficiaries of this process. We hope to finance the company itself on an increasing scale, and through it, smaller distributors and installation companies from this industry in Poland and abroad, so that the market continues to grow despite various adversities, such as the recently rising costs of devices”.
Konrad Klimek, President and CEO of KUKE Finance
Broader cooperation with the Polish Development Fund Group
The agreement is part of a wider Menlo Electric financing program, led by the Company’s CFO Marta Walendzewicz.
“As we observe disruptions in international supply chains, ensuring that we have constant access to the highest quality goods requires an adequate level of working capital. That is why our goal this year is to secure financing worth over PLN 90 million. The agreement with KUKE and KUKE Finance is a milestone in the implementation of the program. We are also talking about wider cooperation with the Polish Development Fund Group, which KUKE and KUKE Finance are a part of”.
Marta Walendzewicz, Chief Financial Officer at Menlo Electric
KUKE, with the support of the Polish government and following the positive decision of the Export Insurance Policy Committee, reestablished the possibility of insuring receivables under export contracts with Ukrainian buyers. The insurance may cover goods or services excluded from the payment moratorium payment moratorium introduced on 24 February 2022 by the National Bank of Ukraine. The full list of is published on the website of the Ukrainian parliament.
“We see this as an important step in restoring trade between Poland and Ukraine, as well as a sign of solidarity with our neighbor in these trying times. We are glad that we are once again offering Polish exporters insurance cover for transactions with their Ukrainian business partners. We are currently restoring cover for exports of goods or services excluded from the payment moratorium introduced at the beginning of the war, which prevents Ukrainian entities from making foreign currency payments. The list of items not covered by the moratorium is wide-ranging and includes mainly basic necessities for the population, i.e. food, drugs, fuel and imports critical for the functioning of the country's economy, i.e. for the energy and security sectors”.
Janusz Władyczak, CEO and President of KUKE
The insurance is available both for companies that have already insured their receivables with KUKE and for those that have never worked with KUKE before. The insurance cover will be extended on the basis of the standard General terms and conditions of the Policy Beyond Borders credit insurance facility.
A Polish exporter who wants to deliver goods to a Ukrainian business partner should first agree with him whether the ordered goods are on the list of goods excluded from the payment moratorium. KUKE will also verify whether the Ukrainian business is active and whether the ordered products are excluded from the payment moratorium.
By the end of 2022, KUKE will be able to grant credit limits for Ukrainian companies worth PLN 500 million.
"Comparing this amount with the value of credit limits used by Polish exporters last year, and taking into account the volume of the current trade turnover, which is almost half lower than before the outbreak of the war, it seems that the needs of Polish entrepreneurs will be satisfied in the near future. We also hope that when analyzing the current situation and the uncertain market environment, exporters will see the advantages of the solutions offered by KUKE, ensuring protection, among other things, from political risk, such as the introduction of a payment moratorium, or the force majeure risk, such as war. We have recently cut the premium rates by 35 per cent for the Policy Beyond Borders credit insurance facility covering 160 market across the globe. This may encourage Polish companies to open up to new export new markets".
Janusz Władyczak, CEO and President of KUKE
In 2021, KUKE insured goods and services worth PLN 1.5 billion exported to the Ukrainian market, thus covering 5 per cent of total exports to Ukraine.
It is worth noting that only a few European export credit agencies allow for limited insurance of sales to Ukrainian, which puts Poland in the forefront of countries actively supporting both its business and the economy of Ukraine.
150 exporters benefited in Q1 2021 from GAP EX and GAP EX+ insurance made available by KUKE for the duration of the pandemic. They despatched their products to approximately 700 counterparties from 33 countries. The largest sales were to customers from the UK (16%), Italy and France (14%) and Germany (13%). The top 10 also includes four countries in our region: Romania, the Czech Republic, Slovakia, and Hungary.
GAP EX solutions are guaranteed by the State Treasury and are designed for exporters who are unable to find insurance on a commercial basis for their existing contracts or wish to increase international sales. The insurance covers European Union countries and selected nine OECD markets such as the United States, Norway, and Australia.
"We estimate that GAP EX solutions have so far insured exports worth almost two billion PLN. This mainly concerns EU countries, although statistics from recent weeks show that despite the problems resulting from Brexit, which significantly weakened the trade exchange with Great Britain at the beginning of the year, Polish entrepreneurs, e.g., from the furniture industry, are still fighting for the local market. So, there is a chance that within a few months exports to the British Isles will return to their previous levels", said Elżbieta Kacprzykowska, Director of KUKE's Sales Department.
The plastics industry accounted for almost one-fifth of coverage under GAP EX and GAP EX+ policies in value terms in Q1 2021, an increase of almost fifty per cent compared to 2020. Metallurgy accounted for 12% of the value of policies, while the food and automotive industry accounted for over 8% each. The wood and furniture sectors had a total share of 10%. Transport, construction, and electrical engineering companies were also keen to use our insurance.
"Acceptance of customers' credit limit applications is higher this year than last year, although our approach to risk has not changed. However, we see that the GAP EX portfolio is safe, with a minimum number of reported claims. Improving economic forecasts are announced for the developed countries. On the other hand, there is a risk that with the upcoming withdrawal of business aid programmes there will be more bankruptcies and restructurings, also among our exporters' counterparties", emphasised Elżbieta Kacprzykowska.
The European Commission has extended until the end of December 2021 the possibility for state guarantees to be provided to insure short-term export credits relating to Union markets and selected OECD countries under instruments such as GAP EX and GAP EX+.
According to a survey conducted by the Berne Union in the first quarter of the year, export credit agencies and private credit insurers expect an increase in the value of claims paid out. This means that, thanks to the protective measures introduced by most governments, the scale of the problems caused by the pandemic has diminished, although it has not been possible to eliminate them entirely. On the other hand, insurers, especially State-owned insurers, are ready to increase their exposure and support international trade.
We are covering a long-term credit that Wielton offers to foreign buyers for the purchase of its products. The total value of the two contracts is EUR 3.3 million. Being protected by KUKE relieves the Polish exporter of the risk of non-payment, and additionally, should the company wish to strengthen its liquidity, it can easily sell the insured receivables ahead of schedule and receive cash. We are talking with Wielton about insuring further sales to African markets, where the company has already built a very strong position - said Adam Grzybowski from the Insurance and International Cooperation Department at KUKE.
This is not the first Wielton contract of this type using solutions offered by KUKE. Last year, sales to Ivory Coast were also insured. Polish exports to this country, despite the difficulties caused by the coronavirus pandemic, increased last year by 58 percent, and to Mali by 49 percent. In the case of Africa as a whole, Poland recorded an increase of 2.2 percent.
We are increasingly active in Africa, which is being "discovered" by a growing group of Polish exporters. This month, we signed a cooperation agreement with the Islamic Investment and Export Credit Insurance Corporation (ICIEC), which includes Mali and Ivory Coast, to jointly participate in export and investment projects of Polish entrepreneurs in this region. In the near future, further attractive instruments supporting exporters and the banks financing them will be added to our offer - emphasised Adam Grzybowski.
Last year, sales of goods to African countries accounted for 1.2 percent of all Polish exports and their share in the portfolio of long-term transactions insured by KUKE is similar.
Polish exporters still have until the end of June – unless the European Commission decides to extend this period – to use the State Treasury backed insurance of trade receivables when selling to markets in the European Union and selected OECD countries.
The KUKE GAP EX and KUKE GAP EX+ instruments were introduced in May of last year, pursuant to the European Commission’s decision. The decision permitted the temporary utilisation of state guarantees when insuring exports during the pandemic due to the difficulties in obtaining cover from commercial insurers. Last year, several hundred Polish entrepreneurs took advantage of this solution at KUKE, and the value of insured turnover can be estimated at around PLN 1.5 billion.
This solution sparked enormous interest at the outbreak of the pandemic when there was great uncertainty on the market as to how the economic situation will pan out and as to the financial situation of foreign customers. A similar effect occurred during the autumn wave of the coronavirus infections, when severe restrictions were once again imposed on businesses in countries constituting our most important outlets. Polish exporters are looking for instruments that will allow them to safely continue sales with the utilisation of trade credit. Many of them came to realise during the pandemic that the option of offering a customer a longer payment term gives them a significant advantage. Polish firms successfully snapped up contracts of their foreign competitors because they were still capable of executing orders on time despite the lockdown, they guaranteed the required quality, and were at liberty to provide trade credit to their counterparty. Thanks to this, our export is enjoying great success, Elżbieta Kacprzykowska, Director of the Sales Department at KUKE, points out.
The largest export transactions utilising GAP EX insurance went to Germany (16% share in terms of the amount), France (14%), and Great Britain (9%). Four countries in our region are also on the ‘Top Ten’ list: Slovakia, Romania, Czech Republic, and Lithuania.
Producers of plastics (13%), food and food products were among those who benefited from GAP EX aid most often. The following industries also had an over 5 percent share in the portfolio: wood (9.4%), steel (8.6%), furniture (8.1%), and transport (5.7%).
KUKE GAP EX is tailored for companies that have a receivables insurance agreement and want to increase export sales, whereas KUKE GAP EX+ is for those firms who have been refused a limit by their insurer or have closed it to foreign customers. The insurance guarantees the broadest scope of protection, also covering trade, political, force majeure, inclusive of pandemic risk, as well as defaults in payments by public entities. So far over 2,000 counterparties from 33 countries who unfailingly meet their payment terms have been included in its cover – with only 10 cases of delay noted to date.