The current value of the Polish manufacturer production facility in Ukraine covered by us exceeds $45 million.
This is a landmark transaction for KUKE in many respects. It is the first insurance of a Polish investment in Ukraine since the outbreak of full-scale war. It is also the first reinsurance transaction of the FDI’s political risks carried out for the investor, rather than for the financing of the bank. At the same time, it is the first ever reinsurance transaction completed for multilateral financial institution, rather than for another export credit agency. The recently signed agreement with MIGA on cooperation and mutual support in insuring the activities of Polish business in foreign markets, with special focus on Ukraine, has quickly borne fruit. We are eager to support other companies based in Poland to safely and successfully invest in Ukraine to help rebuild the country and modernize its economy.
Katarzyna Kowalska, Deputy CEO of KUKE
We are committed to supporting Ukraine and the private sector, which is keeping the economy resilient in the face of Russia’s invasion. Our political risk insurance guarantee product has supported private investors who are playing a crucial role in sustaining Ukraine’s economy during the ongoing war.
Hiroshi Matano, MIGA Executive Vice President
KUKE’s offer in respect to Ukrainian market consist of three pillars:
- Export credit cover
- Investment insurance (greenfield, M&A, other)
- Cover for reconstruction & modernisation projects with participation of Polish contractors and suppliers.
In addition to KUKE, representatives of the following entities signed the memorandum: Atradius Dutch State Business (Netherlands), EDC (Canada), EGAP (Czech Republic), EKN (Sweden), Euler Hermes (Germany), EIFO (Denmark), Finnvera (Finland), PricewaterhouseCoopers (Germany), NEXI (Japan), SACE (Italy), UKEF (UK) and USEXIM (USA). They agree to continue supporting Ukraine in cooperation and to establish an exchange format for sharing experiences.
"We demonstrate our will to support Ukraine more actively in its efforts to rebuild and modernize the economy. Since the beginning of the war, we have advocated the creation of international guarantee mechanisms to enhance safe investments and trade with Ukraine. At KUKE, we have created a comprehensive support program for Polish companies that supply Ukrainian market, invest there or want to rebuild the country. Since the outbreak of the war, we have covered Polish exports worth nearly USD 1 billion realising only marginal loss ratio. Hence we are in a position to share our experience and provide know-how for other parties to increase safely its trade, investments and partnerships with Ukrainian businesses."
Katarzyna Kowalska, Vice-President and CRO of KUKE
To develop practical solutions to address the challenges of applying export and investment promotion in Ukraine, the operational focus of the memorandum centers on contact between experts and practitioners from the respective institutions. The participants expect the joint commitment to use existing flexibilities in the cover policy, the possible optimization of support instruments based on an exchange of best practices, and the proactive use of risk-sharing opportunities between the participants of the memorandum to substantially strengthen the support instruments to the benefit of Ukraine.
The initial signatories call on other countries to join the network to support Ukraine in the future. The aim is to build a broad and strong coalition of financial institutions for Ukraine.
"The combination of our capabilities will strengthen the shield against political and war risk available to not only Polish companies but also entities using Poland as a hub for establishing or expanding their business in Ukraine. We see strong interest on the Polish side in developing economic ties with Ukraine as our export dynamics proves, though the risks stemming from the ongoing war deter from investing on a larger scale. KUKE was leading the ECA community in opening up the Ukrainian market to export and investment cover. We are ready to insure commercial, political and force majeure risks of planned investments as well as the existing ones to make entrepreneurs feel safe and encourage them to accelerate their involvement in recovery of Ukraine. This is our priority, but then we hope for joint transaction in other markets where we can assist Polish companies to carry on sustainable investments and mitigate their risks."
Katarzyna Kowalska, Vice-President and CRO of KUKE
"During this time of immense difficulty caused by Russia’s invasion of Ukraine, we remain committed to expanding our support to the Ukrainian government and the private sector. Our insurance and reinsurance products have played a vital role in sustaining the Ukrainian economy’s resilience during the ongoing war and supporting much needed foreign investment."
Hiroshi Matano, Executive Vice President of MIGA
MIGA is also exploring reinsurance support for Ukrainian projects with other European export credit agencies. The Agency has been collaborating with the Ukrainian government, development partners, and the international investment community interested in risk mitigation and market insights.
MIGA has been among very few providers of political risk insurance in Ukraine, including cover for war and civil disturbance, issuing more than $215 million in coverage since the Russian invasion of Ukraine in February 2022. MIGA’s coverage was made possible by donor contributions to the Support for Ukraine Reconstruction and Economy Trust Fund (SURE TF) which complements MIGA’s own risk capacity. Through these efforts, MIGA has supported new and existing cross-border investors in Ukraine. MIGA’s guarantees serve as a key risk mitigation tool, ensuring the continuity of private sector operations and investments for the country’s continued economic activity during the ongoing conflict.
“On September 28, the amended Act on insurance guaranteed by the State Treasury, entered into force, allowing KUKE to again provide protection for investments of Polish companies in Ukraine, despite the ongoing war there. The legislator decided that although the risk is significant, for the sake of the state's interest, Polish entrepreneurs will be provided with insurance covering 100% of their investment expenditure as well as banks for the financing provided.
Poland is also a pioneer in initiating war risk insurance for the transport industry. Polish and Western shipping companies do not enter Ukrainian territory because it is impossible to insure the related risks on the commercial market and Ukrainian entities are responsible for all transport. KUKE will be the first institution to reinsure casco and cargo cover for Polish carriers issued by Polish insurers. However, the consent of the European Commission for such instrument is necessary.”
Janusz Władyczak, CEO, KUKE
The new solutions include the reconstruction programme of Ukraine, consisting of three pillars:
The first pillar is supporting the current operations of Polish companies. It is worth recalling that KUKE continues to insure the export of goods throughout the war being an exception among export credit agencies. This pillar also includes transport insurance.
The second pillar is to insure the investments of Polish companies in Ukraine against political risk (including war) and to guarantee to Polish banks the repayment of financing granted for investments, e.g. in the project finance formula or to finance acquisitions. This pillar also includes encouraging foreign investors to locate production or branches in Poland in order to conduct business in Ukraine and other markets. KUKE is able to guarantee the financing of such investments (Pillar II) and at the same time support their export (Pillar I).
The third pillar is directly related to the reconstruction and modernization of Ukraine. KUKE can find financing and guarantee its repayment to financial institutions in exchange for inclusion of Polish enterprises into projects like the reconstruction of destroyed energy or road infrastructure, construction of new public utility facilities. KUKE will become involved if at least 30 percent work and supplies of components will come from Poland. Support may therefore apply to producers from the entire spectrum of industries, as well as service, design and construction companies.
The latest example of such success is the contract for the expansion of the Namibe University in Angola between the government and the Polish Quenda Group, which will be responsible for the implementation of the project as the general contractor. In order to execute the project, a consortium of Polish exporters has been established, with participation of Torhamer, a company from Gdynia, which will be supplying the equipment for the facilities. Given the involvement of Polish companies, the project is supported by KUKE – the official Export Credit Agency of Poland – through a comprehensive cover on the financing provided by the lenders [led by Standard Chartered bank].
The project in Angola shows that Polish companies can secure significant contracts on markets where they have been present only marginally so far. What's more, they can carry out large-scale infrastructural projects on their own. In the case of the transaction with Angola, KUKE played an important role by connecting the participants of the project and securing its financing, thus making it possible to become operational. We are glad that after being involved in the project of developing the network of gynecological and maternity hospitals in Ivory Coast, we have an opportunity to support another project with such positive impact on local society, this time in education. This aspect is extremely important to us, because by doing business, we want to simultaneously develop Polish enterprises, and improve the living conditions of local communities
Janusz Władyczak, CEO of KUKE
Polish contractors will be responsible for the 3rd phase of the construction and equipment of Namibe University in Moçâmedes, Angola. Standard Chartered Bank is arranging a total term financing package of USD 73 million to the Government of Angola.
Standard Chartered has been active in Africa for many years providing financing for the development of critical infrastructure to improve essential services such as education, transportation and health care. We are proud to deliver yet another financing for a very important project for the Angolan Ministry of Finance. We are encouraged to see that Polish enterprises also want to get involved in the ongoing investments, and they are supported in this by KUKE
Desislava Radeva Director, Structured Export Finance, Standard Chartered Bank
For Quenda Group, which focuses on infrastructure projects in Sub-Saharan Africa, it is already the third project implemented in Angola, showing that by bringing a combination of attractive offer, skills and competences and the financing, it is possible to compete for interesting projects.
At the same time, the expansion of the University of Namibe is our first project financed by a leading international bank, Standard Chartered, with support from KUKE.
At the same time, the expansion of the University of Namibe is our first project financed by a leading international bank, Standard Chartered, with support from KUKE.
We are convinced that the implementation of the project will contribute to reinforcing Poland’s image as a modern country which has a lot to offer to its African partners. While resorting to local companies for basic construction works, we will source most of sophisticated machinery and equipment, including installations and IT infrastructure, from Poland in close collaboration with our consortium partner, Torhamer. Polish teams of experts will be responsible for the elaboration of technical documentation, managing and coordinating construction works as well as logistics. We are confident the time has come for Polish companies to establish themselves internationally not just as subcontractors or suppliers but as leaders capable of delivering complex projects.
To succeed in Angola, a business needs to be well established locally with a permanent presence. It is the only way to learn the specifics of the market and to establish strong relations with local partners
Małgorzata Szymczuk, CEO of the Quenda Group
Torhamer, a company from Gdynia, already present in Lithuania and South Africa is counting on further international contracts, also in Africa.
The project in Angola is an interesting challenge for our company, both in organizational and operational terms. Together with our consortium partner, the Quenda Group, we are counting on gaining experience in cooperation with local companies and getting to know the market better, which will result in new contracts in Africa. However we are interested and open to activities also in other parts of the world. For us, international expansion is an opportunity to broaden our experience and an important way to diversify our business, especially when we can take advantage of KUKE’s support.
Maciej Chamerski, CEO of Torhamer
Ranking of the most promising directions for Polish foreign investments
Although currently most Polish direct investments are located in Europe (over 84% in terms of cumulative value in 2020), and companies most often indicate nearby European destinations as potential new investment locations, there are many other, less obvious directions with a significant unexplored potential.
The report "Polish foreign investments: new trends and directions" presents the most interesting of them, taking into account the impact of the Covid-19 pandemic on the attractiveness of individual countries. The ranking favors countries that have coped relatively best with the effects of the pandemic in terms of the inflow of foreign direct investment. It was also decided to try to map the impact of current geopolitical events on short-term investor sentiment.
In the basic ranking of the most promising destinations for Polish foreign investments, the highest places were taken by: India, Finland, Estonia, Israel and Chile. These are rapidly growing markets, taking many initiatives to increase their business attractiveness to foreign investors.
“When choosing the direction and specific goal of a foreign investment, it should be remembered that they must fit into the company's long-term development strategy. These cannot be decisions detached from the company’s business model”.
Piotr Kuba, Member of the Management Board responsible for Investments at PFR TFI
Cooperation and support in the implementation of foreign investments
In addition to the ranking, the report also presents the results of research carried out on a sample of 240 medium and large Polish enterprises. They clearly show how important the first experiences on foreign markets are for the next steps in the international development of companies.
“Companies that have already learned about the specifics of doing business abroad can see the benefits and profits it can bring. Among the surveyed companies investing abroad, almost 60 percent announced willingness for further expansion”.
Paweł Oleszczuk, Vice Director at PwC Polska
The situation is the opposite in the group of enterprises that do not invest abroad - the vast majority of 80 percent has no specific plans in this regard. This shows that it is worth encouraging companies to expand abroad and showing them the benefits associated with it. Solutions offered by institutions such as the Foreign Expansion Fund managed by PFR TFI or KUKE, may be helpful here. Working with them can facilitate and accelerate international business development.
Global trends on the foreign direct investment market
The authors of the report present the key trends on the foreign direct investment (FDI) market and point to their importance for Polish companies. These trends could have been observed before, but the Covid-19 pandemic turned out to be their accelerator. The most important phenomena include: securing supply chains, screening foreign direct investment and increasing protectionism, the e-commerce revolution, reducing the carbon footprint and implementing ESG practices, as well as new technologies and the use of artificial intelligence.
“The Covid-19 pandemic, the e-commerce revolution, the need to secure supply chains are factors that make the approach to FDI change dynamically. One of the responses to these phenomena is the regionalization of investments and the formation of state blocs. You can also see that more and more countries are introducing procedures that hamper foreign investment”.
Janusz Władyczak, President and CEO of KUKE
Dowload the report i Polish
First use of a new export support facility
Boryszew will be the first Polish exporter whose loan for a foreign direct investment and its repayment have been insured with KUKE. The financing provided by BNP Paribas Bank will enable the development of the plant in Mexico with a line for the production of air conditioning hoses for electric car manufacturers. Thanks to the insurance, the risk carried by the bank was significantly reduced, giving it more capacity to provide financing for Boryszew’s foreign investments.
"Polish exporters and banks providing export financing have an excellent facility at their disposal, which allows them to conduct a more active and, above all, safe expansion on foreign markets. In the era of regionalization of production and shortening of supply chains, investments in countries that are located close to the main industrial centers - such as Western Europe, the USA or China - will gain importance. Global producers, wishing to increase their resistance to market turbulences caused, among others, by the Covid-19 pandemic, will choose sub-suppliers with production facilities located close to their key plants. Therefore, Polish companies willing to benefit from cooperation with the largest international producers will have to open plants on different continents".
Janusz Władyczak, President and CEO of KUKE
"Through the financing we provide, we enable Polish companies to use their full potential for growth both at home and abroad. Boryszew is an excellent example of this. Its plants are located in countries considered to be potentially the greatest winners of the upcoming changes in global trade, i.e. Mexico, Brazil, Southeast Asia and India By acting together with KUKE and using the global network of the BNP Paribas Group, we are able to make the investments of Polish companies in distant markets effective, safe and beneficial also for the entire Polish economy. Despite the considerable turmoil that hit the automotive industry during the Covid-19 pandemic, we believe that it has excellent prospects for a technological revolution resulting from electromobility".
Agnieszka Wolska, Vice President of BNP Paribas Bank Polska
Polish direct investments abroad
In the latest report of PFR TFI, PwC and KUKE on prospective investment directions for Polish companies, India is in the first place in practically all categories. In high places from non-European countries we can find, among others Israel, Chile, South Korea, Thailand, Malaysia, Morocco and Turkey.
According to the report, in 2020 foreign direct investments in the automotive industry exceeded USD 20 billion. For years, Poland has specialized in the production of car parts - this is our largest export position, giving us the 5th place in this category among the European Union countries.
Insurance of investments in Poland generating exports
Boryszew also invests in the development of domestic plants in the automotive industry. The funds granted by BNP Paribas under the second loan will allow the purchase of new production lines and equipment for the factory in Toruń, Poland, where air conditioning elements installed in electric cars will be manufactured. The value of this investment is EUR 20 million. Here, KUKE will guarantee the loan intended to finance a domestic investment that generates exports. It is worth noting that the share of exports in the revenues of the Boryszew Group has exceeded 60% in recent years, and the level of 20% is sufficient to obtain the guarantee from KUKE. This is another use of the KUKE guarantee to strengthen the production potential of the Polish exporter.
"We are conducting talks about supporting domestic and foreign investments of Polish companies from various industries. Thanks to our solutions, banks can offer financing more willingly and on a larger scale. For the exporter, this is a benefit in the form of lower security requirements or the possibility of securing higher credit and guarantee limits. Together with banks, we want to maintain the propensity of Polish companies to invest, at a time when the market environment causes great uncertainty and discourages allocating funds for development”.
Janusz Władyczak, President and CEO of KUKE
The Boryszew Group is the largest Polish manufacturer in the automotive industry. Every tenth car in the world and every fifth in Europe has parts manufactured in one of the Group's factories.