Getting to Know the EDC

June 1, 2009

In Canada, one in three jobs relies on exports. Due to the size of Canada's population, the domestic market remains limited for small businesses, so they have to think globally to compete.

Export Development Canada (EDC) is Canada’s export credit agency, designed to help Canadian exporters and investors expand their international business. The EDC is also a Crown corporation wholly owned by the government of Canada and is financially self-sustaining and operates on commercial principles.

The EDC provides commercial financing, insureance, and risk management options to Canadian companies and their partners.  These include: 

       
• Loans to foreign-based companies looking to buy goods and services from Canada
• Working capital loans to companies to help them fulfill their export contracts
• Loans and insurance to help companies invest abroad
• Guarantees to banks, making it easier for them to lend
• Insurance to protect companies against a variety of risks;
• Bonding services to help companies guarantee their performance
• Equity participation in specific sectors

In 2008 EDC facilitated more than $85 billion of Canadian trade and investment that included:

• $27 billion in the extractive sector, including mining, oil, and gas
• $18 billion in the infrastructure and environment sector
• $16 billion in the resources sector, including forestry and agriculture
• $10 billion in the transportation sector
• $7 billion for information and communications technology
• $5 billion in the light manufacturing sector

In a recent speech to the parliamentary Subcommittee on Canadian Industrial Sectors of the Standing Committee on Industry, Science, and Technology, Benoit Daignault, senior vice president, business development, said that the challenges that Canadian companies faced last year have grown more pronounced as we move through 2009. 

“Credit and risk mitigation is often difficult to affordably access,” he told the committee. “And demand for many Canadian goods and services has fallen in this recessionary environment.”

Scaled-back production, layoffs, and facility closings, when combined with falling demand, often make it difficult for companies to access affordable receivables insurance.  This presents two challenges, according to Daignault. 

“First, without insurance they are being exposed to greater risks,” he explained. “Second, companies have typically used this insurance to obtain additional working capital from their banks.  Without coverage, their ability to access this financing becomes more limited.”

By investing in new technologies to improve efficiency and lower costs, Canadian companies can compete on the world stage. Companies in this type of economy also tend to invest abroad, again to lower costs and more efficiently serve foreign markets.  These are the right steps to take, according to Daignault.     

In his speech he pointed to four critical priorities that Canadian companies should be looking at in order to compete in the global economy.

1. Companies need to think internationally. An exporting company is a more efficient and competitive company.  Companies need to identify opportunities to market and sell their goods and services to the world.
2. Companies need to think beyond the U.S. market.  While Canada has benefited from its proximity to the U.S., there is a wealth of opportunity in high-growth emerging markets, which should be pursued.
3. Companies must continue to invest in new technologies and processes.  These investments can improve productivity and enhance a company’s competitiveness.
4. Companies need to participate in regional and global supply chains.  In today’s global economy, larger companies are building their own supply chains, and smaller companies are competing to find their link or niche along existing chains.  Canadian companies must follow suit.

“At EDC, what we find is that as the world learns more about Canada and what our companies can offer, opportunities follow.  As a country we develop, produce, and export goods and services that are valued in countries around the world,” said Daignault. “The challenges our companies face today are steep.  But they are no different than the challenges being faced by their competitors.  By helping viable Canadian companies access credit and risk mitigation, we can position them not only to survive, but to compete and succeed.”

For more information, visit www.edc.ca.