The Export Guarantee Fund of Iran (EGFI), and the UK Export Finance (UKEF) have committed to enhancing trade and economic cooperation with a memorandum of understanding signed on March 5 to enhance bilateral trade.
Under the MoU, the EGFI and UKEF will work together to identify opportunities for trade in capital goods, equipment and services. It also allows the two parties to co-finance and co-guarantee financing for projects or contracts in third countries involving British and Iranian exports, the EGFI announced in a press release on Sunday.
The memorandum comes on the heels of the lifting of sanctions in mid-January, as a result of which the UKEF reintroduced cover to support UK companies wanting to do business in Iran.
In January world powers led by the United States and the European Union lifted sanctions on Iran in return for curbs on its nuclear program. The subsequent leap in Tehran's stock market in late January and early February gave some hint of the country's investment potential.
"EGFI welcomes this partnership. By fostering closer cooperation with UKEF, it will create opportunities for UK businesses to play their part in realising Iran’s plans for economic and infrastructure development," Seyed Kamal Seyed Ali, CEO and chairman of EGFI said.
"The MoU also helps EGFI to increase its support for Iranian exporters who want to sell goods and services to the UK."
On January 16, UKEF reintroduced a £50 million ($ 71.2 million) cover to support UK companies seeking to compete for business in Iran, immediately after the lifting of the international sanctions against Iran.
The cover is available on a case-by-case basis in pounds sterling and euros, to guarantee payments to UK professional advisory service providers advising the government of Iran. This can include advice on areas such as: accounting standards; capital market development; compliance with global regulatory requirements; accessing and reducing the cost of financing; and facilitating new trade.
Real Opportunity
Louis Taylor, CEO of the UK credit agency, welcomed the agreement, saying UKEF is committed to supporting UK business plans to trade with Iran, and to playing its part in the framework of the government effort to expand two-way trade.
"Working with EGFI will enable us to provide our customers with comprehensive advice and support as they look to trade with Iran. Through this partnership we can identify – and help create – real opportunities for UK exporters."
Arash Shahraini, EGFI board member, said during the ceremony the new strategy of EGFI is not only to support Iranian exporters, but also play a role in attracting foreign finances and investments.
"To this end, we are willing to participate in covering the local part of export-based projects in Iran, implemented through a consortium of foreign financiers and ECAs including UKEF," he said.
Previously, the UK had between £400-500 million ($600-700 million) in direct exports, and about as much in indirect exports to Iran.
Iran imported $614 million worth of goods from Britain during the past Iranian year (ended March 20, 2015), while it exported commodities worth $72 million, according to data provided by Iran’s Customs Administration.
