Economic security beyond national borders

NEXI Chairman and CEO Atsuo Kuroda discusses how ECAs can respond to novel, intensifying, and interconnected risks while remaining steadfast in their support for trade and investment, and how deeper institutional partnerships can strengthen their capacity to do so.

Atsuo Kuroda, Chairman and CEO, NEXI

Geopolitical tensions and the imperatives of economic and supply chain security are reshaping global trade and investment. How is NEXI adapting its approach to risk assessment and underwriting? What factors and data points are you weighing more heavily as you assess longer-term country, supply chain, and project risks?

The operating environment for export credit agencies (ECAs) has changed significantly in recent years. Geopolitical tensions, economic security concerns, and supply chain disruptions have become increasingly interconnected, requiring us to assess risks from a broader perspective than in the past.

Companies are shifting their focus from the efficiency of ‘just in time’ to the resilience of ‘just in case’. NEXI is likewise placing greater emphasis on supply chain bottlenecks, the strategic importance of critical minerals and energy, and the potential long-term impact of geopolitical developments on individual projects.

Our role, however, is not simply to identify risks. The fundamental mission of an ECA is to facilitate trade and investment even in an uncertain environment. This requires us to work with other ECAs, multilateral development banks (MDBs), and private insurers to share risks and support projects that contribute to sustainable growth and more resilient supply chains.

Economic security has become a growing priority in Japan’s trade and industrial policy. When NEXI assesses projects involving strategic and emerging sectors, how does that affect the underwriting process? Are there areas where approaches to project viability, additionality, or risk appetite need to be adapted or updated to account for broader strategic objectives?

No country can achieve economic security alone. Critical minerals, advanced manufacturing, digital infrastructure, and the energy transition are strategically important to many countries, but their supply chains extend across national borders. Building resilience in these areas therefore requires international cooperation.

NEXI has supported supply chain resilience and industrial competitiveness through initiatives including the LEAD Initiative and the expansion of its domestic financing support. We have also contributed to POWERR Asia, a Government of Japan initiative aimed at strengthening energy and resource security across Asia.

Such projects are often large in scale and involve long investment horizons. Mobilising the financing and risk capacity they require therefore depends increasingly on closer collaboration among ECAs, MDBs, and private insurers, including through risk-sharing and the combination of their respective strengths.

As political and country risks become more volatile, and in some cases more difficult to quantify, how is NEXI adapting its approach to monitoring and managing these risks? Are you placing greater emphasis on scenario analysis, early warning indicators, or active risk mitigation after cover has been issued?

Geopolitical tensions, sanctions, regulatory changes, and cyber-related threats can emerge, spread, and evolve rapidly. Historical data and past experience alone are no longer sufficient to understand the risks we face today or those now emerging.

NEXI is therefore strengthening its underwriting and monitoring while deepening its understanding of developments in individual countries and markets through exchanges with other ECAs and MDBs. The role of ECAs is not to withdraw from a market merely because uncertainty has increased, but rather to detect emerging risks and continue supporting business activity.

No single institution can manage these risks on its own, so it is imperative that we strengthen our ability to respond to and assume risks appropriately by sharing knowledge, information, and risk capacity with other institutions.

NEXI has been deepening its cooperation with other ECAs, MDBs, and international financial institutions. Where do you see the greatest scope to take these partnerships further, whether through co-financing, reinsurance, or other forms of risk-sharing?

Since assuming my role as Chairman and CEO in 2019, I have placed strengthening international cooperation alongside expanding our customer base and enhancing the trade insurance system as one of NEXI’s principal management priorities.

NEXI has developed reinsurance cooperation with ECAs and private reinsurers, as well as with the Multilateral Investment Guarantee Agency (MIGA) in connection with agricultural and solar power projects in Africa.

We have also supported projects across Africa, the Middle East, and Asia through co-financing with institutions including the African Development Bank (AfDB), the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD), the International Finance Corporation (IFC), and the Islamic Development Bank (IsDB).

Our cooperation has taken a variety of forms. In Central Asia, we employed a financing structure under which the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) financed the down payment for a power project. Through two-step loan arrangements, we have worked with the African Export-Import Bank (Afreximbank) to support the stable procurement of COVID-19 vaccines and with the Eastern and Southern African Trade and Development Bank (TDB) to support the procurement of equipment for a geothermal power project.

More recently, NEXI established an innovative framework with the Inter-American Development Bank (IDB) under which NEXI provides insurance for IDB financing.

We have also built a particularly close relationship with the African Trade & Investment Development Insurance (ATIDI). In addition to transaction-level cooperation, NEXI has invested in ATIDI and exchanged secondees to deepen mutual understanding between our institutions.

Regional frameworks provide another avenue for cooperation. The Berne Union’s Regional Cooperation Group (RCG) brings together ECAs from Asia and Oceania to exchange knowledge and discuss common challenges.

Cooperation cannot be sustained by establishing frameworks alone. It must be underpinned by mutual understanding, trust, and long-term institutional relationships. The Berne Union provides a uniquely valuable platform for bringing together diverse institutions and building the trust from which practical cooperation can emerge.

NEXI has also been expanding its partnerships in Africa, Latin America, and other emerging markets. Where do you see the most promising opportunities for Japanese trade and investment over the next several years, and what will be needed to turn those opportunities into bankable projects?

Africa, Latin America, and other emerging markets will become increasingly important to global economic growth.

In Africa, population growth and urbanisation are creating substantial demand for power, transportation, water, and digital infrastructure. NEXI has strengthened its relationships with AfDB and ATIDI, whose local knowledge and strong networks with governments across the region make them invaluable partners for Japanese companies.

In Latin America, we are deepening our cooperation with IDB. In markets geographically distant from Japan, collaboration with institutions possessing regional expertise and networks can enhance the bankability of projects.

When Berne Union members gather in Tokyo in November, which issues do you think most need practical, in-depth discussion between institutions? Are there particular areas where you would like to see the Annual General Meeting move the industry towards greater coordination or a more common approach?

The challenges confronting the world, including geopolitical risk, economic security, technological transformation, climate change, and development needs, are becoming both more serious and more complex.

What I most hope we will discuss in Tokyo, however, is not merely the challenges themselves, but how we can address them together.

As noted earlier, I have consistently sought to deepen NEXI’s international cooperation since assuming my role as Chairman and CEO in 2019. Alongside closer partnerships with institutions around the world, a NEXI representative assumed the Presidency of the Berne Union for the first time in twenty years. Hosting the Annual General Meeting in Japan for the first time in thirty years is, in many respects, a culmination of these efforts.

As we expand the scope and functions of trade insurance, we inevitably encounter difficulties, whether in addressing new risks or extending support into new areas. Yet dialogue with other ECAs, MDBs, and private insurers reminds us that many of these challenges are shared. It also exposes us to perspectives that we may not have developed on our own. International cooperation provides us with valuable insights and opportunities to learn.

For more than ninety years, the Berne Union has provided a forum for trust and dialogue. Practical cooperation, whether through co-financing, reinsurance, or personnel exchanges, ultimately grows out of trust built through face-to-face relationships.

I hope the Tokyo meeting will be more than a conference. I hope it will create encounters that lead to future partnerships and new transactions. Shared prosperity cannot be achieved by any one institution alone. It requires institutions with different strengths to work together and co-create solutions to our common challenges.