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International Credit Credentials Grow

Over the past several years, the increase in the number of international credit credential holders has outpaced the growth of those professionals seeking domestic designations.

Nearly a quarter of the 9,000-plus credentials currently held by NACM and FCIB members are global designations. That’s a significant number given that the international program is just more than 10 years old, points out NACM President Robin Schauseil, CAE. The gain in international credentials signifies a need for programs with a global focus, she added.

Credit professionals who are interested in learning more about global credit and collections can also earn FCIB’s Certified International Credit Professional (CICP) designation by successfully completing the association’s International Credit & Risk Management online course.

Key takeaways from the program range from obtaining techniques for managing international credit to sharing real-life global credit experiences among participants to gaining insight into the international sales cycle.

Several students, who recently completed the fall session and earned the CICP, cited various reasons for taking the 13-week class. “It provides a good perspective on the credit risk management that we need to observe,” said Salomon Lopez, a credit and collections manager for Puma Energy in Santa Tecla, El Salvador. The course provides variables “that we usually miss,” he added. Lopez noted he has gained new techniques and tools for evaluating his credit and collection process.

“While the course starts with basic credit knowledge, it details many relevant topics that are good for any credit professional of any level to learn and mull on,” shared Ravi Mirchandani, a senior credit analyst for World Fuel Services Corporation in Miami, FL. “I would recommend that every credit professional take the class.”

The course goes into “detail about what you need to know in a credit and collection role," said Alfredo Funes, senior accounting associate for Welch Allyn in Tijuana, Mexico. The 13-week time commitment “will pay out significantly in the near future,” he added.

Lopez shared that taking the course was a company requirement, while Mirchandani said he sought to further his professional development and Funes explained that his boss encouraged him to take the class. “He is always looking for courses, webinars, classes, newsletters—any information that could help us to become better at what we do every day,” Funes said. Andrea Barney, of CED in Houston, TX, took the class under the direction of her mentor and division credit manager, who previously had taken it and earned the CICP. “She told me that this class would provide valuable knowledge and insight into the credit management world.”

The course gave Barney “a deeper understanding for international credit and its many processes,” she said. “The CICP course introduced me to a myriad of information that I had no clue about, and I look forward to using my newfound knowledge in future credit-making decisions.”

Similar to Mirchandani, Barney recommends that credit professionals who are “looking to move forward in their credit career” take the course. "The CICP course was important for me and my need to be the best person, credit manager and leader that I can possibly be,” she said.

The online, instructor-led class attracts credit professionals with diverse backgrounds and professional experiences worldwide. Students should expect to spend about five to seven hours a week on coursework, but the program provides flexibility to work with credit professionals’ day-to-day schedules. It covers 12 modules—one a week—and includes weekly assignments and short quizzes. The instructor provides guidance, and there are plenty of opportunities to learn from other students via discussion board activities. The program culminates with the CICP certification exam, which is also taken online.

Click here to learn more about the next ICRM course, which starts Jan. 16.

Gambia Struggles to Emerge

Chris Kuehl, Ph.D.

This story is all too familiar in Africa: The despot that came to power in a military coup refuses to ever leave office, and this eventually triggers another coup or round of violence.

Gambia’s leader, Yahya Jammeh, took power in 1994 as a 29-year-old lieutenant. The coup had overthrown Dawda Jawara, who had been in power since 1970. Jammeh has been the country’s dictator ever since, although periodically he allows a mock election, which he subsequently ignores.

He asserts that he is devout Muslim, but the interpretations of Islam are his own. He had stated that he would step down if he was defeated in this last election and now he has changed his mind. He lost handily to a challenger who was once a security guard at a London retailer.

The country is the smallest in Africa and has very little to base an economy upon. Despite that, the policy pursued by the Jammeh government is to encourage a large population, and the average woman has five children.

The other states in the region have been pushing Jammeh to live up to his promise to leave power, but his last comment was “if Allah wills it, he will rule for a billion years.” Prospects for Gambia are bleak, and it lives entirely off aid from European states and other African regimes. That aid is now in jeopardy, but a cutoff has been threatened before and in the end the largesse keeps flowing.

A Look at China’s Yuan

Dr. Hans Belcsák

Default risks among companies in the People’s Republic of China are rising as the regime struggles to keep the yuan’s exchange market slide gradual. The authorities have taken a number of steps to slow the unit’s depreciation. They have issued new rules clamping down on overseas investments by Chinese companies. They have instructed banks to limit sharply how much companies, be they Chinese or foreign, may move out of the country into other operations they have around the world. They have also used “moral suasion” to prevent money from leaving, urging people not to “blindly follow the crowd” in converting yuan to foreign currency. None of this has made much of a dent into the hemorrhage of capital that the country has been experiencing, a massive net outflow through both hot money and foreign-direct-investment pipelines, which totaled USD 530 billion in the first 10 months of last year and nearly USD 70 billion in November.

The reasons for the exodus are varied, but at least in part include the relative softness of the economy. Growth appears to have steadied in November, judging from industrial output, investment and retail sales reports, and may have reached the official target of 6.5%-7.0% for all of 2016. Chinese statistics being what they are, however, this is not saying much, the less so as it took a flood of money from the Central Bank for lending and massive government spending on infrastructure to reach the marker. Room for further stimulus is now quite limited, on the monetary as well as the fiscal side. Overcapacity in many sectors is putting downward pressure on the prices companies can charge. Wages keep rising and even among better-managed entities, profits are stagnant. Many state firms are losing money. Beijing has already started to snug up its monetary policy in response to growing worries about asset bubbles and rising corporate debt levels. It will probably have to get tougher on this score, now that the U.S. Federal Reserve has opted for higher interest rates. If so, this will further hinder economic growth without halting the capital flight, which is being fueled—in addition to slack economic activity, the pile-up of company debt and the recurring asset price bubbles—by President Xi Jinping’s anticorruption drive.

Debt Mountain
China’s corporate debt mountain now stands at more than 250% of gross domestic product (it was 125% as recently as 2008), and more and more enterprises are relying on the short-term money market to raise the finance needed to service their obligations. So, even minor increases in short-term interest rates will squeeze corporate activity and precipitate defaults. Against this backdrop, the global strength of the U.S. dollar and the slow, grinding depreciation of the yuan give companies and individuals one more reason to move money out of the country. Granted, against a trade-weighted set of currencies, the renminbi’s slide has not been overly dramatic so far, but most people focus on the dollar exchange rate and this is close to an eight-year low, down about 13% from its peak in January.

No Good Options
It is difficult to see what the authorities should, or could, do under these circumstances. Some in Beijing suggest a large, formal one-shot devaluation or even a free float to reset the exchange rate at a level that is generally viewed as cheap. But such a policy would be fraught with grave risks. It would deal a devastating blow to the countless companies and banks with hefty dollar-denominated obligations on their shoulders, debts that would become much more difficult to service and could trigger a rash of defaults. It would cripple importers and local entities dependent on imported materials and parts. Because no one knows for sure at what level investors would feel reassured about the yuan’s valuation, a big debasement could easily over- or undershoot and threaten the whole country’s financial stability. It would also be politically explosive, considering U.S. President-elect Donald Trump’s often reiterated threats to label China a “currency manipulator” to be countered with punitive tariffs.

This would seem to leave as the only viable option continued Central Bank (CB) intervention to prop up the currency. Such intervention does not come cheap. The CB has been burning through hard-currency reserves on a huge scale. But even after a November drop by USD 69.1 billion, these assets still stood at a whopping USD 3.051 trillion, so the CB has plenty of fire power left. On the negative side, expectations of continued renminbi depreciation against the dollar and concerns about the cloudy outlook for the Chinese economy are undermining demand for the currency. Global use of the yuan is now shrinking, only a year after Beijing, in its internationalization drive, achieved its goal of having it admitted to the IMF’s reserve currency basket. The ultimate aim has been to make the renminbi a rival for the U.S. dollar. This campaign, which has all along looked like a long-shot proposition, has now been set back in a major way.

Global Roundup

Ukraine's largest bank rescued by state, Poroshenko urges depositors to stay calm. Ukraine took over its largest bank on Monday in a move backed by Kiev's international donors to protect the country's financial system and accompanied by an appeal from President Petro Poroshenko for calm and assurances to depositors. In one of the biggest shake-ups of the war-torn country's banking system, the central bank said PrivatBank had not fulfilled its recapitalization program. Risky lending practices had left a capital shortfall of around $5.65 billion on PrivatBank's balance sheet as of Dec. 1. (Reuters)

Turkey: End of the Tulip Period? Turkey’s economy experienced several shocks during 2015 and 2016. Heightened political uncertainties, regional tensions, the U.S. rate hike process, the credit rating downgrade and domestic security issues have all resulted in lower tourism revenues, slower consumer demand, lower appetite from foreign and domestic investors, and weaker local currency. (Coface)

Italian banks and Greek debt: risks on rise in fragile eurozone. Overnight, the Italian parliament approved the creation of €20 billion bailout fund for its beleaguered banking sector after the apparent collapse of a €5 billion rescue plan for the country’s third-largest lender. In Greece, funding under the country’s third bailout since the financial crisis, a €86 billion eurozone rescue facility agreed in 2015, has been suspended. (Australian Business Review)

Under the radar: Venezuela divorces itself from reality. It may not have seemed possible, but Venezuela has managed to further torpedo its economy over the course of a single week as the government’s ham-fisted monetary policies wreak havoc. With the country battling shortages, debt, rapid inflation and economic collapse, the government has become increasingly disconnected from reality. The latest example came when Interior Minister Néstor Reverol announced that the government was removing its 100-bolivar notes from circulation. (Global Risk Insights)

India takes a step on the road to cashless economy. It was a move that could have brought India’s economy to a shuddering halt. Indeed, the seemingly endless queues outside banks, and the difficulty of spending cash at shops and stalls may have seemed like it did. But the decision to demonetize the 500- and 1,000-rupee notes was just one in a series of moves that will push India toward a digital economy. (EconoTimes)

Are U.K. exporters benefiting from Brexit? In the months leading up to the Brexit referendum, there was a great deal of anticipation, albeit tinged with anxiety, as to whether or not the U.K. would be acting in its best interests in exiting the EU. However, once it was a done deal and a final exit was in the forecast, a cloud of uncertainty began to form, especially for SMEs that rely heavily on exporting to the EU. The question is, are exports benefiting from the impending exit or are they being harmed? (Global Trade Magazine)


Week in Review Editorial Team:
Diana Mota, Associate Editor and David Anderson, Member Relations