Trade Credit insurance: A critical safety net for South Africa’s businesses

Published Date: 10/02/2025
Source: By Abdul Vally, CEO of Coface South Africa

---

When South Africa went into lockdown in 2020, few could predict the full economic fallout. Businesses shuttered, supply chains froze, and cash flow dried up. Yet, amid the turbulence, one industry quietly kept companies afloat: trade credit insurance.

 

Across the market, insurers paid out between R1.5 billion and R2 billion in claims, ensuring that businesses had the cash flow to survive. Many of the companies supported during that time are still around today because credit insurers stood by them. In an economy without government-backed reinsurance schemes like those in Europe, that safety net was vital.

 

As we go through another period of economic strain — with slow growth and rising business rescues dominating the headlines — trade credit insurance is once again proving its relevance. For South African businesses, particularly SMEs, protecting cash flow has never been more important.

 

Why trade credit insurance matters now

 

Trade credit insurance is one of the least understood financial tools in South Africa. It protects businesses against the risk of non-payment by customers — a risk that is rising as margins tighten and companies burn through reserves.

 

This protection is not just for large corporates. In fact, SMEs are often the most exposed to late payments and defaults, yet they rarely have the buffers to recover from them. Credit insurance gives them the confidence to extend terms, grow into new markets, and invest in expansion, knowing their cash flow is protected.

 

The problem? Few graduates or business leaders even know the industry exists. As an industry, we must do better at raising awareness — not just to attract talent, but to ensure that businesses of all sizes understand the value of this tool in managing risk.

 

Building resilience through infrastructure and SME support

 

The broader question, however, is: what will it take to turn South Africa’s economy around?

The answer lies in infrastructure spending. Meaningful investment in energy, logistics, and transport would create jobs, drive demand, and restore business confidence. Once confidence returns, companies will begin investing again rather than sitting on cash reserves. Foreign direct investment will follow.

 

Equally important is making it easier to start and grow businesses. In other countries, registering a business can take less than a day. In South Africa, it often drags on for months. Add restrictive labour laws and complex compliance burdens, and it’s no surprise that entrepreneurs hesitate. Yet, SMEs are the lifeblood of our economy — and if they succeed, so does South Africa.

 

Coface’s role in shaping the future

 

Coface has been in South Africa for 20 years, and globally for over 80 years. Our mission is clear: to help businesses navigate uncertainty with confidence. Through our global strategy, Power the Core, we are evolving from a credit insurer to a credit management partner — combining risk protection with business intelligence, data-driven insights, and collections solutions.

 

For South Africa, the opportunity is to innovate for local SMEs. If we can build tailored products that meet their unique challenges, these solutions can be replicated across other emerging markets, from Turkey to Chile. In this way, South Africa can lead innovation within the Coface group, not just follow it.

 

Technology and artificial intelligence will also transform risk management, but AI is only as effective as the data it receives. That’s why building and maintaining robust local databases of businesses is a priority for us. The better our information, the stronger the protection we can offer.

 

A long-term vision for South Africa

 

At Coface, our vision is to be the best in the market — the most trusted partner for businesses navigating credit risk. What sets us apart is consistency: our strategy does not change with leadership. Instead, we build steadily, combining global systems and expertise with local innovation and insight.

 

For businesses in South Africa, trade credit insurance should not be seen as a last resort. It should be recognised as an essential part of building resilience, protecting jobs, and enabling growth. The lessons of 2020 proved this beyond doubt. Now is the time to ensure more businesses — especially SMEs — understand the power of this tool.

 

About Abdul Vally

 

Abdul Vally is the CEO and Country Manager of Coface South Africa, appointed in July 2025. With over 29 years of experience in trade credit insurance, Abdul has held leadership roles across underwriting, sales, bonds, surety, and portfolio management. He holds a Management Advancement Program (MAP) qualification from Wits Business School and a General Management Program (GMP) from GIBS Business School. Abdul is passionate about SME product innovation and building solutions that strengthen South Africa’s economic resilience.