EDC’s big bets quietly paying off

It’s a shame we hear so little from Benoit Daignault, the low-profile chief executive of Export Development Canada (EDC); his agency’s year-end results suggest he’s having some success at coaxing Canadian exporters into being a little more adventurous.

EDC, the Crown corporation that has been backing international business since the end of Second World War, worked with 9,938 companies in 2017, the most to date, according to a summation of the agency’s annual report, which is set for release in early May.

That’s noteworthy because EDC tends to be busier in tougher times; when the economy is strong, as it was last year, companies generally seek the funding they need from private lenders.

The jump in the number of clients could reflect growing interest in doing business in places such as Asia and Latin America, adventures that could cause Canada’s risk-averse banks some pause. Some 60 per cent of the more than $100 billion in business EDC financed in 2017 occurred outside of the U.S., compared with about 40 per cent the previous year and about 45 per cent in 2015.

Maybe, just maybe, Canadian traders are starting to diversify their markets, which would please Daignault’s political master, Trade Minister François-Philippe Champagne.

Even before U.S. President Donald Trump started his campaign of import harassment, Prime Minister Justin Trudeau had said he wanted Canadian companies to be players in places other than North America.

Trudeau’s government completed a commercial agreement with the European Union; stuck with the Trans-Pacific Partnership after Trump quit the now 11-nation trade pact; and launched officials talks with with Mercosur, the South American trade alliance that includes Brazil, Argentina, Uruguay, and Paraguay. Trudeau also is exploring the free-trade agreement with China, although that effort appeared to stumble last year after Canada’s prime minister ended a visit to that country without an official announcement that negotiations would proceed.

There’s something else that may please the government, especially Finance Minister Bill Morneau: a dividend of nearly $1 billion, which represents profit from EDC’s various lending programs that is unneeded for operations.

A payment like that also should quiet those who portray the Crown corporation as a sinkhole for public money. Taxpayers would be on the hook if EDC went bankrupt, but there is little reason to think that will happen. It is structured to operate with its own capital, not contributions from the federal treasury, and it paid an average dividend of about $531 billion over the decade through 2017.

“Our aspiration is to help more companies than ever before go, grow and succeed internationally, and we’ll achieve this by using our own carefully managed capital base, not taxpayer dollars as is often assumed or misinterpreted,” Daignault said in a separate statement.

(Two press releases describing EDC’s annual results were provided to the Financial Post and other news outlets ahead of their official publication on April 4, but not the annual report itself. Daignault declined an interview request ahead of the release of the year-end figures.)

I talked to Daignault in the spring of 2014 for the Globe and Mail, not long after he was named chief executive, replacing Stephen Poloz, who had won the competition to takeover from Mark Carney as governor of the Bank of Canada. Daignault has shared his views publicly only a handful of times since, sticking with the communications strategy followed by Poloz, who also said little when he ran EDC.

That’s not unusual; rather, it’s convention. With the exception of Evan Siddall, the forthright head of Canada Mortgage and Housing Corp., the leaders of the federal government’s various arm’s length companies and agencies prefer to be neither seen nor heard, an approach that may keep them out of trouble, but robs the public of their insights. “Public servants often worry too much about the negative perception of what they would say,” Siddall told me in an interview for Maclean’s last year.

Daignault has a story to tell, as he seems to be doing his part to stop Canada’s share of global trade from continuing to shrink. The highlights package EDC released shows Daignault bet big on clean technology, backing companies in that industry with $1.5 billion in 2017. He also issued two green bonds worth a combined $1 billion, taking advantage of growing demand for such assets. He guaranteed export credit valued at $1.3 billion, the most ever.

Back in 2014, EDC was coming off some mediocre years as the Great Recession continued to weigh on business sentiment. Daignault told me he wanted to reach beyond the agency’s core clientele. He appears to have had some success at that without the aid of publicity.

Wonder what would happen if he tried to get some?

• Email:kcarmichael@nationalpost.com | Twitter: CarmichaelKevin