Adbul Vally, CEO, Coface South Africa
For most small and medium enterprises across Africa, the biggest asset on the balance sheet is also the most neglected: the debtors book. It is the one thing a business owner never thinks to insure, until a major customer stops paying and the cash flow gap threatens the survival of the business itself. That blind spot is exactly where Coface South Africa, one of the continent’s leading trade credit insurers, has built its business.
Africa Insurance Magazine Editor Andrew Chinoperekwei sat down with Abdul Vally, CEO of Coface South Africa, for a wide-ranging conversation on how SMEs are defined and financed, why trade credit insurance remains misunderstood despite being remarkably affordable, and what it will take to build the skills pipeline the industry needs to expand across the continent. Vally, who has spent three decades in the trade credit insurance industry, offered a candid, practitioner’s view of the opportunities and the work still ahead.
Defining the SME market
Coface applies a single, consistent yardstick to define an SME across the markets it serves.
“We generally define SMEs purely by a South African standard. For us, an SME would be any business with under 100 million turnover. Over 100 million, we would consider that sort of a mid-market,” says Vally.
According to Vally, that definition, is applied uniformly rather than adjusted country by country. Within that SME universe, Vally sees demand for trade credit cover concentrated wherever the barriers to entry are lowest, fast-moving consumer goods, wholesale and import businesses, and increasingly, construction, as fixed capital investment slowly returns to South Africa. “For SMEs generally, the entry point needs to be less capital intensive,” he noted, pointing to the appeal of labour-intensive sectors over capital-heavy ones for entrepreneurs starting out.
Non-payment: the risk nobody insures
As highlighted by Vally on what keeps SME owners up at night: a handful of good customers who, sooner or later, fail to pay?
“Most SMEs, once they start up, get a couple of good customers, maybe five or six good, decent-sized customers. Their biggest risk is non-payment, because it’s the one asset that no one realizes they need to insure. It’s an asset on your balance sheet that has real value, and it will really damage your business if you lose it,” he said.
Coface’s role, he said, is to step in the moment a payment is overdue, using the insurer’s standing in the market as leverage. “It’s almost like we have a big stick,” Vally said, describing how a call from a trade credit insurer often prompts faster settlement than a call from the supplier alone. Where a debtor is genuinely unable to pay, the policy pays out, protecting the SME’s cash flow. Beyond claims and collections, an insured debtors book also unlocks financing: banks lend more readily against receivables that carry cover, giving asset-light SMEs, which typically hold little more than stock and debtors, a credible path to growth capital.
Changing the Perception of a ‘complex’ product
Despite the value on offer, Vally acknowledged an industry problem: SMEs often see trade credit insurance as costly and complicated. “I used to always compare the cost of insuring your car versus the cost of insuring your debtors. Everyone seems to think it would be a lot more expensive, but it’s not. On a turnover of 100 million, you’re looking at maybe five to ten thousand a month. It’s not that expensive,” says Vally.
To simplify the experience itself, Coface has rolled out its Easy Liner product globally, an offering designed around a straightforward workflow: request a credit limit, get it approved, trade, and submit a claim if the customer defaults. Vally also stressed that Coface absorbs the hard parts of a claim on the client’s behalf, in-house collections, legal escalation where necessary, and representation at liquidation hearings, covering the full amount outstanding rather than only the insured portion. “While it seems complicated, it’s actually less complicated,” he said, “because when you’re not insured, you have to worry about all of those things yourself.” Fixing the perception gap, he argued, will take sustained industry-wide education: showing up at SME conferences, forums, and informal trading hubs to demystify the product rather than simply advertising it.
Planting the seed: building the industry’s talent pipeline
Vally is equally candid about the skills gap facing trade credit insurance, an industry so niche that most professionals, including himself, only find their way into it by accident.
“I myself ended up in this industry by pure accident. I didn’t leave school thinking I want to go into credit insurance. It just so happened I met someone playing soccer one day, and that was thirty years ago.”
His prescription is to start engaging students long before graduation, through university career days, a practice he believes the industry has largely abandoned. “You’ve planted the seed of what trade credit insurance is in their minds,” he said, describing how a founder who once heard about credit insurance as a student may return to it years later when their own debtors book is at risk. He was equally frank that formal courses can only go so far: in his estimation, it takes at least five years on the job to develop real instinct for the business. “We don’t just offer a job in this industry,” he said, “we offer a career.”
Growth strategy: distribution, partnerships, and Africa’s next frontiers
Looking ahead, Vally’s priorities centre on getting an already strong SME product into more hands, primarily through partnerships with banks and brokers rather than direct advertising.
“If Andrew said to me, ‘Abdul, have you considered insuring your customers?’ I would take it seriously. That’s why we need to get to as many potential partners in South Africa to distribute our product. Distribution is key.”
Coface also differentiates itself, Vally said, through an internal scoring system that lets clients assess the quality of their own debtors book by industry and customer risk, a transparency tool he believes no other insurer in the market currently offers. With SMEs contributing an estimated 25 to 30% of South Africa’s GDP, and by his estimate fewer than 10% of them currently insuring their books, Vally sees enormous headroom for growth locally before expanding further into East Africa, starting with Tanzania, Uganda, and Kenya.
On expanding into new African markets, Vally was clear that partnerships alone will not substitute for local, on-the-ground underwriting expertise. “You need someone that understands both the trade credit insurance market and the local market,” he said, arguing that fronting arrangements with local partners have not worked for Coface in the past. “The only way to actually do that is to be a ground-up insurer.”
Closing thought
Three decades into a career he stumbled into, Vally remains energised by an industry he describes as endlessly varied, one day a steel company, the next a food producer, the next a construction firm. “I’m constantly learning,” he said. “And this is at the age of 51, I’m still learning.” For Africa’s SMEs, his message is straightforward: the risk of non-payment is real and insurable, the cost of protection is lower than assumed, and the businesses that manage that risk well are the ones best placed to grow.