Stanbic explores trade finance challenges 

SHARE   |   Monday, 12 June 2017   |   By Kabelo Adamson

Africa is not conducting much business within itself, with majority of goods either coming in or outside the continent. This is according to Thendo Mulaudzi, a Regional Product Manager for Southern and Central Africa at Standard Bank. Mulaudzi was speaking at a trade finance workshop organised by the bank in Gaborone on Friday morning. He said it is high time movements of goods is seen in the continent with countries doing business among themselves as opposed to what is currently happening as most goods are destined outside while the bulk that gets in is from outside the continent as well. Botswana’s major exports, beef and diamonds, are mostly shipped to Europe and Asia and others parts of the world but little goes to other African markets. He said the largest consumer of Botswana exports is Belgium while South Africa and Namibia make up 76 percent of Botswana imports. Mulaudzi also said the number of goods coming into Botswana is also decreasing. The conference which was attended by the bank’s key clients, potential and other stakeholders was meant to raise awareness on trade finance, focusing on the risks it addresses and benefits offered.

Trade finance is described as the facilitation or financing of goods or services between trading parties and such facilitation is in the form of guarantees of Letters of Credit. Trade finance solutions are said to predominantly mitigate performance and financial risks, and obligations are assumed by the bank in trade finance and reflects the sales and payment cycle and improves working capital. Trade finance in the context of Botswana is said to predominantly promote the use of bonds and guarantees while letters of credit have been issued only when an international supplier requires it. Standard Bank Regional Head, Transactional Products and Services, Muzi Nkosi  said it has been established that 80 percent of jobs or projects being issued by government of Botswana do not always serve in favour of the of Botswana and that trade finance instruments are not always employed to favour all parties. He therefore said there is an avenue to explore and develop more prudent and beneficial terms and solutions. Nkosi said the bank is structured and organised to deliver bespoke solutions in power and infrastructure, mining and metals, telecommunications, oil and gas and Fast Moving Consumer Goods (FMCG). Trade finance is said to offer a number of benefits such as credibility, performance, self-liquidating and efficiency among others.