Greetings!
We begin 2013 with our continuing update on points of interest in our world, which happens to be largely your world too. During the last year we were starting work on the platform for a business component that works hand in glove with the trade finance business. We refer to the ability to combine finance with providing products for which there is continuing demand in many parts of the world.
We are as aware of Alibaba and similar websites as the next internet citizen, and we’ve been skeptical of the credibility of many of the people who hawk their wares out there. Knowing this, we have confined ourselves to the finance side until we came in direct touch with reliable suppliers. We also recognize that there is an ethical requirement not to bypass the very people who are actively engaged in trade. Our solution has been to align ourselves with client partners who could help us provide the very products that many who read our comments will want to import for themselves.
Funding a Deal
We are sometimes surprised by client expectations of finance.
As you must know, no new parent ever has an ugly baby. And likewise, no prospective client ever has an unfinanceable deal, at least in their eyes. You, dear reader, would be surprised to learn that sometimes a client who can’t put up
any capital to secure the supplier will still conclude that the finance is at fault.
It works like this: the deal has to fit the available finance, not the other way around. Our contribution is, slowly but surely, to find or develop finance structures so that we can assist more clients in completing their transactions.
Last Mile Finance for Mining Deals
One of the gaping holes in the finance world is the gap between where miners bring ore to a secure location, but there’s still further transport needed to the port so that cargo can be loaded and the LC for payment can be cashed. We now have a partner who can provide this type of finance, subject, as always, to a bit of structuring of the deal to fit, and a credit-worthy end buyer or payment instrument. This is actually similar to the needs of many in the agricultural community as well, and we may be able to entertain similar needs in that marketplace. When the transaction is a bit more complex, conditions have to be just right for the deal to be funded.
The same process may lend itself to agricultural transactions if there is a secure collateral management system in place.
Sourcing Capabilities
Our ability to source directly has been increasing over recent months, aided by a working partner in the UK with extensive food industry contacts in Europe and Asia.
Products of interest for our African clients include rice, top brand name liquors, milk powder (available soon — indicate interest if you like). We also have contacts for various vegetable oils.
Non-food offerings include jute bags, used all over Africa for agricultural exports, and cement, where we have reliable supply from Vietnam.
Please note that for some products, purchase will require either an LC or in some cases, 30% deposit with the 70% remaining due upon sight of copies of shipping documents. We’ll review finance requirements on a case by case basis with you.
We’re not far from having a web link for product offerings; that will be one of our next projects.
Meanwhile, get in touch if we can help, either with your trade finance requirements, or with product sourcing.
Written by,
Doug Friedenberg