Stanbic IBTC Bank Plc The 2nd African Trade

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Stanbic IBTC Bank Plc The 2nd African Trade
Transport Seminar Todays Reality, Tomorrow s
Potential Trade Opportunities And
Financing Trade To/From Africa Oluwande
Muoyo Head Global Transactional
Banking, Stanbic IBTC Bank Plc
08 July 2008
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Outline

• Introduction
• Trade Activities of Nigeria, South Africa
• Trade Opportunities and Drivers
• Minerals and Natural Resources - Key Drivers of
  Trade Opportunities
• China and Africa Trade Focus on Trade Flows
• Africas Efforts Towards a Friendlier Trade
  Environment
• Trade Solutions
• Standard Bank Trade Finance Services

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Introduction

• International trade involves the flow of goods
  from seller to buyer in accordance with the
  contract of sale and subsequently, the flow of
  payment from buyer to seller.
• International trade has been an engine of
  economic and political growth in many economies.
• Many countries in Africa have recognised the
  importance of trade to economic growth and have
  introduced measures to liberalise and facilitate
  trade.

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Trade Activities of Nigeria South Africa

• Nigeria
• Oil, Agricultural products, Finished goods,
  machinery
• The United States leading trade partner in
  Africa
• High potential for significant growth
• South Africa
• Accounts for the most diverse trade flows in
  Africa
• Is one of the United States' leading trading
  partners in Africa
• A leading exporter to the rest of Africa

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Nigeria trade position (2007)
Source Economist Intelligence Unit
Strictly Private Confidential
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US Trade with Nigeria

• Nigeria is the largest African trade partner with
  the U.S
• Main export is energy related products ( mainly
  oil and natural gas)
• Imports of finished goods
• expanding but still small compared to exports
  to the US

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US Trade with South Africa

• South Africa is a leading US partner in Africa
  and accounts for the most diverse trade flows.
• U.S. exports to South Africa far exceed US
  exports to any other country from Sub-Saharan
  Africa.
• Exports rank second after those of Nigeria, with
  Gabons exports being in third position.

Strictly Private Confidential
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Trade Opportunities In Africa

• Significant growth in minerals and natural
  resources
• Bridging the infrastructure gap roads, bridges,
  telecommunications
• Increased focus of the BRIC countries
  (particularly China)
• Improving African trade/business environment

Strictly Private Confidential
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Minerals and Natural Resources Key Drivers of
Trade in Africa
Mineral resources in Africa

• Africa hosts approximately 30 of the worlds
  mineral resources
• Africa is an important producer of commodities
  needed to fuel world growth
• Africa has the potential to be a strategic
  exporter of commodities for the foreseeable
  future
• Africa is relatively under-explored and
  under-exploited with South Africa being the
  exception
• Bulk commodity mining is now starting to ramp up

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China and Africa Trade Focus on Trade Flows
Out of Asia and into Africa
Capital Goods

• Telecoms, mining/industrial/earth moving
  machinery, power generation, vehicles (passenger,
  commercial and yellow)

Agri Products

• Rice and wheat

Consumer Goods

• Electronic equipment/white goods

Oil

• Refined products

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China and Africa Trade Focus on Trade Flows(2)
Out of Africa and into Asia
Oil and Gas

• Crude oil

Minerals

• Copper, coal, chrome, iron ore, zinc, nickel,
  cobalt, platinum, gold

Softs

• Tobacco, cotton, sesame

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Africas Effort Towards a Friendlier
TradeEnvironment

• Focus on democracy and rule of law
• Increasing transparency and corruption
  eradication agenda being pursued by many
  Governments.
• Consolidation and Re-Capitalisation in the
  banking industry (Nigeria)
• Port reforms
• Infrastructure Energy Power, Road network,
  telecommunication
• Macro-economic stability and better management of
  inflation and interest rates
• Relaxation on exchange control regulations
• Shift in use of mode of payment from
  Confirmed/Cash collaterised LCs to Unconfirmed
  LCs and Bills for collection

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Trade Finance

• Trade finance
• Includes the finance of specific goods and
  services (generally, but not exclusively) across
  borders.
• Considered by banks to be less risky compared to
  general working capital facilities for the
  following reasons
• The finance is transaction specific
• offers better control end to end
• Clients do not usually default
• Parties other than the borrower are also involved
  and the probability of all of them defaulting
  simultaneously is low.
• considered self securing and self liquidating.
•  

Strictly Private Confidential
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Some Trade Solutions

• Letters Of Credit (LC).
• Bills for Collection
• Advance Payment
• Open Account
• Specialised Structuring
• (e.g.Oil LCs , large transactions)

Strictly Private Confidential
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Trade Products characteristics and features
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Trade Products characteristics and features
Overview of Bill For Collection Mechanics
(1) Sales Contract
(2) Goods/Services
Exporter
Importer
(5) Sends Draft/ Notice Of Pyt Due Date
(6) Accepts Draft/ Instruction To Pay
(7) Release Documents
(9)
Payment
(3) Documents
Advising and/or
Importers
(8
)
Payment
Confirming
Bank
Bank
(4)
Documents
Strictly Private Confidential
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Trade Finance Services Standard Bank

• Import Documentary Letters of Credit
• Export Documentary Letters of Credit
• Import LC Refinance Loans
• Export LC Discounting
• Standby Letters of Credit
• Import and Export Documentary Collections
• Guarantees, Bonds and Indemnities
• Back to Back Transactions
• Structured Trade Finance

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Thank You