Currency liquidity risks play key role in Africa trade

Know the export destination,
and know your debtor’. That’s
the single golden rule for
exporters, particularly when
trading into Africa.
“Africa is a good export
market,” says national sales
manager, business finance at
Sasfin Bank, Arno van Niekerk.
“But some African countries
are short of hard currency – US
dollars – in the wake of lower
commodity prices. Therefore,
there are currency liquidity
risks when dealing with some
of these countries.”
Exporters therefore need
to differentiate between a
commercial risk where the
buyer fails to pay and economic
risk where the forex to make
payments is simply not
available, he cautions. “The
companies that exporters
deal with may be financially
stable and able to meet their
payment obligations. However
the global economic challenges
faced by different countries
have led to shortages of forex.
Governments are prioritising
their forex expenditure and
therefore forex used to settle
debts may not always be
available,” he adds.
Knowing your debtor is
therefore not enough. The
company may be well known
with established offices and a
good payment
record, but
this could all
be trumped by
a shortage of
forex, which is
an economic
risk over which
the exporter
has no control.
According
to Van
Niekerk,
Sasfin Bank
is involved
in export
finance for
a number of
clients exporting into Europe,
the US, UK and some select
African countries.
Sasfin recently sold 70%
of Sasfin Premier Logistics
to Imperial Group to form
Imperial Sasfin Logistics
(ISL). “As a
consequence
of the move
we are now
able to assist
clients in both
imports and
exports. We
are able to
assist with the
full logistical
process,
providing a
single entry
point for
clients from
a freight,
logistics and
finance perspective,” he says.
Van Niekerk believes this
is particularly relevant as
South African companies
increasingly combine
imports and exports within
their business models. “For
example, an increasing
number of South
African companies
are importing goods
from around the
world – finished
goods, components
and raw materials.
In some cases
they assemble
or manufacture
goods for export.
“The export
markets are
usually into
Africa and this
means that clients
have to make sure
that the f low of
funds is secure,” Van
Niekerk adds.
INSERT & CAPTION
Governments are
prioritising their
forex expenditure
and therefore forex
used to settle debts
may not always be
available.
– Arno van Niekerk