Informal lending market relieves the pressure for shippers

Gaining access to trade finance
through the normal banking
environments remains one of
industry’s biggest stumbling
blocks.
According to Charl du
Toit, managing director of
Ziegler South Africa, which
incorporates InHouse Ziegler,
the informal trade finance
lending market offered by some
clearing and forwarding agents
has played a significant role in
addressing this challenge as it
allows shippers to access trade
finance on a more efficient and
less onerous basis – thereby
relieving the pressure of
pledging tangible security
which is usually required by the
banks in addition to various
other strenuous requirements.
“Traditionally, trade finance
product offerings were the
domain of larger banking
institutions,” he said.
But this has changed
significantly due to the
challenges many shippers
face in accessing the finance
– particularly on account of
the increased focus on risk
following the global economic
meltdown several years ago.
“Even in the informal lending
environment, hedging your risk
is critical,” said Du Toit. “Even
though our lending criteria
are much lower than those
of the commercial banks, we
still conduct thorough credit
and risk assessments on our
borrowers.”
Political and economic
uncertainty severely affected
shippers and the companies
and consumers to which
they supplied their products,
explained Du Toit.
“Therefore, the end user’s
inability to consume affects
the borrower’s ability to service
their debt. But we have also
seen many shippers finding
innovative ways to re-engineer
their business models and still
remain very profitable.
“All they need is the money to
help them make it a reality and
at Ziegler we are always looking
to assist shippers who require
our much-needed support to
grow their businesses.”
Du Toit told FTW he was
extremely positive about the
coming year.
“Our economy was
under tremendous
pressure last year due
to various elements and
external factors. The IMF
forecasting is still relatively
low; however we are
predicting positive growth
in 2017 compared to 2016,”
he said. “Cash-strapped
shippers who are looking
to capitalise on this growth
will be happy to know
that trade finance is going
to greatly assist them in
turning prospective clients
into actual sales.”