Weak currency helps grow export financing product

Due to an increasingly weak rand, Sasfin Bank has been “very successful” in expanding its export debtor finance product during 2013 and anticipates further expansion this year. “The weak rand has created great export opportunities for the local market, particularly for the fruit and wine industry into Europe and consumables into the rest of Africa,” says Arno van Niekerk, national sales manager: trade finance at Sasfin Bank. “There is a growing realisation that debtor financing is not only used as a means of resolving cash-flow challenges but can be used to promote exports and grow the exporting arm of a business when traditional financing vehicles cannot assist,” he said. The lead-up to the elections, ongoing strike threats, general emerging market weakness and the tapering of the quantitative easing programme of the US Federal Reserve mean that the rand will continue to perform badly against other foreign currencies, he predicts. Van Niekerk says Sasfin’s export factoring products allow businesses to concentrate on increasing their export sales with confidence, knowing they have the backing they need, as it ensures that cash flow keeps pace with export sales. “The product also provides access to Sasfin’s credit control expertise to help collect debts effectively and efficiently,” he comments. He told FTW that what makes it attractive for the client is that the entire funding cycle is facilitated in the foreign currency. “Another benefit is that the interest rate is lower than a conventional South African prime-linked interest rate because it is linked to the London inter-bank official rate (LIBOR) interest rate,” he said. The bank has an export factoring focus in the Western Cape’s fruit and wine industries’ exports into European markets, as well as mining and engineering consumable supplies from Gauteng into Africa, he added. “There is huge export growth potential in Africa, especially within the mining, infrastructure and agricultural sectors.” INSERT & CAPTION The weak rand has created great export opportunities. – Arno Van Niekerk