Babajide Komolafe
29 December 2008
Former Director, Trade and Exchange department, Central Bank of Nigeria (CBN), Mrs. Omolara Akanji has called on banks to be offensive in trade transactions.
Speaking at the Send-forth party organised in her honour by the Commission on Banking Technique and practice of the International Chamber of Commerce (ICC) Nigeria, Akanji noted that banks have a catalytic role to play in fostering international trade.
L - R: Dr Barth Ebong Group Managing Director/Chief Executive, Union Bank of Nigeria PLC, his wife, Jane, Dr Godwin Oboh, Chairman of Union Bank UK Plc, Mr Archer, former director at the Bank's Board Meeting Dinner held in London recently.
To play this, she stated, "Bankers must go on the offensive and stop treating a trade transaction as an abstract exercise just because the goods do not cross their counters! They must leave their desks and meet their customers. They must also learn more about their products, markets and foreign buyers. A well documented follow-up with the correspondent banker is a first step to lasting and rewarding banking relationships built on a steady trade flow.
To confirm a letter of credit, issue a payment guarantee or warrant, a transfer commitment from a foreign bank will then appear less risky than previously thought. In this way, the presumed "unbearable" export/import exposure becomes "bankable" as a risk sharing proposition to the benefit of all parties concerned. Additionally, improved pricing on the bank's "risk" commissions could add a competitive edge to the overall costs of the trade transaction."
In addition to been offensive in trade transactions, Akanji urged banks to speed up international payment transfers by ensuring compliance to the Foreign Exchange Rules.
"A situation where banks under-cut trade is detrimental to the country's risk rating". Any culprit must be brought to book by first reporting the issue at the Clearing House. Authorised dealers can enhance the transfer of convertible funds by actively monitoring cross-border trading patterns
We all know that international trade is a risky business, the banks at both ends of the trade transactions have to safeguard the interest of the exporters and importers. Effective support through payment instruments such as Letters of Credit, Bills of Exchange, and Documentary collections is a prerequisite to the unobstructed flow of goods and services. But all too often, one encounters the diligent bank officer or employee charging additional bank commissions for servicing trade transactions or enumerating an endless list of documentary discrepancies on a letter of credit - this could be a deterrent to your customers and thus inhibits trade flows.
A free trade or market economy can only function if those who supply goods and services are assured payment; and in return, those who pay receive goods and services. This seemingly obvious statement is the complexity that exists in international trade.
Again, the non-convertibility of a multitude of currencies in today's world market (NGN being one), still represents a serious impediment to the free flow of goods in international trades. Banks therefore are expected to play a catalytic role in helping to address the non-convertibility of the currency - and this will foster trade. Consequently, banks must be transparent, ensure integrity and probity."
Be the first to Write a Comment!
Copyright © 2008 Vanguard. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
