ABSTRACT
Pre-export finance is a type of finance product specifically aimed at commodities producers, including agricultural exporters. The reasoning behind these facilities is so that it can make the underlying producer a credible partner to finance; so that the product is available. The world of trade finance is about to change, and agricultural trade is set to be a major potential beneficiary. Existing trade finance contracts are typically loaded with optionality, frequently linked to information provision, and agricultural trade finance is no exception. Banks operating in international agricultural trade, such as Stanbic, issue irrevocable reimbursement undertakings, which can be used as security when the nominated confirming/negotiating bank engages itself to Stanbic’s customer’s letter of credit. Banks like Stanbic can reissue guarantees against a correspondent bank’s counter-guarantee through a central gateway. Customers can either register as an authorised user of the programme or use it on an ad hoc basis.
