24th February, 2012
The Cargo Defence Fund (CDF), a project of the Nigeria Shippers’ Council (NCS), for assisting importers and exporters in the pursuit of their claims recovery and legal remedies, has cautioned small-time exporters to take appropriate steps to formalise payment methods in their transactions with foreign buyers.
The CDF Secretary, Ms. Azuka Ogo, stated during a media chat in Lagos recently, that the fund was at the moment handling over 27 cases of unpaid proceeds of Nigerian exports due largely to breaches of trust on the part of the buyers.
According to her, the open account system of payment for international trade transactions, which the Nigerian exporters contracted, was one based solely on trust.
Under the arrangement, a buyer undertakes to pay 80 per cent of agreed cost of the product on the receipt of all shipping documents from the seller.
Ogo explained that the experience of many Nigerian charcoal and other commodity exporters had been that, as soon as the buyers receive the shipping documents and take delivery of the consignments, they renege on the agreed advance payments and balance of the total costs.
She advised all exporters, particularly those who are new to international trade transactions, to always insist on doing business with letters of credit, noting that, though it might be an additional transaction cost, it ultimately protects their investments and saves their business from collapse.
The CDF boss also advised that it was a necessary preliminary step for exporters to undertake due diligence to ascertain the credit rating of buyers, adding that the CDF was in a position to assist exporters in this regard.