Sanctioning Apartheid - KORA

C Industrial plants, commercial jet aixmft, locomotives:
5 to 10 years2
Trade finance mn be provided by the supplier or by the
buyer direcCly involved in a transaction, or these parties can
bring in a bank kr play an intermem role.
Suppliers' and buyer credits are the most straightforward
examples of trade dts. For a suppIieis d t I an exporter
provides the finan~hipping the product and eoUecthg
payment with intenst hm the buyer at a later date. This time
lag allows for transport halfway across the globe in the case of
South Africa and giva the buyer an opporhmity to assemble the
payment money. Sales on open account itre a commonly used
farm of supplier's credit. Here a h, typicidly a large corporation,
ship goods to a subsidmy or a regular customer and
receives payment at a later date. In the case of a buyer's d t ,
the pudasa obtains the credit and pays the shipper M y .
Banks may paaidpate in suppliefs or buyer's d t s by
Iending a firm the funds which allow it to provide suppliers or
buyers d t s through a credit facility. B& can also pmchase
at a discount the paper held by firms which have provided
suppliers credits. This practice is known as forfaiting.
Banks play a direct role in other types of trade lending
through letters of d t , revolving credit facilities and other
mechanisms. Under such arrangements, a bank pays the
expo* at the time the goods are shipped and later collects
payment from the pmhser, in addition to a fee for its senrices.
Banks in the importing and/or exporting country can take a role
in such a transaction
The Role of Gmtem-t Trade Promatiots Agencies
Most industriaEized countries have government agenaes that
promote foreign trade by faditating trade finance. The structure
of these programs varies horn country to country. Some agencies
primarity h e privately armnged trade d t s against losses
arising from political turbulence artd commd risks. Most
countries offer both inamnce and actual trade finance. Table 1
provides a lists of these agencies for South &a's major trade
F-.