Barclays says it is experiencing a growing number of requests for letters of credit (L/Cs) in the Middle East and North Africa (MENA) region.

Demand has been stimulated by new markets opening up, while persistent concerns over creditworthiness means that sellers are insisting on guaranteed trade payments.

Credit concerns

According to Barclays' head of financial institutions for the MENA region, Sunil Rao, L/C business is brisk.

Rao told The National that he anticipates L/C business to grow when there is concern about creditworthiness.

He said Barclays had seen L/C business increase, according the report in the Abu Dhabi-based newspaper.

Constant volumes

However, the proportion of L/C transactions compared with transactions supported by other trade finance instruments has remained constant, according to Rao.

Trade volume in the Gulf Cooperation Council has grown significantly over recent months, according to the report.

African trade

As well as concerns over creditworthiness, another powerful driver of trade credit in the Gulf is trend for companies based there to explore new markets such as Africa.

Dubai Chamber of Commerce and Industry recently staged a huge conference promoting the Emirate as a financial and business hub for Gulf trade with Africa.

The chamber also plans to open several offices in Africa in the coming years to help boost Dubai exporters' sales on the continent.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.