The head of a US e-commerce company providing international trade finance services is pressing US exporters to use pre-shipment finance backed by importers' letters of credit (L/Cs) when dealing with African buyers.

CEO of California-based InterNetLC, John Dunlop, said he would use a conference in Washington on doing business with the West African country of Cameroon to explain the benefits of the company's Export Transaction Financing programme (ETFP).

Pre-shipment finance

Under the ETFP, transactional short-term pre-shipment loans can be arranged for the beneficiaries of documentary L/Cs, according to a statement issued by the company.

InterNetLC.com's loans range from US$10,000 to US$10,000,000, with money advanced by the company's network of mainly US-based social lenders.

L/C advantages

Dunlop is expected to tell the Third Annual African Investment Corporation's Investment Forum on Projects and Finance for the Cameroon that L/C-based transactions can be better than other types of transactions for deals between US exporters and African buyers.

"Often Africans are bidding on-line for second-hand large ticket items, like bulldozers and construction equipment," Dunlop said before the conference.

Methods of payment

"PayPal, credit cards, the US Postal Service and trusting people isn't a system that can work for a large export item worth $200,000 plus freight," he added.

"A documentary L/C and an e-commerce service like InterNetLC.com provides a business framework for the transactions," he concluded.

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