Outgoing group managing director of United Bank for Africa (UBA) is predicting that more letter of credit (L/C) business will be written entirely in Africa.

Phillips Oduoza also reckons UBA is well placed to initiate and complete L/C transactions across the continent.

African gains

During a valedictory lecture organised by the Chartered Institute of Bankers of Nigeria in his honour, Oduoza said the lender's African footprint and reach helps it write more intra-African L/Cs, which saves customers' time and resources.

He also sees Africa gaining L/C business from providers worldwide. "The current practice for an L/C confirmation is for it to be done outside Africa by European or US banks even if the companies consummating the trade both reside within the continent," he said.

Potential benefits

"This need not be so. It is my strong belief that business conducted across African borders can be efficiently financed by eliminating the extra cost incurred when L/Cs are confirmed outside the shores of the continent," he said.

Oduoza also reckons there will be efficiency gains if L/C transactions were processed entirely in Africa. It would, he says, take less time to confirm and negotiate L/Cs for customers in two African countries.

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