Calculate the full cost of opening and using a Letter of Credit for African trade. See issuance, confirmation, SWIFT, margin deposit, and more — broken down by country.
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A Letter of Credit (LC) is a payment guarantee issued by a bank on behalf of an importer (buyer) to a supplier (seller). The bank promises to pay the seller once specific documents are presented — typically a Bill of Lading, Commercial Invoice, and Packing List that match the LC terms exactly.
In Africa, LCs are the dominant trade finance instrument for international imports, especially from China, Europe, India, and Turkey. They are required by most central banks when importing above certain thresholds (e.g., Nigeria's CBN requires Form M and bank-domiciled LCs for imports over $100).
A second (confirming) bank — usually in the seller's country — adds its own payment guarantee. The seller gets paid by the local bank even if the issuing bank fails. Higher cost but more secure for the supplier.
Only the issuing bank (buyer's bank in Africa) guarantees payment. Lower cost but the seller relies solely on the issuing bank's creditworthiness. Suitable for reputable banks and trusted relationships.