A buyer in Rotterdam wants four hundred tonnes of Malian sesame. The exporter in Bamako will not load without payment. The buyer will not transfer two hundred thousand euros to a company he has never visited, in a country he has never been to, on the strength of photographs.

Both positions are rational. Both are correct. And the deal dies there — not because the goods do not exist, not because either party is dishonest, but because neither can afford to move first.

This deadlock kills more African trade than any logistical problem. The instrument that resolves it has existed for over a century, and it is still poorly understood by both sides.

What a documentary credit does

A letter of credit replaces the counterparty's promise with a bank's promise.

The buyer instructs their bank to issue a credit in favour of the seller. The bank undertakes to pay — not when the buyer is satisfied, but when the seller presents documents that comply with the terms of the credit. The buyer cannot decide to withhold payment because they changed their mind about the price.

The seller ships knowing a bank is committed. The buyer pays knowing the documents prove the goods were shipped as specified. Neither has to trust the other. That is the entire point.

The mechanism is governed by the UCP 600, a set of rules published by the International Chamber of Commerce and applied in the same way by banks worldwide. A dispute in Dakar is decided on the same rules as a dispute in Singapore.

Irrevocable and confirmed: two words that matter

Irrevocable means the credit cannot be amended or cancelled without the seller's agreement. Never accept a revocable credit. In practice they are almost extinct, but the word deserves checking.

Confirmed is the more important one for an African exporter. Confirmation means a second bank — usually in the seller's country or a major financial centre — adds its own undertaking alongside the issuing bank's.

Why it matters: without confirmation, the seller carries the risk of the issuing bank and of the buyer's country. If you are exporting from Bamako and the credit is issued by a bank you have never heard of, confirmation by a first-rate bank turns an uncertain promise into a certain one. It costs a fee. It is the cheapest insurance in the transaction.

What each document proves

The credit lists the documents that must be presented. Each exists to prove one specific thing.

The commercial invoice establishes what was sold and for how much. The description must match the credit word for word. Not equivalently — literally.

The bill of lading proves the goods were shipped, on which vessel, when. It is also a document of title: whoever holds the original controls the goods. This is why an original bill of lading released to the buyer before payment destroys the entire protection.

The insurance certificate covers the goods in transit, usually at 110 % of invoice value.

The certificate of origin establishes where the goods were produced, and determines any preferential duty at destination.

The inspection or quality certificate, issued by an independent body before shipment. For agricultural commodities this is the document that matters most: it is what stops a buyer receiving sesame at eight percent impurities when the contract said two.

The phytosanitary certificate for plant products, and any product-specific certification.

Why credits fail: discrepancies

Roughly half of first presentations under documentary credits are rejected. Almost never for fraud. Almost always for discrepancies — small mismatches between the documents and the credit terms.

The recurring ones: a goods description on the invoice that differs by a word from the credit; a presentation made after the expiry date or outside the presentation period; a shipment made after the latest shipment date; a partial shipment where the credit prohibited it; a bill of lading marked "received for shipment" where the credit required "shipped on board"; an insurance certificate for the wrong amount; a document missing a required signature.

When documents are discrepant, the bank is no longer obliged to pay. Payment becomes dependent on the buyer waiving the discrepancy — which returns you precisely to the trust problem the credit was meant to eliminate, except now the goods are already on a vessel.

The practical lesson: read the credit the day it is received, not the day you ship. If a term cannot be met — a delivery date that is impossible, a document that cannot be obtained — request an amendment immediately, before loading. Amendments before shipment are routine. After shipment, you are asking a favour.

Alternatives, and when they make sense

Documentary collection is cheaper. The bank forwards the documents against payment or acceptance, but does not guarantee anything. Reasonable between parties with a trading history. Not a substitute for a credit with a new counterparty.

Advance payment favours the seller absolutely, and no serious buyer will accept it in full on a first transaction. A partial advance — twenty to thirty percent — with the balance under a credit is a common and workable compromise.

Open account is normal between long-standing partners, and reckless otherwise.

Standby credits and bank guarantees cover performance rather than payment, and are common on equipment supply and project work.

The structure that unlocks these deals

There is a variant worth knowing, because it resolves the problem that stops most commodity trades: the intermediary who has the buyer and the supplier, but not the working capital to pay the supplier before the buyer pays.

A back-to-back arrangement uses the credit received from the buyer as the basis for issuing a second credit in favour of the supplier. The transaction finances itself. No party has to fund the goods out of its own balance sheet.

This is how a great deal of commodity trade out of West Africa is actually done, and it is the structure we work with when we buy goods on a client's behalf rather than simply moving them.

What we do

We are a freight forwarder, not a bank, and we do not give financial advice. What we do is make the documentary side work, because the documents a credit requires are largely the documents a shipment produces.

We arrange pre-shipment inspection by an independent body, obtain certificates of origin and phytosanitary certificates, prepare the shipping documents so that descriptions match the credit exactly, and control the timing so that presentation falls inside the period allowed.

And where a buyer wants a single counterparty rather than a chain of them, we buy the goods ourselves and deliver DDP. One contract, one price, one party accountable — which removes the trust problem instead of managing it.

Securing payment between Africa and abroad: letters of credit and what they actually protect