Letters of Credit for Africa Exporters: LCs and ECAs (2026)

When an African buyer you have not met before places a large order, you want to be sure of payment before you load the container, and the buyer wants to be sure you will ship what was agreed. A documentary credit, commonly called a letter of credit or LC, is the traditional tool for both. This guide to letters of credit for Africa exporters explains how an LC works, why confirmation matters, how export credit agencies and insurers fit in, and what to check before you rely on either. It is general information as of October 2026, not financial advice; talk to your bank before agreeing terms.

How a letter of credit works

According to the ICC Academy page on documentary credits (updated October 2024), the ICC rules are known as the Uniform Customs and Practice for Documentary Credits, and the latest version, UCP 600, has 39 articles. The page names the parties: the applicant (normally the buyer), the issuing bank, an advising bank, optionally a confirming bank, and the beneficiary (normally the seller). It says a credit has its own terms and does not rely on the terms or performance of the sales contract, which makes it a primary means of payment. It also describes a complying presentation as one that is in accordance with the terms of the credit, the applicable UCP 600 provisions and international standard banking practice. For electronic presentation, the ICC says eUCP version 2.1 came into force in July 2023. Read the ICC Academy overview.

The U.S. International Trade Administration puts the key point simply in its Trade Finance Guide (last changed 30 June 2025): a letter of credit is a documentary instrument, and "banks deal in documents only, not goods." Payment depends on the paperwork you present matching the credit, not on the buyer's satisfaction with the goods after arrival. See the Trade Finance Guide.

Confirmed or unconfirmed letter of credit for Africa exporters

An unconfirmed LC carries only the issuing bank's undertaking. The Trade Finance Guide says that with an unconfirmed credit, payment is made to the exporter only after the shipping documents are presented to the issuing bank, and that the exporter bears the foreign bank's payment risk and the importing country's political risk. A confirmed LC adds a second bank's commitment. The ICC Academy's guide to types of documentary credit (page dated 21 October 2024) quotes UCP 600 Article 2: confirmation is a definite undertaking of the confirming bank, in addition to that of the issuing bank. It says a beneficiary usually requests confirmation when it has concerns about the issuing bank, country risk or documentary risk, and defines country risk as the payment risk of the country where the issuing bank is domiciled. Whether your bank will confirm a given credit, and on what terms, is a question for the bank, so ask early. See the ICC guide to types of documentary credit.

Checking an LC before you ship

1. Match it to the deal. Compare the draft credit with your proforma invoice, quantity, price, Incoterm and shipment date. Our guide to the proforma invoice shows the fields the buyer's bank may rely on; the ITA pro forma invoice page notes a buyer may need one to open a letter of credit.
2. Ask for amendments before production. The ICC Academy says a credit can neither be amended nor cancelled without the agreement of the issuing bank, the confirming bank (if any) and the beneficiary. Fix errors now, not at the port.
3. Check you can produce every document. Certificates, inspection reports or legalised papers that you cannot obtain in time are a common risk. Get the list from your forwarder.
4. Keep descriptions identical. Goods descriptions, quantities and names should match across the invoice, packing list and transport document.
5. Know the deadlines. Note the latest shipment date and the period for presenting documents, and plan production around them.

Export credit agencies and export credit insurance

An LC is not the only way to reduce payment risk. Many countries have export credit agencies (ECAs) or insurers that protect exporters against buyer non-payment. The Berne Union describes itself as representing the global export credit and investment insurance industry since 1934, and says credit insurance protects exporting companies, investors and financial institutions against losses from commercial and political risks. These are examples from official pages we read; they are not a complete list, and each serves exporters of its own country:

• UK Export Finance describes its export insurance as government-backed cover for UK exporters that protects against the risk of not getting paid by an international buyer, including buyer insolvency and failure to pay (page last modified 13 August 2026).
• US EXIM says export credit insurance covers foreign accounts receivable against commercial and political risks, for U.S. businesses, and may cover a portfolio, several buyers or a single buyer.
• ECGC Ltd in India describes itself as wholly owned by the Government of India, and lists covered risks including buyer insolvency, failure to pay within a specified period and war or new import restrictions in the buyer's country.

Read each agency's own page for eligibility, cost and conditions, which we are deliberately not summarising. See UK Export Finance, US EXIM and ECGC. If your country has no agency listed here, ask your bank, trade ministry or export promotion body what exists. Insurance has limits: the Trade Finance Guide says it does not cover physical loss or damage to goods, or foreign exchange loss.

Choosing between LC, insurance and other terms

There is no single best answer. An LC places a bank's undertaking between you and the buyer but demands precise documents. Insured open account can be simpler for repeat buyers but depends on the insurer's decision on that buyer. Advance or staged payment reduces your exposure but may lose you the order. Our guide on getting paid safely by African buyers compares the common options, and what to quote explains how your Incoterm interacts with risk. For currency questions on top of credit risk, see our guide to currency risk when pricing for African buyers.

On Comilmart, buyer protection means payment is held until delivery is confirmed, with a 7-day window. Whether an LC or any other specific payment method can be used for a given order is not something this article can confirm, so ask Comilmart through live chat or /contact-us.

Frequently asked questions

What is a letter of credit? A documentary credit is a bank's undertaking to pay a seller when the seller presents documents that comply with the credit's terms, normally issued at the buyer's request under ICC rules such as UCP 600.

Do I need a confirmed LC for Africa? It depends on your view of the issuing bank and country risk. The ICC says beneficiaries usually request confirmation when they have such concerns. Ask your bank whether it will confirm.

Can an export credit agency pay me if my buyer does not? Agencies describe policies that cover defined risks under conditions. Check the agency's page and policy wording for your country.

Does export credit insurance cover currency losses? The ITA Trade Finance Guide says it does not cover foreign exchange loss.

Getting started

Whether you choose a letter of credit, insurance or another term, Africa exporters need accurate documents above all, and a verified supplier profile makes your offer easier for a buyer to trust. Read about selling to African buyers at /sell-to-africa and apply for a supplier account at /apply-manufacturer. Rules and products change, so confirm terms with your bank or agency.