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BARTER
DEALS IN THE OHADA ZONE
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The barter deal , a non monetary exchange of goods and/or
services, is used in internal and international trade as an
instrument offering several opportunities of trade and investment
without the obstacles related to the traditional practices
(lack of money, non-convertible currencies etc. ).
Very much in used after the 1930 crisis and maintained after
the 2nd World War, barter deals regress after the conclusion
of Bretton Woods Agreements except in the Soviet block. They
are again enhanced when these Agreements are challenged, along
with the collapse of the international monetary system and
the 1974 oil crisis because of several reasons notably high
interest rates, the indebtedness of countries which do not
produce oil, the instability of the prices of comodities.
A glimpse on an past experience : Los Angeles 1984 Olympic
Games
The financial sheet at the end of Los Angeles Olympic Games
was tremendously good (223 milllions $ profits) as against
the 9 billions $ loss of the previous Moscow Games. These
excellent results have mostly been due to the introduction
of barter deals by the Executive
Director Peter Ueberroth. Indeed, putting aside traditional
practices, he made to the Los Angeles Organization Committee
the proposal of susbtantially increasing the rate of license
rights for sponsoring (up to 4 millions $) while imposing
payments in kind instead of conventional financial payments.
Barter deals represented in the 1990's about 10% of the world
trade among which some achieved in developing countries (*).
With the development of the Internet, there is an extension
of barter deals to new fields notably business to business
transactions for various reasons (lack of money, inventory
surplusses etc). According to the International Reciprocal
Trade Association (IRTA), in 2001, world business to business
transactions represented close to 8 billions US dollars. It
was underlined that an increase of 12% for three consecutive
years could bring this percentage to 20% in 2002.
Among the benefits you can derive from barter deals :
. keep your production costs low by acquiring low cost goods
and services,
. optimize your operational capacity with low cost facilities
and services enabling your enterprise to operate more efficiently,
. increase your profit margins with barter deals at marginal
cost,
. manage in a more dynamic and creative way the wherabouts
of the life cycle of the enterprise's resources and assets
(* *),
. build up a capacity of acquiring other goods or or services
which you need (trough exchange proper or by reselling to
known customers the products obtained from these deals).
Barter deals may enhance business within the Zone Ohada and
with non Ohada countries. If you need an information, don't
hesitate to contact us. Click
here.
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(*) Before,
during the 80's, Tanzania exchanged tea against tractors and
Nigeria its oil production against spare parts. In 1997, Cuba
exchanged its sugar production against Soviet oil.
(* *) Optimizing the use of the enterprise's resources and assets
is a difficult exercise in view of the unavoidable reality of
the limited life cycle of any investment which implies that
at the end of the life cycle of the products, services, facilities
and assets used by the enterprise, their natural destination
is very often the garbage can or there are sold at very low
prices so that they don't increase the expenses or become a
source of loss. The challenge is then to succeed in making these
items generate new profits. How ? Through barter deals that
can allow to make them available for enterprises which need
them, sometimes badly. It thus becomes possible for the enterprise
to maximize the value of its resources and assets while building
up its financing capacity to acquire new goods or services.
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AD
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2001 -
© Evelyne Mandessi Bell. All Rights Reserved.PO Box 2808 Douala Cameroon
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