CHAPTER ONE

 INTRODUCTION

Considering the fact that no nation is endowed with all the natural resources she needs for the production of goods and services, while some other nations were endowed with various types of natural resources.  Therefore, there is the need to concentrate on the production of goods and services they have comparative cost advantage and exchange it with other countries.  The effect of this exchange of goods and services between countries is called international trade.  When there is a trade between two countries payment must be made which brings to settlement of debt.

International trade as defined by (ORTIH 1998) is a trade arrangement involving exchange of good and services between a particular nation and other nations of the world.  The importers and the exporters are brought together in the process while the importers make payment, the exporter receive payment.

1.1       BACKGROUND OF STUDY

No country in the world is self-sufficient because natural and human resources are unevenly distributed.  Nigeria is blessed with Crude oil, Zambia is richly endowed with Coppa while United State of America and most West European Countries has abundant capital, technical know-how and skilled manpower.  Hence for a country to get the commodities she is not endowed with she must trade with other countries that have the (EWA and AGU 1989) and if this is the case money must be exchanged ordinary, exporters would most probably prefer to be paid in their local currency, while importers will prefer to pay in their local currency as well this implies that both of them wants to avoid a some exchange rate risk.  In this effect, the devices for funds transfer and methods of debt settlement will be discussed in the research work with particular reference to the problem and prospects encountered in debt settlement in international trade.  This would will be based on the theory of computation cost advantage as propound by David Richards.

Nevertheless, the parties involved in international trade will agree from the outset, on the terms as well as the method of payment (ODOH 1997) in his work opined that the term and method very, depending on the transactions the integrity and financial standing of the parties involved.

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