Guarantor Program

THE GUARANTOR PROGRAM SUMMARY

A Trust-Building Solution for Commodity Transactions


Presented by Celtouch, supported by JP Morgan

Executive Summary

The Guarantor Program directly resolves the longstanding trust deficit in commodity transactions. Buyers keep their money in their own AAA-rated bank account under a blocked-funds arrangement, while Celtouch covers all upfront costs including quality testing, storage and first deliveries. Sellers are paid in full at once, buyers only begin direct payments from month three and the guarantor recovers its financing and a minimal assistance fee (0.3%–1%) at the end of the contract.

Unlike costly or fraudulent SBLCs, this mechanism is transparent, conservative and anchored in institutional banking support. If a deal collapses before first delivery, Celtouch absorbs the cost and the buyer’s funds are released. Already welcomed by industry stakeholders, the program transforms stalled negotiations into executable deals by turning trust risks into a straightforward verification exercise.

THE GUARANTOR PROGRAM DETAIL

A Trust-Building Solution for Commodity Transactions


Presented by Celtouch, supported by JP Morgan

Introduction

Global commodity trade, from oil and gas to gold and agricultural products, is one of the most lucrative yet risky areas of international commerce. At its core lies a fundamental problem: trust between buyers and sellers.

  • Buyers hesitate to release funds upfront, fearing non-performance, fraud or substandard quality.
  • Sellers hesitate to deliver, fearing non-payment, delayed settlement or withdrawal of financial guarantees.
  • Intermediary instruments such as SBLCs (Standby Letters of Credit) have become both costly and unreliable, with fraudulent issuances eroding confidence.

The Guarantor Program solves this deadlock by introducing a specialised escrow and guarantee framework, anchored in AAA-rated banking systems and supported by institutional credibility.

Under the program:

  1. Buyers block funds in their own accounts for the equivalent of at least two months of purchases.
  2. Celtouch, as guarantor, verifies and locks those funds, then covers all upfront costs such as:
    • Quality and Quantity (Q&Q) testing
    • Storage and warehousing
    • Sample transport and logistics
    • Shipment scheduling
  3. The seller is paid in full for the goods delivered against the agreed contract.
  4. The buyer begins making payments from the third month onward, while the guarantor recovers its costs and a small assistance fee (0.3–1% per annum depending on contract size) at the end of the contract term.

This solution transforms what was previously a high-risk trust exercise into a simple verification exercise backed by transparent, bank-verified security. It ensures transactions materialise, upfront costs are absorbed without exposing buyers or sellers and both parties enjoy peace of mind.

The program has already generated enthusiastic responses from institutional stakeholders during Africa Energy Week and is positioned to be rolled out across multiple commodities, including oil, gas, gold and agricultural products.

The Current Problem in Commodity Transactions

Despite centuries of global trade, the issue of mutual trust in high-value commodity deals persists. The challenges include:

  1. Front-loaded costs: Testing, inspection, storage and early logistics require upfront expenditure. Neither buyer nor seller wants to shoulder these before trust is established.
  2. Payment risk: Buyers fear poor quality, late delivery or fraud; sellers fear delayed or non-payment once goods are shipped.
  3. Fraudulent financial instruments: SBLCs and other payment guarantees are expensive and often abused, with counterfeit documents eroding their effectiveness.

Negotiation breakdowns: Transactions collapse at the last mile because no party wants to move first.

This trust deficit translates into lost opportunities, even when capital, goods and demand are fully aligned. Deals worth hundreds of millions stall due to comparatively minor disputes over testing costs or escrow requirements—a “penny problem for a pounds transaction.”

The Guarantor Program Solution

The Guarantor Program was developed precisely to unlock stalled deals and eliminate unnecessary risk. Its features include:

  • Buyer Security: Funds remain in the buyer’s own AAA-rated bank account. They are not transferred to a third party but are simply blocked for the contract term.
  • Seller Assurance: The guarantor covers all initial expenses and ensures the seller is fully paid for the first two shipments.
  • Transaction Integrity: The buyer starts paying from month three, with blocked funds released at the contract’s conclusion to settle the guarantor’s financing.
  • Risk Mitigation: If a deal is cancelled after Celtouch has already paid upfront costs but before first delivery, the guarantor absorbs the loss. The buyer’s blocked funds are released within four months.

This mechanism transforms the transaction into a low-risk cycle, where blocked funds equal certainty and the guarantor bridges the trust gap.

How It Works: Step by Step

  1. Contract Agreement: Buyer and seller agree on purchase terms (12–24 months typical).
  2. Proof of Funds: Buyer provides evidence of sufficient funds at a AAA-rated bank. Minimum: USD 5 million.
  3. Blocking Funds: The equivalent of at least two months’ purchase is blocked for the contract period. Example: USD 5 million for a USD 2.5 million/month agreement.
  4. Guarantor Activation: Celtouch verifies the block and activates the Guarantor Program.
  5. Upfront Financing: Guarantor pays for Q&Q testing, storage, sample transport and first two shipments.
  6. Seller Paid: The seller receives the full amount due for goods corresponding to the contract period.
  7. Buyer Onboards: From the third month, the buyer begins direct payments.
  8. Release of Funds: At the end of the contract, blocked funds are released to Celtouch, covering its financing and assistance fee.

Commercial Terms

  • Assistance Fee: 0.3%–1% per annum, depending on contract size and complexity.
  • Minimum Monthly Contract: USD 2,500,000 in purchases.
  • Minimum Blocked Funds: USD 5,000,000 for 12 months.
  • Risk Protection: Celtouch absorbs upfront costs if a deal is cancelled before first delivery. Buyer funds are released within four months.
  • Scalable Ceiling: Transactions can extend from USD 5 million up to USD 250 million per month, though optimal structuring is advised for efficiency.

Application Across Commodities

While initially designed for fuel agreements, the Guarantor Program applies seamlessly across commodities:

  • Crude oil and refined products
  • Natural gas and LNG
  • Gold and precious metals
  • Agricultural commodities (grain, sugar, coffee, cocoa, etc.)
  • Industrial raw materials (iron ore, copper, aluminium)

By standardising trust and shifting risk management to the guarantor, this model enables diverse sectors to transact more confidently.

Institutional Backing and Market Reception

  • Celtouch & JP Morgan: The program is anchored by banking credibility and risk expertise.
  • Industry Response: Presented during Africa Energy Week, the proposal received strong support and recognition as a practical solution to industry-wide challenges.
  • Market Expansion: Initial focus on energy products (fuel, gas) with immediate scalability to metals and agriculture.

Competitive Advantage

  1. Transparency: Funds remain in the buyer’s account, reducing fear of fraud.
  2. Low Cost: Assistance fee (0.3%–1%) is minimal compared to costs of SBLCs or collapsed negotiations.
  3. Flexibility: Works for transactions from USD 5 million up to USD 250 million per month.
  4. Risk Absorption: Celtouch bears upfront costs if deals collapse prematurely.
  5. Simplicity: Reframes transactions from complex trust negotiations to straightforward verification exercises.

Case Study: Fuel Transaction

  • Problem: Buyer and seller could not agree who should pay for lab tests and temporary storage. Negotiation broke down.
  • Solution: Buyer blocks USD 10 million for four months. Celtouch pays for all tests and initial logistics. Seller receives full payment for first shipments.
  • Outcome: Buyer begins payments from month three. At contract end, Celtouch recovers its capital and fee. Deal proceeds smoothly where previously stalled.

Strategic Vision

The Guarantor Program is more than a transaction mechanism; it is a platform for fairer, faster and safer international trade. By reducing friction:

  • Sellers gain reliable buyers.
  • Buyers access secure supply without excessive upfront exposure.
  • Banks and financiers see reduced fraud and improved confidence in trade finance.

Over time, this model could expand into digital platforms, integrated with real-time fund verification, blockchain-based transparency and broader adoption in trade corridors such as Africa–Asia, Africa–Europe and Africa–Americas.

Conclusion

The Guarantor Program represents a transformative leap in global trade facilitation. It takes a centuries-old barrier—trust—and removes it with a modern, cost-effective, bank-backed solution.

By ensuring that both buyers and sellers are protected, that upfront costs are covered and that blocked funds guarantee performance, Celtouch positions itself as a pioneering force in next-generation commodity transactions.

In short:

  • Trust restored
  • Transactions guaranteed
  • Costs reduced
  • Opportunities unlocked

This is not just an innovation in finance—it is an innovation in global commerce itself.

THE GUARANTOR PROGRAM QUICK REFERENCE GUIDE

1. How do I know my funds are safe?

  • Funds stay in your own AAA-rated bank account.
  • They are blocked, not transferred and remain under your control.

2. What happens if the deal is cancelled before delivery?

  • Celtouch absorbs any upfront costs already paid.
  • Buyer’s funds are released within four months.

3. Why would Celtouch take on this risk?

  • Upfront costs are predictable and backed by blocked funds.
  • Celtouch recovers its financing and a small fee at contract end.

4. Why not just use SBLCs or other instruments?

  • SBLCs are costly, slow and prone to fraud.
  • Blocked funds are simpler, cheaper and verifiable.

5. What is the minimum deal size?

  • USD 2.5 million per month.
  • Minimum blocked funds: USD 5 million for 12 months.

6. Can the program handle very large contracts?

  • Yes, up to USD 250 million per month and above.
  • Larger deals can be split for efficiency.

7. Which commodities are covered?

  • Oil, gas, LNG, gold, precious metals, agricultural products.
  • Works for any structured, bank-verifiable transaction.

8. What if the buyer defaults after month three?

  • First two months are fully secured by Celtouch.
  • Later defaults are handled under the contract’s remedies.

9. What if the bank holding the funds fails?

  • Only AAA-rated, stable banks are used.
  • Ongoing monitoring adds an extra layer of security.

10. How is Celtouch itself protected?

  • Exposure capped at early-stage logistics/testing.
  • Recovery guaranteed by blocked funds and fees.

11. What’s in it for sellers?

  • Full, upfront payment.
  • No need to fund testing, storage or transport themselves.

12. How quickly can a transaction be set up?

  • Typically within 2–3 weeks once proof of funds is confirmed.
  • Faster than arranging an SBLC or similar instrument.

THE GUARANTOR PROGRAM FREQUENTLY ASKED QUESTIONS

1. How do I know my funds are safe?


Your funds remain under your control at all times. The Guarantor Program does not require you to transfer money to Celtouch or to any third-party escrow. Instead, the funds are “blocked” or ring-fenced in your own AAA-rated bank account for the duration of the contract. This means the funds are visible to you, secure within your banking institution and cannot be moved without your authorisation. The bank confirms the blocked status to all parties, creating a verifiable, tamper-proof assurance that the capital is genuinely available. This design minimises exposure to fraud and eliminates the risk of funds disappearing into an unknown account.

2. What happens if the deal is cancelled before delivery?


If a contract is terminated before the first delivery is completed, Celtouch takes responsibility for any upfront costs we have already paid—such as laboratory tests, sample transport or temporary storage. Those costs are absorbed entirely by us. Your blocked funds remain untouched and are released by your bank within four months. This arrangement ensures that buyers are not penalized for unforeseen circumstances and that sellers are not left with unpaid preliminary expenses. The model was intentionally designed to remove hesitation from both sides of the transaction so that agreements can move forward without fear of early-stage losses.

3. Why would Celtouch take on this risk?


At first glance, it may seem unusual for Celtouch to assume financial responsibility for upfront costs. The reason is that these costs are limited, predictable and fully supported by the security of the blocked funds. By covering these expenses, we ensure that transactions proceed smoothly and that trust barriers are removed. Our revenue comes from a small assistance fee of 0.3%–1% per annum, recovered when the blocked funds are released at the end of the contract. The program is not designed as a high-risk speculative play; it is a conservative, structured service that makes stalled deals executable. We succeed only when both the buyer and seller succeed.

4. Why not just use SBLCs or other traditional instruments?


Standby Letters of Credit (SBLCs) and similar instruments have been the traditional mechanisms for bridging trust gaps in trade. However, their effectiveness has diminished. Costs are high, the process is slow and fraudulent SBLCs are unfortunately common. Sellers frequently receive “paper” that is either forged or impossible to monetise. Buyers often face heavy bank charges and delays without any guarantee that the deal will move forward. In contrast, the Guarantor Program relies on simple verification of blocked funds in top-tier banks. This process is transparent, low-cost and resistant to fraud. By removing layers of unnecessary financial engineering, we offer a cleaner and safer path to closing deals.

5. What is the minimum deal size?


The program is intended for serious, large-scale commodity transactions. To ensure efficiency and sustainability, the minimum monthly purchase under the program is USD 2.5 million, with a minimum blocked funds requirement of USD 5 million for a 12-month contract. This threshold ensures that both the guarantor and the parties involved are operating at a scale where the assistance fee and cost coverage make economic sense. While this may seem high for smaller buyers, it reflects the realities of commodity trade and the costs associated with upfront logistics.

6. Can the program handle very large contracts?


Yes. The framework is flexible enough to accommodate contracts of significant size. In fact, transactions up to USD 250 million per month have already been modelled within this structure. Beyond that scale, deals can be negotiated, but our recommendation is to keep them within practical limits for ease of execution. Splitting overly large transactions into smaller, parallel structures can often reduce complexity while maintaining security. The program is therefore scalable in both directions: it works for mid-sized contracts and for very large ones, depending on buyer and seller needs.

7. Which commodities are covered?


Although the program was originally conceived in the context of oil and fuel agreements, its design is commodity-agnostic. The principles apply equally to natural gas, LNG, gold, precious metals and agricultural commodities such as grain, coffee or cocoa. The key requirement is that the transaction is structured, contracted and bank-verifiable. By broadening the application beyond fuel, the program opens up new opportunities for diverse sectors to transact securely and efficiently.

8. What if the buyer defaults after the third month?




The structure ensures that the first two months of supply are fully protected and financed by Celtouch, secured against the blocked funds. From month three onward, the buyer is expected to make payments as per the contract. If the buyer defaults at that stage, the seller has already received the benefit of initial secure deliveries and standard remedies under the contract are activated. This might include drawing against the blocked funds or pursuing legal recourse depending on jurisdiction. Importantly, the design reduces the risk of early collapse and creates a track record of performance before any default could occur.

9. What if the bank holding the funds fails?


To protect against institutional risk, the program only operates with AAA-rated banks in highly stable jurisdictions. These institutions are subject to stringent regulatory oversight and possess strong capital reserves. The use of such banks ensures that the possibility of institutional failure is remote. Moreover, the verification process includes ongoing monitoring of the blocked funds and the bank’s standing, which provides additional reassurance to all parties. This safeguard is one of the reasons why industry stakeholders responded positively to the proposal during early presentations.

10. How is Celtouch itself protected?


Celtouch’s protection lies in the structure of the program. Our exposure is capped at the cost of early-stage logistics and testing. We are not speculating on commodity prices, delivery schedules or market conditions. Instead, we provide a controlled, low-risk financial service backed by blocked funds. Our recovery is contractually built in, with funds released at the end of the term to cover our initial financing and the assistance fee. This creates a sustainable business model where risk and reward are proportionate. By standing in the middle and absorbing manageable levels of risk, we unlock deals that would otherwise collapse and earn modest, reliable returns for doing so.

11. What’s in it for sellers?


For sellers, the program provides immediate and tangible benefits. They are paid in full, upfront, for the goods corresponding to the agreed contract period. This eliminates concerns about delayed settlement, partial payments or fraudulent guarantees. Sellers also avoid the expense and risk of covering early logistics costs themselves. Because Celtouch finances testing and storage, sellers can focus on delivering their product without fear of being left with unpaid invoices. In effect, the program gives sellers both liquidity and certainty, allowing them to plan operations with confidence.

12. How quickly can a transaction be set up?


Once buyer and seller have agreed on contract terms, the process can move rapidly. The key requirement is proof of funds in a AAA-rated bank. As soon as the buyer’s bank confirms the blocked amount, Celtouch can activate the Guarantor Program. Depending on the efficiency of the institutions involved, this verification and activation can often be completed within two to three weeks. In practice, the timeline is far shorter than arranging an SBLC or other traditional financial instruments, which can take months to finalise. This speed is one of the program’s most valuable advantages, as it allows buyers and sellers to act on opportunities quickly.