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The Eastern and Southern African Trade and Development Bank (TDB) and dltledgers have announced three-year agreement, through which TDB aims to scale-up the volume of trade finance transacted via blockchain in Africa using dltledgers’ platform
TDB and dltledgers have been collaborating since 2019 on pioneering the use of distributed ledger technology to execute end-to-end trade finance on the continent. That first year, US$22mn in white cane sugar was imported from India by Ethiopia, with Singapore-based Agrocorp as the seller and trading company, and all trade finance activities concluded via blockchain.
When COVID-19 hit, TDB accelerated the use of this technology to conclude an additional US$150mn in intra-African trade finance transactions, this time consisting of fertilisers imported from Morocco’s OCP by Ethiopia.
Admassu Tadesse, TDB group managing director and TDB CEO, said, “As part of our response to the pandemic, we have been providing liquidity to our clients to curtail cross-border trade and supply chains disruptions, and ultimately, to help our Member States continue working towards their development objectives. With transport logistics slowing down, blockchain has been instrumental in making this happen.”
Michael Awori, TDB deputy CEO and chief operating officer, stated, “We look forward to work with more financial institutions in our region as well as traders and suppliers, both globally and in Africa, who stand to significantly benefit from the digitisation of their trade finance activities.”
Farooq Siddiqi, CEO of dltledgers, added, “Benefits include facilitation of trade finance, improved visibility of the underlying flows, and better client experience. It is a pleasure to work with such a forward-thinking organisation and we are excited to help TDB scale its digital capabilities in 2021 and beyond.”
While it is estimated that 80-90% of global trade relies on some form of trade finance, the trade finance market size is expected to reach about US$10 trillion by 2026. Blockchain has the potential to revolutionize the way this is done, and to further boost overall global trade volumes thanks to reduced trade costs. According to an IBM survey of more than 1,000 executives from large corporations in 34 countries and 22 industries globally, with customer satisfaction ranking first as a measure of operational success across blockchain networks, 85% of CTOs and CIOs expect to work with multiple blockchain technologies within the next three years.