Intra-African Fertilizer Trade Worth Almost $400 Million USD Executed Using Blockchain

Image Credit: AfDB

According to the official website of the Eastern and Southern Trade and Development Bank (TDB), recently announced that the first Intra-African multi-million trade, which is worth nearly $400 million was done using blockchain.

The Intra-African Fertilizer trade was facilitated by the TDB, in which the OCP Group, a state-owned phosphate mining and fertiliser producer delivered the phosphate fertilizers from Morocco to the Ethiopian buyer.

These transactions were executed via a blockchain platform provided by dltledgers, a Singapore Fintech which operates on R3 Corda decentralized and consensus network. $270 million has already been paid, and the remainder is to be paid in a few months’ time.

The multi-giant fertilizer company, OCP Group, said that it is part of their digitalization strategy to support the use of blockchain for trade transactions and to reduce the trade finance gap among the countries in Africa, thereby, boosting trading, majorly in the fertilizer sector, through digital inclusion.

In a joint statement by the parties involved, the import-export trading deal was done under two hours, and this was made possible by the unique characteristics of blockchain technology (i.e eliminating middlemen, speedy transactions etc).

The traditional banking system, however, would ordinarily take about three weeks to fully finalize the whole deal. This is due to the movement of documents needed to be signed from the sellers to the buyers. Also, the lockdown of the border and airport due to COVID-19 pandemic would have most probably increased it to six weeks, thereby, causing more delays.

The blockchain platform provided by dltledgers enabled the parties involved to upload, view, edit, and audit the documents in one private blockchain, simultaneously, and in real time.

Added advantages for transactions done via blockchain is that they are more secure, due to blockchain’s encryption and verification technologies. Also, there is transparency and traceability, which reduces risks and eliminates potential errors in the movement of documents.

Earlier this year, the Eastern and Southern African Trade and Development Bank (TDB) had already used the blockchain platform created by dltledgers to facilitate the importation of White Cane Sugar worth $22 million, from India to Ethiopia with Singapore-based Agrocorp acting as the seller and trading company.

In October 2019, Trade and Development Bank (TBD) became the first African Development Finance Institution (DFI) to execute an end-to-end trade finance on the continent, by making use of the blockchain. This has served as a template which TBD has been able to replicate for further Intra-African trade transactions.

Since Agriculture is an important sector in the countries within Africa (e.g 31% of Ethiopia’s GDP). Through this deal, both the OCP Group and CBD have empathised the need for structured and efficient collaboration to face the challenges poised against sustainable Agriculture in Africa.

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