Rabat – Morocco’s OCP Group and the Eastern and Southern African Trade and Development Bank (TDB) have completed the first ever large-scale intra-African transaction using blockchain.
“The Eastern and Southern African Trade and Development Bank (TDB) and OCP Group, the world’s largest phosphate mining and leading fertilizer company, are pleased to announce USD 400 million worth of fertilizer trade finance transactions executed via blockchain technology,” reads a joint statement published on March 30. $270 million worth of the transaction has been completed while the rest is expected to be “executed” in the coming months, added the statement.
As part of the blockchain transactions, “OCP Group delivered phosphate fertilizers from Morocco to Ethiopia,” the statement specified. It presents the historic agreement as a critical step in the materialization of OCP’s strategic digitalization drive. The aim is to foster intra-African trade, reduce the trade finance gap in Africa, and improve Africa’s standing in the global scramble for the digital revolution.
The digital is here to stay
Dltledgers, a world-leading blockchain platform based in Singapore, specializes in large digital import-export operations. With its world-renowned blockchain platform, dltledgers can help complete large scale trading operations within two to three hours.
Typically, transactions like the one OCP Group and TDB have just completed can take up to three weeks. With the spread of COVID-19 and governments’ adoption of emergency measures such as the closure of borders, this already long process became even more complicated and time-consuming. Treatment of administrative documents related to large export-import operations has become more complex while transaction delays can now be up to six weeks.
With a blockchain platform, however, explained the joint statement, “stakeholders are able to upload, view, edit, and validate the documentation in one private blockchain, simultaneously and in real time.”
Other than the incredibly rapid pace of completion, blockchain transactions are associated with a lower carbon footprint and are “more secure due to encryption and verification technologies,” according to the statement. It added, “They also allow for greater transparency and traceability, and reduce risks by eliminating potential errors and ambiguities in the exchange and amendment of documents.”
The exchange between OCP Group and TDB comes as digitization gains wide currency in a global market significantly driven by the numerous disruptions brought about by the COVID-19 pandemic.
Read also: Morocco’s OCP Invests in Digital to Take Lead in African Agriculture
While digital transactions’ share of global exchanges grew by 5 to 10% in 2020, there is a widespread feeling that digitization will only grow in significance in the coming years and decades. Even after the world has effectively eradicated the COVID-19 virus, projections are that digitization is on track to “become the new normal for organizations who want to remain competitive.”
For OCP and TDB, meanwhile, this first blockchain operation between two African companies translates both the desire to embrace the coming, irreversible digital transformations and a joint determination to further intra-African exchanges.
As a regional pioneer in its field, TDB is present in 22 countries and oversees a far-reaching portfolio that includes investing in, and promoting, “trade, regional economic integration, and sustainable development,” according to the joint statement.
It generally intervenes in the importation of essential products, such as fertilizers and wheat. The company has “supported close to USD 1 billion of fertilizer imports from OCP Group to Ethiopia in the past three years,” said the statement.
Social responsibility and intra-African cooperation
OCP Group, for its part, places its cooperation with TDB within the broader scheme of its commitment to intra-African trade and its “social responsibility” and sustainable development goals.
In Ethiopia, where agriculture represents 31% of the country’s GDP and 66% of its total employment, explained the joint statement, OCP has effectively teamed up with Ethiopian authorities and companies to help meet the country’s needs in fertilizers and achieve food security.
About half of Ethiopia’s fertilizer imports come from OCP Group, and the Moroccan company sees its engagement in Ethiopia – and across the African continent – as an expression of its commitment to helping “drive forward Africa’s environmental and social development and implement sustainable and prosperous agriculture through innovation.”