Singapore government arms, Including Enterprise Singapore, Infocomm Media Development Authority and National Research Foundation, have launched a $12million program to strengthen the country’s blockchain ecosystem, according to a press statement on Monday.
This further emphasizes that Trade finance powers much of global trade but traditionally it involves heavily manual and paper-based processes. Digitisation of these processes can reduce transaction times from 5-10 days to under 24 hours, unlocking working capital and enabling more trade to be done between countries.
Early 2020, #dltledgers had helped facilitate a live trade of phosphate fertilizers worth 400 million dollars from Morocco to Ethiopia successfully with TDB as the facilitating bank. While the physical transfer of goods between Morocco and Ethiopia takes a relatively short time due to close proximity, the administrative paperwork can often impede delivery. By using blockchain, the reduced transaction time had boosted the efficiency of trade between the two countries.
Michael Awori, TDB Deputy CEO and COO said that: “thanks to the use of blockchain, we are now able to improve the turnaround time of our transactions, reducing it from 3 to 6 weeks to under 2 hours, lowering the cost and carbon footprint of our administrative processes by eliminating paperwork, and further enhancing trust between the different stakeholders in a trade thanks to the neutral governance provided by blockchain which in turn enables better protection of their data, and much more. As these advantages are gaining traction in our ecosystem of stakeholders, 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 digitization of their trade finance activities.”
Handling trade on paper and manual handling of documents, even when sent by email, fax, or post, slows down logistics and facilitation of trade. Blockchain technology enables the automatic operation of a maritime smart contract, with events triggering actions that would otherwise require manual intervention or processing. Digitisation of the paperwork exchange process is a cost-effective mechanism, which will provide savings in transaction costs.