Trade has historically served as the backbone of global economies; however, its infrastructure remains archaic, relying heavily on paper-based documentation, fragmented supply chains, and inefficient verification systems. This outdated model leads to losses amounting to billions and stifles economic growth. Yet, a significant transformation is underway as digitised trade systems, powered by blockchain technology, artificial intelligence, and real-time data-sharing networks, are set to revolutionise the landscape.
This shift is particularly pronounced in Africa, where the recent IOTA East Africa Web3 Innovation Summit in Nairobi brought together a diverse group of trade experts, technologists, and policymakers. They discussed how a digital-first approach could unlock over $10 trillion in untapped global value. Central to the conversation were two innovative platforms, the Trade and Logistics Information Network (TWIN) and the Trade Logistics Information Pipeline (TLIP), which are designed to create secure, transparent, and verifiable trade documentation.
The potential benefits of these innovations cannot be overstated. By streamlining transactions and reducing reliance on paper processes, they promise to enhance efficiency and drive down costs. Real-time data sharing is set to improve supply chain operations and bolster cross-border trade, while blockchain technology introduces a level of fraud prevention through document verification. Furthermore, these systems are designed with interoperability in mind, facilitating seamless transactions across borders. Notably, small and medium-sized enterprises (SMEs) stand to gain from reduced compliance costs, while AI-driven analytics can offer insights into market trends and optimise trading strategies.
Dominik Schiener, Co-Founder and Chair of the IOTA Foundation, highlighted the significance of this transition during the summit, stating, “The internet has connected us, but it hasn’t built trust into how we share data. With digitised trade systems, we are laying the foundations for fast, secure, and verifiable transactions, starting right here in Kenya.” This underscores the urgent need for digital trust, a critical shortcoming of traditional trade modalities. Erick Sirali, Digital Trade Director at TradeMark Africa, echoed this sentiment by pointing out that digital trade documentation is still often not universally accepted, leading to inefficiencies that contribute to significant productivity losses.
However, challenges remain on the path to widespread adoption. Many governments lack uniform policies tailored to digital trade, creating a haphazard regulatory environment. Additionally, stakeholders entrenched in traditional systems may resist the shift to more innovative mechanisms. Moreover, as trade increasingly adopts digital frameworks, the need for robust cybersecurity measures becomes imperative to safeguard against burgeoning threats.
Notably, this transformation aligns with a broader trend within the global financial system, which is grappling with foundational stress from globalisation, inflation, and declining trust in traditional authorities. Experts, including a co-founder of Ethereum, have argued that blockchain technology offers a vital solution. By enabling decentralised, tamper-proof transfers of value, it embeds trust into the infrastructure, promising a structural reset reminiscent of the internet’s evolution in the 1990s.
Industry reports have surfaced, advocating for global standards facilitating cross-border blockchain trading. Despite the potential efficiency gains from tokenised assets, the lack of cohesive regulations hinders progress. A report from the Axelar Foundation and Metrika, which included input from major financial players like Deutsche Bank and Mastercard, highlighted the necessity for universally accepted risk assessments to avoid stifling innovation.
Insights into the transformational capacity of blockchain extend beyond trade, with potential applications in areas such as digital identity and real estate transactions. The efficiency improvements and reduced costs associated with tokenisation—where traditional assets become digitised—hold promise for enhanced liquidity and transparency in financial markets.
As these developments unfold, the push for digitised trade systems positions Africa, particularly Kenya, at the forefront of a global movement towards trade innovation. Modernising documentation, improving data integrity, and eliminating inefficiencies could pave the way for a more transparent, interconnected global economy—one that is capable of fostering unprecedented growth in the years to come.
The evolution of trade systems signifies more than a mere trend; it is an economic imperative that could reshape our world for the better.
Source: Noah Wire Services
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