OCP Group develops digital commerce in Africa
Moroccan OCP Group and Eastern and Southern African Trade and Development Bank announced $400 million-worth of fertilizer trade finance transactions executed via blockchain technology, $270 million of which have already been completed, and the remainder to be executed in upcoming months.
These transactions make OCP Group the first African company to execute an intra-African trade transaction using blockchain. Through a blockchain platform, OCP Group delivered phosphate fertilizers from Morocco to Ethiopia. The intra-African transaction initiative, as part of OCP’s digitalization strategy, aims to reduce the trade finance gap in Africa and boost trade between African countries, particularly in the fertilizer sector, through digital inclusion.
The blockchain technology makes it possible for all parties to carry out these import-export trades digitally and in under two hours. Traditional transactions typically take over three weeks to complete due to the need to move physical documents from suppliers, through the banking system, to the buyer. This lengthy process was disrupted further by the coronavirus pandemic, taking up to six-weeks to complete, as border and airport closures continue to create additional delays.
Through the blockchain platform, stakeholders are able to upload, view, edit, and validate the documentation in one private blockchain, simultaneously and in real time. Moreover, blockchain transactions have a lower carbon footprint, and are more secure due to encryption and verification technologies. They also allow for greater transparency and traceability, and reduce risks by eliminating potential errors and ambiguities in the exchange and amendment of documents.
Agriculture plays a critical role in Ethiopia’s economy, representing 31% of the country’s GDP and 66% of its total employment. Fertilizers are fundamental to the sector, with about half being imported from the OCP Group in Morocco.