Trade Intelligence

Fintech is a hybrid term referring to financial technology. The main task of fintech companies is to enable hassle-free and quick accessibility of financial services facilitated by technology. The most contemporary fintech examples are blockchain and cryptocurrency, online and mobile payment systems, budgeting applications,crowdfunding platforms, and investment and trading platforms.

The fintech industry in Africa is rapidly catching up with its emerging counterparts in India and Latin America. Bloomberg 2021 statistics indicated that the continent secured $1 billion in funds in 2019 and scaled up to a total of $1.35 billion by the end of 2020. The two most prominent contributors to the growth of this sector are Ghana and Kenya. They chose to transform the fintech potential by concentrating on their rural populations’ financial inclusions based on mobile payment and mobile banking systems.

The African Business Magazine recalled Ghana’s challenging fintech journey in its Finance & Service section article. In 2012, there were just 350,000 Ghanaians keen on making their transactions via mobile banking accounts, which was a severe concern of fintech startups. Adding to the predicament, the Bank of Ghana’s 2008 Branchless Banking Guidelines system restricted issuing of digital money. But they gradually solved the issues by creating awareness and the government’s support to promote mobile money. Today, Ghana’s transactions by mobile wallets and phones show 82% of the country’s Gross Domestic Product (GDP). The World Bank identified Ghana as the most dynamic mobile banking market in Africa in the past five years.

Kenya bestows their fintech triumphs primarily to their largest telecommunications company Safaricom. In 2007, it launched M-Pesa in collaboration with Vodafone Group plc, a mobile phone-based money transfer and payments service. In January 2021, M-Pesa reached 66 million mobile money accounts and, owing to its tremendous success, went worldwide with launching M-Pesa Global. It has over 800,000 users in 167 countries at the end of 2020. More than 50% of the foreign remittances from Kenyans working abroad was transferred via this platform.

African countries have various regulative implications, network obstructions, digital infrastructure malfunctions that impede innovations at the start. With wise strategic decisions, both Ghana and Kenya are still standing firm against all the odds.

In the last couple of years, the businesses in the global trade observed and experienced many volatilities involving China as they added a set of new trade laws to their legal system. Apart from their Customs Law and Foreign Trade Law, there was no specific legislation addressing export controls previously within China. The new ECL was ratified on 17 October and took effect from 01 December 2020.

In a snapshot, an ECL is a standard international practice. It consists of regulations limiting or preventing certain exports from gaining control over a country’s consumption patterns. It is also formulated to align with other national policies such as foreign trade, economic, security, environment and military.

Existing and budding businesses in the export industry need to understand the core principles of the new ECL when trading with China

• The ECL applies to the export of dual-use goods, military goods, nuclear goods,technologies and services and other goods and services associated with national security matters and anti-proliferation responsibilities. These are listed as controlled goods.
• It requires exporters to apply for licenses to export the controlled goods where they will have to meet multiple criteria classified by the licensing authorities.
• Exporters should provide documents validating and explaining the end-user and end-use of the controlled goods to the Chinese State Export Control Administration.
• Authorities can use the ECL to force export bans for controlled goods from particular countries, regions, companies or individuals if they threaten national security.
• It applies to the procurement of controlled goods by Chinese entities and individuals to foreign entities and individuals inside or outside the country.

China faces challenges in the practical utilisation and administration of the ECL and ts integration with the existing legal system. There is also a demand for further direction, detailed interpretation requirements from international businesses.Exporters trading with China are highly recommended to conduct comprehensive research and evaluation of prerequisites and ramifications of the new ECL. It is also necessary to understand how the ECL facilitates managing risks and opportunities of exporting to China.

China has a reputation for having a conspicuously intricate compliance system.International businesses should pay attention to the regular developments and deviations of the ECL to ensure their transactions with China are faultless.

AfCFTA is the newest pendulum of the global FTA network, considered to mould Africa’s economic potential. It intends to trigger GDP growth, raise employment, and stabilise economies across the African continent, creating a single African market for goods and services.

AfCFTA requires the member countries to exclude 90% of tariffs, granting free access to merchandise, goods and services. It also simplifies customs procedures and advances further by the movement of white-collar and blue-collar workers, healthy competition, intellectual property and investments. A recent publication from Baker Mckenzie stated that, as of April 2021, AfCFTA has 36 countries sanctioned with their agreement and 54 countries in Africa have signed the agreement, with Eritrea being the only nonsignatory party.

Trading under AfCFTA activated from 1 January 2021. It is acknowledged as a timely reinforcement to encourage intra-continental trade and enhance inter-continental collaboration in a period of increasing seclusion.

The agreement is already making headway and headlines. For example, South Africa is among the first to harvest the benefits by combining its solid manufacturing base and substantial networks across the continent with AfCFTA terms. Similarly, smaller countries such as Ghana and Côte d’Ivoire are seeing a rapid improvement in trade thanks to their open economies, favourable business environment and top-grade infrastructures.

AfCFTA recognises the lack of competent leadership and trade support as critical factors and aims to address them continuously. According to Ghanaian President Nana Akufo-Addo, the COVID-19 pandemic has amplified the significance of the AfCFTA’s success more than presumed.

Some of the significant challenges that AfCFTA faces are lacking proper infrastructure, inferior trade logistics, regulatory constraints, uncertainty in financial markets, regional warfare and intricate customs processes. These can affect trade development more than imposing tariffs. In the aftermath of COVID-19, these challenges can be subdued but only with more major trade and support.

If everything works smoothly and AfCFTA unlocks its truest potential, the proposed benefits would spread globally. For example, defeat poverty in Africa, improve the export portfolio, attract FDIs, expedite economic growth, enrich women’s lives, and promote the concept of “Trade Integrity” by ensuring authenticity and transparency of transactions. According to the World Economic Forum, AfCFTA is becoming the global vanguard that demonstrates what can be accomplished with robust decision
making and forward-thinking

Traditionally, trade finance for importers and exporters has been paper-based and fragmented, meaning that each service has been made available separately. However, in the aftermath of the global pandemic, and as technology has reached a state of maturity, the trade finance industry is looking at creating digital platforms to deliver holistic trade finance services to customers.

At Euro Exim Bank, we are heavily focused on digital service delivery and have empowered our customers to make international trade settlements through our blockchain powered, Exim Wave global settlement platform, with access to over 150 currencies. For us, this is only a first step as we look to create a seamless, comprehensive and automated digital trade finance services platform.

Already, we are able to provide most trade finance instruments such as letters of credit, bank guarantees and others digitally, where they are acceptable. However, our ultimate goal is to provide a fully-featured omnichannel digital trade finance platform.

Why it is Beneficial

1. It will allow importers and exporters to keep track of all their trade finance and international trade settlement transactions in one simple, easy to use, highly accessible interface.
2. Customers will be able to request for and manage paper-based and digital trade finance instruments with ease.
3. Global accessibility is a key concern at this juncture, and digital technology has the power to deliver. In trade finance, reliance on paper-based systems has become potentially the key limiting factor as the global recovery gets underway.
4. A transparent digital trade finance platform will allow for data collection and analytics, which will better enable trade finance service providers to understand their customers and effectively manage risk.
5. Digital platforms, particularly those powered by blockchain will open the doors for open collaboration and information sharing between trade finance service providers. This will make for easier and more effective due diligence and serve to effectively mitigate the risk of fraudulent activity.
6. Blockchain powered digital trade finance services platforms, through the use of smart contracts and end-to-end tracking, are making it possible for the whole process of trade finance and international trade settlement to be automated, reducing the need for human intervention.

Transforming Trade Finance

While the industry is still in the early stages of its digital journey, we at Euro Exim Bank are working hard to ensure better digital delivery and accessibility. The pandemic has encouraged countries around the world, including the G7, to change laws and transform paper-based systems into ones that can, at the very least, accommodate digital trade transactions. As a pioneer in the space of digital trade finance and building on our successful range digital trade finance and settlement products, we look forward to delivering to our customers a reliable, holistic and class-leading digital trade finance services platform in the near future.

When you compare the last great pandemic, the Spanish Flu of 1918, with the present one, it becomes immediately clear that we have one major advantage over our predecessors; technology. Modern technology, as it turns out, is good for more than just sharing cat videos and TikToks. It has the potential to help us combat the present pandemic, while also helping to prevent another one. Technologies like blockchain, artificial intelligence, 5G and IoT are now being used in innovative ways to help fight disease.

Prevention and Preparedness

In the event of an outbreak of an unknown disease, experts first need to collect and collate as much information as possible, just to make sense of what is going on. Understanding what is actually happening is crucial to designing an appropriate response. Artificial Intelligence and machine learning is technology that is well suited for this purpose and can work much faster than humans. They can be set to collect and analyse huge volumes of data across languages, regions and disciplines. This technology is also capable of allowing for a better understanding of people’s travel patterns, helping to quickly identify the riskiest areas and take preventative measures.

Real-Time Data

At all stages of tackling the spread of disease, real-time data is crucial, particularly in terms of identifying where a pathogen originated. The earlier this kind of information is gathered and understood, the faster authorities can act to contain outbreaks. For example, blockchain has the capacity to work as a decentralized database, to track the traceability of, for example, food items. If such a system had been in place, it might have been possible to better understand the exact origins of the SARS-CoV 2 virus. Furthermore, it would become easier to track, trace and warn about potentially contaminated shipments.

IoT devices and data analytics are further revolutionizing the way we collect data, and this is crucial during a health emergency. Smart thermometers and other devices used for screening can analyse huge swathes of data to detect trends that may not otherwise be apparent. This can then contribute towards a global network of data and information that can be used to take the right measures.

Communications

Tech like 5G has the potential to revolutionize communications, which will bring the world closer together and enable, for example, patients around the world to obtain the best medical advice. It will also bring communities far and wide, rural and urban, together.

We have the power and the technology to battle any challenge thrown at us today. However, collaboration is a prerequisite to implementing the right systems to make the best use of the technologies we have at our disposal.