Author: Sanne Wass

Barclays opens major UK trade centre

From Global Trade Review (GTR) | By Sanne Wass

Barclays_logo_on-the-move Barclays has launched a new trade centre in Birmingham, which will be dedicated to helping UK businesses export more. Staffed by 30 export and trade product specialists, the centre will provide export support to more than 1,000 firms across the Midlands. Its goal is to “make it easier for UK businesses to find their way in overseas markets, by providing the right finance and all-important advice and guidance”, according to Jes Staley, Barclays’ group CEO. Supporting firms in all sectors, the centre will focus particularly on export activity into India, Pakistan, Bangladesh, across Europe, the Middle East, Africa, as well as Far Eastern markets such as China, South Korea, Thailand and Vietnam. The announcement follows the launch of the UK government’s new export strategy, which sets out its ambition to raise exports as a proportion of GDP from 30 to 35%. It aims to reach this goal through a range of initiatives, such as promoting more peer-to-peer learning and creating an online tool for UK businesses to easily connect to overseas buyers, markets and other exporters. Many of the projects will be business-led, with the government intending to work closely with private sector players to drive exports. In a statement, Barclays says the launch of its new trade centre is “a great example of the private sector support that the department of international trade (DIT) is promoting as part of its new export strategy”. Staley adds that Barclays “is determined to play its part” in helping firms to become “superstar exporters”. “New research we have commissioned on this important subject, published with the Policy Institute at King’s College London, shows that one important way to boost UK exports is to create more ‘superstar exporters’, or UK firms who export 10 or more products to 10 or more overseas markets. Helping these businesses to export more in turn helps smaller firms in their supply chain to grow, and to create jobs,” he says. The post Barclays opens major UK trade centre appeared first on Global Trade Review (GTR).

Markel expands Americas trade credit team

From Global Trade Review (GTR) | By Sanne Wass

Markel Markel Corporation has hired Jennifer Chang as underwriter and senior risk analyst in its trade credit and political risk operation in New York. Chang has nine years of experience in trade credit insurance, within both commercial and risk underwriting. She joins from Zurich in New York, where she spent four years as a senior underwriter, supporting the establishment of the firm’s excess of loss capabilities. Prior to that she held senior positions at AIG and QBE. Chang will report to Phil Amlot, Markel’s head of trade credit and political risk, Americas, and will work closely with underwriters Howard Lee and Christen Mizell. She will also support Arjan van de Wall, development director for the trade credit and political risk team globally. “Jennifer brings broad broker and client contacts to our operation and will play an important role in developing our US trade credit and political risk business,” says Amlot. Ewa Rose, managing director of Markel’s trade credit, political risk and surety operations, adds that the Americas region “remains rich in opportunities” for the firm’s trade credit and political risk business. “We look to capitalise on the cross-selling opportunities that exist within Markel’s broader portfolio. Jennifer’s broad underwriting experience will be a huge asset to our organisation,” Rose says. The post Markel expands Americas trade credit team appeared first on Global Trade Review (GTR).

Kenyan trade financiers “losing the battle” with Chinese banks

From Global Trade Review (GTR) | By Sanne Wass

Kenyan trade finance bankers express concern that they are “losing the battle” with Chinese banks, whose expanding business in the country is increasingly leaving local banks out of the equation or in advising roles only. The concern is raised as China continues to up its stake in the African continent. Speaking on Monday at the start of the three-day Forum on China-Africa Co-operation in Beijing, China’s President Xi Jinping pledged another US$60bn for African development over the next three years. This funding will go towards agricultural modernisation, infrastructure connectivity, green development and healthcare projects. Xi also said China would implement trade facilitation programmes and hold free trade negotiations with interested African countries and regions. Reacting to criticism that Beijing is tangling African governments in a debt trap, he said: “Only Chinese and African people have a say when judging if the co-operation is good or not between China and Africa. No one should malign it based on imagination or assumptions.” In Africa, meanwhile, the Chinese dominance is very real: while financial support is generally appreciated, it’s not always deemed as good for the continent. In Kenya, for example, critics have for long warned against a “Sino-invasion”, as business reporter Dominic Omondi called the problem in an op-ed in Kenya’s Standard newspaper in May. Under the headline “Poor strategy dug Kenya into Chinese trade hole”, he argued that China has “stretched Kenya’s hospitality”, “taking advantage of the country’s open-door policy to flood the market with all manner of goods”. The numbers speak for themselves: as of June 2017, China controlled no less than 66% of Kenya’s total Sh722.6bn (US$7.2bn) bilateral debt, according to the Kenya National Bureau of Statistics in its 2018 economic survey. At Sh478.6bn (US$4.75bn), this is more than a seven-fold increase from China’s Sh63bn (US$625mn) debt to Kenya in 2013. And while Kenya imported goods worth US$7.38bn from China in 2017, it only exported US$114.5mn-worth of goods to the Asian country, according to estimations by Coriolis Technologies. Kenyan trade finance bankers are also worried that they are not getting as big a slice of the Chinese pie as they would wish. This is despite the fact that most Kenyan banks now have Chinese relationship managers, or have even created full Chinese departments, as recently reported by GTR. Timothy Mulongo, trade finance business development manager at Co-operative Bank of Kenya, says Kenyan banks are sometimes cut out of deals altogether by local Chinese branches, a trend he says is “a major cause of concern”. “We see a lot of the Chinese banks setting up locally, so instead of marketing their products from offshore, they would set up a local office and build customer relationships from there,” he says. “What that means is that there are less and less opportunities for local banks to do business. It becomes more or less like local Chinese trade: Kenyan banks would not even have an opportunity to intermediate.” This experience is shared by other banks. George Kiluva, head of trade finance at Commercial Bank of Africa (CBA), points to “the dominance of the Chinese business in the region” as an issue often raised at the Trade Finance Association of Kenya, a local professional body for Kenya’s 44 financial institutions launched last year to discuss challenges and harmonise practices. One challenge, Kiluva explains, is that local public sector construction agencies in certain instances have started to accept performance guarantees on local projects directly from China, rather than locally. “That is our business being exported. The Chinese banks are taking away a lot of our banking business, because we expect to issue these guarantees locally. We’ve continuously looked at how to lobby against this,” he says.   Priced out of the guarantee market While Kenyan banks started to encounter the problem last year, Kiluva says it is now becoming “entrenched”. “Whenever there is a local project that Chinese firms are undertaking here in Kenya, we would get a counter-guarantee from a bank in China, and on the back of a that, we issue a guarantee,” explains Mulongo of Co-op Bank. “But Chinese counterparties are always looking at how to cut their costs. So we have seen that they send out a guarantee directly from a bank in China. It doesn’t make much sense, because you are accepting an instrument from a counterparty that you don’t know.” The trend means that guarantee business is increasingly run without involvement of the local banks, he adds. “They do not play their intermediation role in the industry. And when the local banks are utilised, it is for advising only, not for local issuance or confirmation.” The fact is that Kenyan authorities have gained a high level of comfort in Chinese contractors, after years of working together. “The Chinese say: ‘We’ve done so many projects in Kenya and nothing has gone wrong, you’ve not had the need to demand on the guarantees.’ So why bring in a local bank that will charge extra and make the cost high? You find local banks are losing the battle on that front,” says a trade finance banker who preferred not to be named. Kenyan banks are simply unable to compete with the price of the guarantees issued out of China. According to Janet Mulu, trade finance manager at Ecobank in Kenya, the average price for a performance guarantee by a Kenyan bank is about 2% per annum, whereas Chinese banks typically offer 0.8%-1%, and have even been known to go as low as 0.2%. It leaves banks in Kenya with the challenge to find other revenue streams that they can leverage from Chinese commercial activity, such as collection and payments. More banks are also looking at how they can grow their business through supply chain finance programmes and invoice discounting. In June, for example, CBA launched a new supply chain platform to finance more SMEs, built by Nairobi-based fintech firm Ennovative Capital (ECap). But China’s fast pace will undoubtedly leave some local banks behind. As Theo Osogo, director of business development at Sidian Bank, puts it: “Competition has come, and those who are surviving are the ones who are structuring things differently.” The post Kenyan trade financiers “losing the battle” with Chinese banks appeared first on Global Trade Review (GTR).

HSBC exploring Middle East for next trade finance blockchain trial

From Global Trade Review (GTR) | By Sanne Wass

HSBC is looking to carry out its next trade finance blockchain pilot in the Middle East, according to the bank’s regional head of trade. Speaking to GTR for its upcoming Fintech Issue, Sunil Veetil says the Middle East will be the next region of focus for HBSC when expanding its recently successful trial for a blockchain-based letter of credit solution. The bank made big headlines in May when it announced it had conducted its first live, commercial trade finance transaction on blockchain together with ING for agrifood trading giant Cargill. The deal was completed using the R3 Corda platform, with a cargo of soybeans exported from Argentina to Malaysia. Corda’s letter of credit module, which has been developed by 12 banks, enabled the transaction time to be reduced from a standard five to 10 days, to 24 hours. According to Veetil, the announcement created great interest among clients in the Middle East, some of which HSBC is now looking to involve in the next stage of the trial. He did not give any further information on which clients the bank is in discussions with, but says the Middle East is an “ideal place” for testing blockchain, given the region’s growing importance as a trade hub between the East and West. “If you look at the region, there is a huge reliance on trade, so there are huge benefits that our clients can derive from this technology,” he says. Another “uniqueness” of the Middle East, he explains, is that there’s considerable push for change from the regulators. “There is currently a large focus on blockchain, fintechs are opening up, banks are encouraging fintech and accelerators, and we have our own hubs where we work with locally groomed startups. Definitely I can see that interest is very high in the region, within the government and the regulators. And they are quite nimble, they move quickly,” he says. He adds that HSBC is currently in discussions with UAE regulators, which are keen to provide the necessary support for the bank’s blockchain pilot. The UAE has thrown its weight behind fintech and blockchain more so than any other government in the region. In April, it launched its Emirates Blockchain Strategy, which seeks to transform 50% of government transactions into the blockchain platform by 2021. In doing so it expects to save AED11bn in transactions and documents processed routinely, 398 million printed documents annually and 77 million work hours every year. Meanwhile, Dubai has its own blockchain strategy, run by its Smart City Office.   Ideal for trade finance technology HSBC has also had a great focus on the Middle East for piloting other trade and supply chain finance technologies. Last year, when HSBC and IBM introduced an AI solution to automate and digitise trade finance documentation, they selected the UAE as one the first countries (together with Hong Kong) to go live in. The bank also recently rolled out its trade transaction tracker, a smart-phone based application, which was first piloted in Qatar. And it has just launched a new supply chain finance platform in the region together with Kyriba, a financial software provider. HSBC isn’t alone in its quest: a growing number of global banks and software firms are starting to see the Middle East as a perfect location to test and roll out new trade technology. Standard Chartered, for one, announced last week that it had chosen the UAE to kick off an “industry-first client pilot” for blockchain-based smart guarantees in trade finance, together with Siemens Financial Services and blockchain firm TradeIX. TradeIX’s CFO Daniel Cotti specifically quoted the government’s “enormous drive for digitalisation and blockchain” as one important reason for choosing that location over others. This was followed by an announcement by Finastra, one of the world’s largest financial software companies, that it had joined Bahrain’s accelerator programme Bahrain Fintech Bay, with the goal to expand its open innovation platform to local fintech startups. Finastra went live with the platform earlier in June in order to accelerate innovation for its 9,000 bank clients by allowing them to easily connect to fintech applications within an open marketplace. “Now couldn’t be a better time to be part of this community as the Bahrain Fintech scene heats up,” says Wissam Khoury, Finastra’s managing director for the Middle East and Africa. While it’s still early days for fintech in the Middle East (in fact, the region had as of January 2017 only attracted 1% of the US$50bn raised globally by fintech startups since 2010, according to consulting firm Accenture), it seems that this is set to change. Fintech Hive, an accelerator which was launched last year in Dubai International Finance Centre (DIFC), kicked off its 2018 programme this week, after having received “overwhelming response” from applicants for what will be its second programme. It got more than 300 applications from around the world – three times more than in 2017. According to Raja Al Mazrouei, executive vice-president of FinTech Hive at DIFC, it is a “testament to the increasing demand for disruptive technologies in the region”. As for HSBC, it has not revealed the specific timeline for the roll-out of its blockchain solution for letters of credit. Vivek Ramachandran, the bank’s global head of innovation and growth for commercial banking, told GTR in May that we can expect to see another few live transactions on the platform, as the bank learns how it interacts with the systems of other banks and corporations. Then the primary focus will be on driving industry-wide adoption. “We’ve still got a few more steps to do before we get to widespread adoption,” he said. The post HSBC exploring Middle East for next trade finance blockchain trial appeared first on Global Trade Review (GTR).

Seasoned alternative financier becomes CEO of fintech firm

From Global Trade Review (GTR) | By Sanne Wass

Investly, a UK-based invoice finance fintech firm, has appointed Wayne Hughes as its new CEO. A seasoned working capital executive, Hughes brings over 25 years of experience working in the UK’s financial services industry, including senior roles with leading alternative financiers such as Demica and Bibby Financial Services. He joined Investly in May as consultant chief commercial officer. Now appointed the firm’s CEO, Hughes has been charged with “making Investly the leading receivables finance platform across the UK and rest of Europe”, the company writes in a statement. Investly launched its invoice finance platform for working capital and e-invoice providers last month. The platform, which allows businesses to sell their invoices, employs emerging technology to improve the speed and drive down the cost of financing, while expanding the reach of businesses that can be served sustainably. For example, the platform utilises open banking APIs to allow businesses to onboard seamlessly by connecting it to their bank accounts. The APIs also help the fintech firm to perform up-to-date monitoring for changes in credit risk to prevent fraud and overextension of limits. In a statement, Hughes says that while market and media commentary tend to focus on fintech’s disruption of incumbent players, he will rather seek to establish “mutually beneficial partnerships across the industry”. “I believe the true value exists in cooperative B2B relationships between fintech partners and existing market participants,” he says. And so instead of going after banks’ businesses directly, Investly is focusing on making its technology available for large origination partners which can then extend invoice discounting to their customers without having to build it in-house. Siim Maivel, founder and the previous CEO of Investly, now assumes the role of chief data officer. He says: “Working with the significantly larger pools of customers of our partners opens up further tools for data-driven credit decisioning, fraud prevention and automation. I will be carrying our long-held vision towards machine assisted credit decisioning engine in our next phase of growth as chief data officer. Credit intelligence will be key in becoming a market leader and sustaining healthy credit model.” The post Seasoned alternative financier becomes CEO of fintech firm appeared first on Global Trade Review (GTR).

Swift recruits Barclays executive to grow gpi in North America

From Global Trade Review (GTR) | By Sanne Wass

Swift has hired Dave Scola as its new head of North America, based in New York. He joins from Barclays, where he worked for almost seven years, most recently as global head of financial institutions. Prior to that, he spent seven years at Deutsche Bank, and previously worked at BNY Mellon. In his new position, which he will take up on October 1, Scola will be in charge of Swift’s innovation and growth strategy in the US and Canada. He will have a particular focus on driving growth in Swift’s global payments innovation (gpi) service and financial crime compliance portfolio. Swift’s gpi was launched last year to speed up settlement time and improve transparency for international payments. The service has so far been adopted by more than 200 financial institutions globally, but Swift recently announced it will move towards universal adoption of the gpi, meaning that all 10,000 banks on its global network will use the service by 2020. Commenting on the appointment, Javier Pérez-Tasso, Swift’s chief executive, Americas and UK, says: “With a proven track record of leadership in the Americas and Europe, Dave is ideally positioned to deliver innovation and growth in North America. We are delighted to welcome him on board as we accelerate our strategy in the region.” The post Swift recruits Barclays executive to grow gpi in North America appeared first on Global Trade Review (GTR).

Standard Chartered and Siemens pilot blockchain-based trade finance guarantees in UAE

From Global Trade Review (GTR) | By Sanne Wass

Standard Chartered and Siemens Financial Services, the financing arm of Siemens, are kicking off what they call “an industry-first client pilot” for blockchain-based smart guarantees in trade finance. They will do so in collaboration with blockchain firm TradeIX, a provider of a trade finance specific open-source blockchain platform, which allows financial institutions to develop their own trade finance applications with open APIs. Using TradeIX’s tools, Standard Chartered and Siemens started building the solution in March. It is among a number of proof of concepts that the bank has conducted on the open platform – and one which it has now decided to pilot with the purpose of commercialisation. Built on R3’s Corda framework, the solution will enable Siemens to digitise and automate its guarantee process – a traditionally paper-intensive business – for customers with large transaction volumes, from initiation of the bank guarantee to the claim handling. It utilises a decentralised ledger and auto-executing smart contracts to provides a streamlined communication tool between the guarantee issuer (in this case Siemens), the bank (Standard Chartered), and the beneficiary (Siemens’ customers). The pilot is expected to be fully completed later this year. “Unlike a letter of credit, which involves multiple parties, performance details and over 100 pages of documents, a commercial bank guarantee is a much simpler instrument to digitise,” Standard Chartered says in a statement. According to Michael Bueker, CFO at Siemens in the Middle East, having such a digital trade finance solution “is an important step” toward making the company’s trade finance operations “smoother, faster and more efficient”. “We are delighted to partner with Standard Chartered in leading such a game-changing transformation, which will help our customers go digital in their guarantee and claim processes and achieve higher efficiency,” he adds. The parties will pilot the solution in the UAE, which offers a good location for such an initiative, given the government’s “enormous drive for digitalisation and blockchain”, Daniel Cotti, CFO at TradeIX, tells GTR. He adds that most of the beneficiaries of the guarantees will be government entities. The UAE has thrown its weight behind blockchain more so than any other government in the region. In April, it launched its Emirates Blockchain Strategy, which seeks to transform 50% of government transactions into the blockchain platform by 2021. In doing so it expects to save AED11bn in transactions and documents processed routinely, 398 million printed documents annually and 77 million work hours annually. Meanwhile, Dubai has its own blockchain strategy, run by its Smart City Office. Commenting on the pilot, Motasim Iqbal, Standard Chartered’s head of transaction banking in the UAE, says: “This is an industry-defining solution which we believe will transform the way guarantees are issued and processed in the UAE. Siemens Financial Services has been a key partner for us to build and develop this pilot on the distributed ledger and we believe that this technology can further be harnessed by the Dubai Smart City initiative.” A range of projects are currently being carried out on TradeIX’s platform. The most prominent one goes under the name Marco Polo and is a platform for open account trade developed with R3 and 10 international banks, also including Standard Chartered. Pilots for this project are currently being prepared and are scheduled to begin in October, before being commercialised next year. The blockchain firm has also worked with Standard Chartered and global insurer AIG on a project to develop a blockchain-powered invoice finance programme for DHL. Now implemented by the logistics company, the solution helps its customers extend their payment period whilst maintaining the company’s receivables at current terms. The post Standard Chartered and Siemens pilot blockchain-based trade finance guarantees in UAE appeared first on Global Trade Review (GTR).

CargoX goes live with blockchain-based bill of lading

From Global Trade Review (GTR) | By Sanne Wass

Blockchain startup CargoX will roll its blockchain-based bill of lading solution into production next month, having carried out its first live pilot. The trial saw the shipment of garments from Shanghai in China to Koper in Slovenia, where it arrived on Sunday, using CargoX’s Smart B/L service. It involved Metro d.d (the importer), Hangzhou Doko Garments (the exporter) and was shipped by a large freight forwarder, whose name has not been disclosed. According to CargoX CEO and founder Stefan Kukman, other trials are currently underway, and the product will be made available to clients next month. The Slovenia-based blockchain firm raised over US$7mn in an ICO in January. The platform, which digitises the issuance and transfer of bills of lading, targets freight forwarders and NVOCCs (non-vessel operating common carriers), who will then be able to offer the solution to their customers. In the first live pilot, which the startup announced completion of today, the bill of lading was successfully processed in minutes, and at a cost of US$15, with the help of a public blockchain network. That’s a significant improvement from the days or weeks that a conventional, paper-based process usually takes, and which costs up to US$100. “This will give us the opportunity to lower the cost of importing goods significantly,” says Miloš Košir, logistics manager at Metro d.d., the pilot’s importer, which runs a network of 200 MANA clothing stores throughout Central and Eastern Europe. “We import hundreds of TEU [twenty-foot equivalent unit] from the Far East, and we are always trying hard to optimise our supply chain. If it raises the safety and reliability of the document transfer, that is an added value for us as well.” Zongyong Lin, CEO of Hangzhou Doko Garments, a manufacturer, and the exporter on the pilot, points to the option of overseeing the flow of the bill of lading, while always having access to an archive, as “advantages that we really think could bring a great benefit to us. We are looking into the opportunity and the effect it would have for our company as a whole”.   A tight race to digitise shipping CargoX is not alone in its aim to help firms involved in global trade digitise and streamline documentation using blockchain. Just earlier this month, Maersk and IBM announced they are live with the early adopter programme for their blockchain-powered global trade platform, called TradeLens, involving 92 participating organisations from across the globe. The platform connects all parties in the trade ecosystem and enables them to interact efficiently and access real-time shipping data. It also allows participants to digitalise and exchange trade documentation – anything from packing lists and shipping instructions to bills of lading and certificates of origin. The announcement followed a 12-month trial phase where more than 154 million shipping events were captured on the TradeLens platform, which will be made fully commercially available by the end of the year. Meanwhile, CargoX has dedicated its efforts to “solving one problem at a time”, says Kukman. In the first instance, the firm is focusing only on the bill of lading, but it plans to later expand its platform to the letter of credit. “Looking at the current situation, we made a proper decision and sticking to our game plan is paying out,” Kukman says. “By successfully completing the official test shipment we are concluding our development and testing phase of our CargoX Smart B/L solution, which will now be available to all logistics and shipping companies.” The firm says it is currently onboarding other large freight forwarders, NVOCCs and their customers. One client that has been named is Swiss freight forwarder Fracht AG. Kukman tells GTR the solution is now “stable from the development point of view”, but that “there might be some product tweaking as we gather feedback from customer trials”. The feedback has so far been positive, but rolling it out across all of the freight forwarder’s customers will take time, he says. “Forwarders of this magnitude are huge and globally dispersed entities, so it is not possible for them to roll out the solution in a very short time. They will evaluate how to integrate our solution into their processes, and we expect that to happen in the coming months. But the calculations of time and money saved speak for themselves – and this might help them improve their fiscal earnings really quickly and efficiently. And with less risk to their customers, too.” The post CargoX goes live with blockchain-based bill of lading appeared first on Global Trade Review (GTR).

Rising temperatures to threaten oil, agriculture and manufacturing exports

From Global Trade Review (GTR) | By Sanne Wass

Rising temperatures could “substantially undermine” export markets across emerging economies, new research from global risk analytics company Verisk Maplecroft finds. The firm’s newly-released 2018 Heat Stress Index assesses countries’ exposure to temperature and humidity conditions. It identifies four regional hotspots expected to bear the biggest economic brunt of rising temperatures over the next 30 years: West Africa, Central Africa, Middle East and North Africa (Mena) and Southeast Asia. In all, 48 countries are rated as being at ‘extreme risk’ from rising temperatures, with African countries accounting for almost half that number. Expected losses all come down to the fact that heat stress slows worker productivity by causing dehydration and fatigue. In extreme instances, Verisk Maplecroft notes, it can also cause death. The risk is therefore particularly high in the agriculture, mining, oil and gas and manufacturing sectors, as work is highly intense and often outdoors. West Africa is the most vulnerable region, given the importance of the extractives and agricultural sectors to the region’s export economy. The research finds that 10.8% of export values from West Africa are projected to be at risk from heat stress by 2045. This compares to 7.9% in Central Africa, 6.1% in Mena, 5.2% in Southeast Asia and 4.5% in South Asia. Using current values of exports, Verisk Maplecroft has translated this into an estimated loss of almost US$10bn per year for West Africa and US$78bn per year for Southeast Asia. Oil outputs from Nigeria and cocoa exports from Côte d’Ivoire and Ghana are “particularly vulnerable”, it says. In Central Africa, Angola and Gabon, where oil accounts for around 95% and 80% of their total exports respectively, are at high risk. The research also points to the manufacturing sector in Southeast Asia as being “under threat”, particularly in Vietnam and Thailand – key exporters of machinery and electrical components – which account for almost two thirds of the region’s total manufacturing export value. Meanwhile, strains on electricity infrastructure from rising demands for air conditioning to combat extreme temperatures will pose a major threat to reliable electricity supplies, particularly in countries that lack robust energy infrastructure. Again, Africa faces the greatest risks of disruption. With the continent’s urban population expected to expand by 235% by 2050, power capacity increases are “unlikely to keep pace with growing demand”, according to Verisk Maplecroft. The impact of rising temperatures could be dire – not just for the exposed economies, but also for global supply chains. “Taken together, the risk of disruption for companies operating in, or sourcing from, affected countries will substantially increase unless climate adaptation measures are implemented,” the company warns. According to Alice Newman, environment and climate change analyst at Verisk Maplecroft, these labour capacity losses could mean price rises for importers if product availability drops or production costs increase. “Supply chain disruption may also drive businesses to consider sourcing from lower risk locations, which would have a major knock-on effect on regional economies,” she says. Verisk Maplecroft’s estimates are calculated based on projected daily temperatures for the period 1980-2045 and data on the current values of exports. The research does not take into account future growth or diversification of export sectors, meaning it could serve as an important reminder of what is to come if exposed countries and companies turn a blind eye to the risk. “Forward-looking companies can mitigate heat stress risk through a range of measures, including sector diversification, changing work patterns, seasonal adjustment of output targets and climate control,” the firm says. But, it notes, such efforts will require “significant investment”, which many developing economies will struggle to mobilise. While this summer has seen Europe gripped by a heatwave, it remains the region most insulated from the economic impact of heat stress. The 10 lowest risk countries for heat stress are predominantly located in Europe, including the UK and Ireland and the Scandinavian countries. The post Rising temperatures to threaten oil, agriculture and manufacturing exports appeared first on Global Trade Review (GTR).

Standard Chartered trade finance banker joins AIG

From Global Trade Review (GTR) | By Sanne Wass

Olga Berlinskaya has left Standard Chartered to join AIG’s supply chain and trade finance team. At Standard Chartered she was an associate director within the capital structuring and distribution group. There she worked with the distribution of financial institution and corporate trade assets into the secondary market, and risk participation in supply chain and receivables finance programmes, covering a European and Sub-Saharan African portfolio of financial institutions and alternative investors. She previously worked at Bank of America Merrill Lynch, HSBC and Olam International. At AIG, Berlinskaya has taken on the role of senior business development and relationship manager. Heading up AIG’s supply chain and trade finance team is Marilyn Blattner-Hoyle, who was promoted to the role last year after Scott Morris moved to Sompo Canopius. With her move, Berlinskaya joins a growing number of trade finance bankers who have left banks and taken the leap into insurance. A relatively recent example is Chris Hall, who moved from Lloyds Banking Group to become a senior underwriter at Liberty Specialty Markets earlier in the year. In 2015, Silja Calac took on an underwriting role in Swiss Re’s credit and surety team, and spoke to GTR recently about changing track almost two decades into her banking career. The post Standard Chartered trade finance banker joins AIG appeared first on Global Trade Review (GTR).

Maersk and IBM go live with global blockchain trade platform TradeLens

From Global Trade Review (GTR) | By Sanne Wass

Maersk and IBM are now live with the early adopter programme for their blockchain-powered global trade platform, called TradeLens, involving 92 participating organisations from across the globe. The announcement follows a 12-month trial phase where more than 154 million shipping events were captured on the blockchain. TradeLens will be made fully commercially available by the end of the year. It all falls under a revised partnership model between IBM and Maersk after industry players had expressed worry over “too much Maersk control”. TradeLens, jointly developed by Maersk and IBM, is a platform aimed at promoting more efficient and secure global trade. It connects all parties in the trade ecosystem and enables them to interact efficiently and access real-time shipping data. The platform will also enable participants to digitalise and exchange trade documentation – anything from packing lists and shipping instructions to bills of lading and certificates of origin – all backed by a secure, immutable audit trail. Its trade document module, called ClearWay, will allow for the automation of various businesses processes, such as import and export clearance, with smart contracts ensuring that all required approvals are in place. The platform also allows for the integration with internet of thing (IoT) and sensor data to measure events like temperature control and container weight. Maersk and IBM believe the blockchain-based system will significantly improve efficiency in shipping, an industry still largely dominated by manual, time-consuming, paper-based processes. During a trial, the platform helped reduce the transit time for shipments to the US by up to 40%, saving thousands of dollars in cost. Among the 92 organisations already signed up are port and terminal operators, ocean shipping lines, customs authorities, freight forwarders and logistics companies. While today’s announcement marks the formal launch of the early adopter programme, about half of the participants have already been onboarded and are now using the platform. In fact, over the last 12 months, during which users have been trialling the beta version, more than 154 million shipping events have been captured on the blockchain-based platform. This includes data such as arrival times of vessels and container “gate-in”, as well as the exchange of documents. According to IBM, this data is growing at a rate of close to 1 million events per day. No banks are a part of the project at this stage, but they are “on our roadmap”, says Marvin Erdly, global trade digitisation leader at IBM Blockchain. Speaking to GTR, he says the project will likely starting piloting with financial institutions next year. “We are currently having discussions and workshops with a lot of financial institutions, both for trade finance and trade insurance, and we will continue to do that and uncover what those capability requirements are and likely have something out in 2019. It’s not something we are going to be doing by the general availability release, but it’s absolutely a critical part of our plans,” he says. The idea is that banks providing trade finance products will be afforded increased visibility of key events affecting their financing, as well as the digital documentation supporting the transactions. It is hoped that this will enable them to free up more capital to lend elsewhere.   No joint venture Erdly emphasises that TradeLens is “definitely not a solution for Maersk”, but rather “an industry platform”. That’s why IBM and Maersk decided to ditch their original plan to form a joint venture to commercialise the platform, as announced in January. Maersk would have owned 51% of the company. But the announcement was followed by criticism, in particular from Maersk’s biggest rivals, who rejected the idea of joining a project that was not driven by the industry as a whole. “Some were worried about too much Maersk control,” Erdly says. “The idea is that you need to have a neutral industry platform. This is not a platform for Maersk, it is an industry platform that needs to be adopted by the industry. We announced we were going to form a joint venture, but we have since received feedback from many in the ecosystem. We did get some pushback, especially from other ocean carriers, who said if this joint venture cannot be more broadly distributed in the industry, it’s not a model they would find the best. We took that very seriously.” Instead, the parties decided to extend their existing collaboration model so that other participants can join as members of the platform, through agreements with IBM or Maersk. “It’s really a better way to drive widespread adoption,” Erdly says, adding that while AP Moller Maersk and IBM will continue to invest in the development of the platform, Maersk Line will be a participant just like any other in the network, on the same terms and conditions that others would sign up to. So far, IBM and Maersk have named only two other ocean carriers as current participants in the solution: Pacific International Lines (PIL) and Hamburg Süd. But, according to Erdly, the parties are in “active discussions” with rival shipping lines and are “very optimistic” that others will join “very quickly”. “The network is as important as the software product itself,” he explains. “The platform becomes more valuable as we add network participants. The most critical point for us is that we are able to bring on other ocean carriers, because that’s where we really get to expand the network.” To date the TradeLens network includes more than 20 port and terminal operators, including PSA Singapore and APM Terminals, a large number of beneficial cargo owners (BCOs), freight forwarders, transportation and logistics companies, as well as customs authorities in the Netherlands, Saudi Arabia, Singapore, Australia and Peru. After the commercial release, which is scheduled to take place by the end of the year, participants will be able to access the core platform through a subscription-based model. TradeLens will also host an “applications marketplace”, where – through APIs – participants can develop and offer value-added services and apps themselves. The post Maersk and IBM go live with global blockchain trade platform TradeLens appeared first on Global Trade Review (GTR).

Swift opens up payments tracking to corporates: “The beginning of a long journey”

From Global Trade Review (GTR) | By Sanne Wass

Corporates will soon be able to track their payments in real time as part of Swift’s global payments innovation (gpi) initiative – a function of the system that was previously only available to them through their banks. Over the coming months, Swift, together with 10 multinational corporates and 12 leading banks, will pilot what it calls an “enhanced multi-bank standard” for tracking payments, aimed specifically at bringing more transparency to multi-banked corporates. Swift’s payments tracker, which enables users to trace cross-border payments in real time, was rolled out in May last year. It came in response to a common complaint from Swift users about the lack of visibility on their payments status. Until now the tracker has only been available to banks, meaning that their clients have been dependent on them to monitor the status of their payments. “The unfortunate thing is that if you work with several banks you end up with several trackers,” Martin Schlageter, head of treasury operations at Roche, tells GTR. “For the initial setup within gpi, banks wanted individual trackers because they can build services around them. It means we would basically have a tracker for each and every bank that we are working with. This is highly questionable.” Roche, a Swiss multinational healthcare company, is among the firms taking part in the pilot. The aim is to start the live testing with two banks in September/October this year. The design for the system has been developed through co-creation workshops with pilot participants, which also include Airbus, Bank of America Merrill Lynch, BBVA, BNP Paribas,, Borealis, Citi, Deutsche Bank, General Electric, IATA, Intesa Sanpaolo, JP Morgan, LVMH Moët Hennessy Louis Vuitton, Microsoft, National Australia Bank, Ping An Group, RTL Group, Sumitomo Mitsui Banking Corporation, Société Générale, Standard Chartered Bank and UniCredit. The new capability essentially means that corporates will be able to bypass their banks’ trackers and instead integrate gpi flows in their ERP and treasury management systems. It’s a function that will be particularly useful for companies that want to initiate and track gpi payments to and from multiple banks. When initiating a payment instruction with the gpi tracker in its current iteration, a bank includes a unique end-to-end transaction reference (UETR), which enables it to trace the payment. In the upcoming pilot, a UETR will be created for the corporate client, allowing the corporate to follow the payment in its own system, independently of its banks. Schlageter explains the typical payment process without a UETR: “If you send a message through the old process, you get an acknowledgement that the message is on its way, but then it’s a black box. When another bank or a supplier then has a question regarding this payment, you start sending emails to your bank, they contact the next bank in the chain and so on, and it can take weeks before you get a copy of the Swift message to realise that fees were deducted, or a payment got stuck or whatever. It’s cumbersome and not transparent at all. It really eats up resources.” “Corporates want to track payments in real time and get confirmation of credit to the beneficiary’s account,” says Swift’s global head of corporates Marc Delbaere. “This new multi-bank capability will enable that experience in a consistent fashion, across multiple banks and multiple corporates. Having this information instantly in the corporate treasury space is what corporate customers are asking for.” But the pilot is just “the beginning of a long journey”, says Schlageter at Roche, noting that it will take time to implement, and there will still be shortfalls: not all banks are live with gpi. Currently, of Swift’s network of 11,000 financial institutions, 180 banks have signed up. However, he is hopeful that the new standard will eventually make cross-border payments easier and more transparent for a company like Roche, especially now that Swift is making it mandatory to include a UETR in all payment instructions across the network from November. Swift also recently announced it is moving towards universal adoption of the gpi, which will see all banks on its global network use the service by 2020. “We will achieve full transparency of all our flows, so this is quite ideal,” Schlageter says. “Once we are live with this, it will change the nature of how we do cross-border payments and how much resources we have to put into supporting these.” He adds that the initiative is also of strategic importance to Roche. “It’s important that we can still rely on Swift as our central comprehensive payment channel. That’s why we have been pushing Swift to close this last hole, where they are really losing ground, because they were not living up to corporates’ expectations.” The post Swift opens up payments tracking to corporates: “The beginning of a long journey” appeared first on Global Trade Review (GTR).

New deal to bolster green investment market in Palestine

From Global Trade Review (GTR) | By Sanne Wass

Bank of Palestine has secured a €12.5mn credit line from the French development agency AFD for the financing of green and renewable energy projects in the West Bank and Gaza. The facility is aimed at developing a market for green investments in Palestine by giving Palestinian enterprises, in particular SMEs, easier access to green finance. Bank of Palestine will on-lend the money to projects related to environmental efforts and renewable energy. It will also target retail, industrial, tertiary and agricultural sectors in order to replace high energy consumption equipment. This includes supporting hotels, offices, hospitals and supermarkets in saving energy and reducing water consumption. In the agricultural sector, it will promote energy efficiency in irrigation and biogas technology. A focus on green and renewable energy is essential to secure future energy sources in the Palestinian territories, which today rely heavily on Israel for their electricity imports, and energy costs more than anywhere else in the Middle East. Researchers have found Palestine’s main renewable energy sources to be solar energy, wind energy and biomass, which could significantly reduce the energy dependence on neighbouring countries. The green credit line was agreed under AFD’s green finance programme Sunref, a scheme that provides local banks with long-term loans on favourable terms. It also offers technical support, assisting banks in project financing and helping companies implement green strategies. Bank of Palestine has previously partnered with AFD under the Ariz loan guarantee programme, an instrument by which AFD provides up to 50% credit risk cover on corporate loans. Starting in 2014, the programme has so far financed 255 projects worth a value of between US$20,000 and US$300,000. Bank of Palestine is the West Bank’s largest financial institution and lender to SMEs, a sector that represents 90% of the Palestinian economy. In the last 10 years its assets have grown from US$500mn to almost US$5bn, according to the bank. The post New deal to bolster green investment market in Palestine appeared first on Global Trade Review (GTR).

Barclays to offer digital invoice finance after taking “significant” stake in fintech firm

From Global Trade Review (GTR) | By Sanne Wass

Barclays is to expand its invoice finance offering for SME clients, having partnered with MarketInvoice, a fintech firm and Europe’s largest online invoice financing platform. In doing so, Barclays has committed to acquiring a “significant minority stake” in the firm, the bank says in a statement. The bank also plans to fund invoices via the platform, growing its asset base in the small business segment. The aim, Barclays adds, is to give SME clients “seamless access to innovative forms of finance”. As a result of the partnership, customers will get access to MarketInvoice’s single invoice finance product as well as broader digital invoice finance facilities. MarketInvoice’s platform allows SMEs to upload their invoices and sell them to investors, thus unlocking cash during the invoice’s payment period, which can often be up to 120 days. Since it was founded in 2011, MarketInvoice has funded more than 90,000 invoices worth over £2.7bn. The new product will be introduced to Barclays customers “over the coming months” in East Midlands, West Midlands, Herts and North West London, with a full roll-out across the UK set to commence in 2019. MarketInvoice is among a sea of fintech firms seeking to tap into a booming invoice financing market. As reported by GTR in its recent fintech feature, these firms differentiate themselves through technology, utilising emerging tech to shore up security and speed up transaction times. Most recently, MatchPlace, a platform that has been offering foreign exchange and payment services for SMEs since 2016, launched a peer-to-peer invoice financing service in the UK. Seeing a “huge potential” for invoice finance across Europe, the firm expects to soon expand its service to Portugal, France and Spain, and aims to build a book of £30mn within the next three years. There seems to be plenty of space for growth within this market, as more companies (SMEs in particular) move away from traditional banking products to more innovative ways of optimising their working capital. MarketInvoice recently announced that in one year it almost doubled the average amount advanced to UK businesses – from £606,000 in 2016 to £1.14mn in 2017. The partnership with MarketInvoice is undoubtedly an effort by Barclays to capitalise on this trend and stop the flight of SME customers toward alternative financiers. “Invoice financing gives small businesses the power to obtain funding in a fast and innovative way. It is a product that has come of age in the digital era, it’s efficient, effective and controllable for small businesses,” says Ian Rand, CEO of Barclays Business Bank, commenting on the new partnership. Barclays is the first UK high street bank that MarketInvoice has partnered with. Anil Stocker, MarketInvoice’s CEO, says: “It’s exciting to be combining the knowledge and footprint of a 325-year old British banking institution with MarketInvoice’s tech-led online finance solutions. Bringing this together in a strategic partnership can only mean good news for UK businesses, with the segment we’re targeting responsible for upwards of 60% of UK employment.” The post Barclays to offer digital invoice finance after taking “significant” stake in fintech firm appeared first on Global Trade Review (GTR).

Trump’s Iran sanctions deadline: What businesses need to know

From Global Trade Review (GTR) | By Sanne Wass

Firms doing business in Iran “risk severe consequences” as Donald Trump’s first batch of secondary sanctions against the Middle Eastern country come into effect today. August 6 is the first of two deadlines that the US president gave companies to “wind down” activities in Iran when in May he announced he was pulling the US out of the Iranian nuclear deal – officially known as the Joint Co-operative Plan of Action (JCPOA). Calling the JCPOA “a horrible, one-sided deal that should have never, ever been made”, Trump said the US would be instituting “the highest level” of economic sanctions against Iran. The JCPOA was agreed between Iran and China, France, Russia, the UK, US and EU in 2015. While the US maintained its tough stance on US persons dealing with Iran, the JCPOA meant it agreed to lift its so-called secondary sanctions – those that apply to non-US persons and entities engaged in Iranian transactions. Those are the sanctions now being reimposed. However, with the EU expected to enforce a so-called ‘blocking regulation’ – a statute that makes it illegal for any EU company or person to comply with those US sanctions – EU firms will be caught “between a rock and a hard place” when it comes to doing business in Iran and complying with the US requirements. So says Leigh Hansson, partner at law firm Reed Smith, where she heads up the international trade and national security team. In an interview with GTR, she explains what changes will come into effect and how they will impact business.   GTR: August 6 will see the first batch of US secondary sanctions reimposed on Iran. Which sanctions are being reenforced and which type of businesses should be especially aware of these changes? Hansson: On August 6, the US government will re-impose secondary sanctions on the following:
  • The purchase or acquisition of US dollar banknotes by the government of Iran;
  • Iran’s trade in gold or precious metals;
  • The direct or indirect sale, supply or transfer to or from Iran of graphite, raw or semi-finished metals such as aluminium and steel, coal and software for integrating industrial processes;
  • Significant transactions related to the purchase or sale of Iranian rials, or the maintenance of significant funds or accounts outside the territory of Iran denominated in the Iranian rial;
  • The purchase, subscription to or facilitation of the issuance of Iranian sovereign debt; and
  • Iran’s automotive sector.
These sanctions also apply to associated services, and therefore all businesses which engage in dealings related to these industries should carefully review their transactions that directly or indirectly relate to these sectors to ensure they are not inadvertently violating these newly imposed sanctions.   GTR: Trump’s second deadline is November 5. What sanctions will come into force then? Hansson: On November 5, the US government will reimpose secondary sanctions on the following:
  • Iran’s port operators and shipping and shipbuilding sectors;
  • Petroleum-related transactions, including the purchase of petroleum, petroleum products or petrochemical products from Iran;
  • Transactions by foreign financial institutions with the Central Bank of Iran and other Iranian financial institutions;
  • The provisions of underwriting services, insurance or reinsurance; and
  • Iran’s energy sector.
Like those that will be reimposed in August, these sanctions also apply to associated services, and therefore all business which engage in dealings related to these industries, such as shipping and those involved in the oil and gas industry, should make sure they are not engaged in activities that may violate sanctions. On November 5, the US government will also re-designate many of the persons and entities who were removed from the List of Specially Designated Nationals (SDN) pursuant to the Joint Comprehensive Plan of Action (JCPOA) in January 2016. Following November 5, engaging in transactions with these persons and entities can subject non-US persons to sanctions.   GTR: The EU is anticipated to impose a so-called ‘blocking regulation’. What would this mean for EU firms doing business or looking to do business in Iran? Hansson: The EU blocking regulation has been amended to include the US sanctions that are being reimposed on August 6 and November 5 and is expected to come into effect any day now. Under that regulation, EU persons are prohibited from complying with any requirement or prohibition that is based on the reimposed sanctions. EU firms are therefore between a rock and a hard place when it comes to doing business and complying with the US requirements. It is worth noting that the EU blocking regulation has been in place since the early 1990s and there is little, if not any, record of enforcement. In contrast, there is a long history of the US government enforcing its sanctions programmes against non-US entities. However, many EU countries have stressed their commitment to the JCPOA, so it may be that this could be a new era of enforcement by the EU.   GTR: In what way have firms in both the US and Europe reacted to the announcement of these new sanctions? Are they prepared for the deadline? Hansson: President Trump made his announcement the afternoon of May 8, and by 9pm we had received countless calls and emails from both US and EU companies inquiring about what they needed to do to remain in compliance with US sanctions. Those calls and emails have not let up since then. Within weeks of this announcement, a number of large companies announced they would exit Iran. Among those companies are Total, the French oil company, Danish shipping company Maersk, and Peugeot. Since the US announced it would not grant sanctions waivers for European companies seeking to remain in Iran, it seems the number of companies announcing that they are ceasing Iranian business has increased. In sum, most companies are prepared or close to being prepared for the deadlines.   GTR: What consequences could firms face if they do not comply with these changes? Hansson: The US takes compliance with its sanction programmes, especially its Iran programme, very seriously. If persons and companies fail to comply with these sanctions, the US has the authority to put that person or entity on the SDN list. US persons are prohibited from engaging in all transactions and services with SDNs and even non-US persons run the risk of being sanctioned if they engage in significant transactions with certain SDNs.   GTR: How do you expect the new US stance to impact Iranian trade going forward? Hansson: As I mentioned, the US takes its Iran sanctions programme very seriously and hostilities between the two countries seem to be escalating. I do not expect the sanctions to be reduced anytime soon and I think we will see significant enforcement actions by the Office of Foreign Assets Control (OFAC) against non-US companies. Consequently, I expect to see most companies polish up their compliance programmes, which will then cause companies to withdraw from transactions even remotely related to Iran. The post Trump’s Iran sanctions deadline: What businesses need to know appeared first on Global Trade Review (GTR).

Industry veteran launches receivables finance community

From Global Trade Review (GTR) | By Sanne Wass

A new industry organisation has been launched to create a global voice and community for those involved in open account receivables finance around the world. Under the name World of Open Account (WOA), its mission is to be a “global collaborative competence centre for more, better and safer receivable financing”. It was founded and is run by Erik Timmermans, together with eight founding companies and with support from eight strategic advisors. Timmermans has worked in the receivables financing space for decades. He was secretary general at IFG (International Factors Group – a global trade association for factoring) from 2005 to 2015 and played a key role in the merger between IFG and FCI in late 2015. Speaking to GTR, he says that, over the years, he has seen a great need for a more accessible, peer-to-peer environment where professionals in receivables finance can network and share knowledge. This is where Timmermans sees WOA playing a role. He insists that it “is not an association, it’s a community”, and that it focuses on “a number of things that associations try to do but not always well: connecting people”. That’s why he is ditching the top-down approach of traditional associations in favour of a peer-to-peer structure, which is primarily run through digitally-driven initiatives (including webinars and other online offerings) to achieve as wide a reach as possible. One key element will be an online database of individual professionals, bank and non-bank financiers, service providers and other stakeholders, which can be used as a forum to discuss issues and ask for advice, knowledge and support. It is also hoped that firms looking for working capital solutions will engage in the project as well. “It should not just be a better phone book or LinkedIn group for the world of receivables finance, it should go beyond that,” Timmermans says. WOA will also work as a platform for community expert groups, something Timmermans believes will be the “backbone of the organisation”. The aim behind these groups is to bring new product and market ideas, as well as new technology, to the community. One example he mentions as an obvious area for expert groups to emerge around is blockchain. “There are a number of initiatives going on, but there is still a very big issue in getting feedback from the market. Once we have a community, members could create a community expert group for blockchain solutions for investing in receivables or factoring. They will work together, maybe create a survey, and that can lead to very quick feedback,” he says. The website and app will go live by the end of the year. Membership will be based on a so-called ‘freemium model’, whereby it will be free to sign up and use basic services, while more advanced features will be subject to a membership fee. The launch comes amid a global move away from traditional trade finance instruments towards more open account trading, which has created a growing need for new financing solutions. Meanwhile, the trend of unmet demand for trade finance continues. In a recent survey conducted by the ICC Banking Commission, 61% of banks perceived that there is more demand for trade finance than there is supply, while 80% expected little or no growth in traditional tools like the letter of credit. “If WOA is successful, in a few years from now, it’s not only about the number of individuals and companies who will be involved in the community, but it will definitely have contributed to an increase in open account, and that can be domestic or international business, and more receivables financing,” Timmermans ends. The post Industry veteran launches receivables finance community appeared first on Global Trade Review (GTR).

Japanese players enter debut facility in Oman

From Global Trade Review (GTR) | By Sanne Wass

A project to build a seawater desalination plant in Oman has secured US$114mn from a number of Japanese banks with cover from Japan’s export credit agency Nexi. MUFG Bank, SMBC and Shinsei Bank will extend the loan to the Al Asilah Desalination Company in the form of project finance. Currently under design, the project is expected to launch operations in 2021. Thereafter it will sell approximately 80,000m³ desalinated water a day for over 20 years to the Oman Power and Water Procurement Company, the single buyer of power and water for all IPP/IWPP projects within the Sultanate of Oman. Al Asilah Desalination Company was founded in November as a joint venture between Japanese JGC Corporation (75%), Oman’s United Infrastructure Development Company (20%) and Korea’s Doosan Heavy Industries & Construction (5%). The firm will own and operate the project, which will be located at a coastal site near Asilah, in the governorate of Southern Sharqiyah in eastern Oman. In a statement, Nexi says the facility comes as part of the Japanese government’s decision to strengthen its support for water business overseas. It is the first time that Nexi has provided insurance for a seawater desalination plant project. The post Japanese players enter debut facility in Oman appeared first on Global Trade Review (GTR).

World’s first blockchain commodity exchange to transform African agribusiness

From Global Trade Review (GTR) | By Sanne Wass

Binkabi, an Africa-focused blockchain startup, is set to pilot what it says will be the world’s first commodity exchange on blockchain. The firm will first launch the exchange in Nigeria, having entered a partnership with TAK Agro, a local agricultural conglomerate. But ultimately the goal is to expand, one country at a time, into a pan-African platform. Formed in 2017, Binkabi has to date focused on developing one of its core products, Barter Block, which it is currently implementing with a number of commodity traders in partnership with Ecobank and will be fully launched early next year. Powered by blockchain technology, Barter Block matches trades moving in opposite directions (for example, an export of cashew nuts from Côte d’Ivoire to Vietnam and an export of rice from Vietnam to Côte d’Ivoire) for the purpose of settlement, allowing bilateral trades to be settled in local currencies, thus saving FX costs. Now, in partnering with TAK Agro, the startup is taking the next step towards its vision to empower commodity supply chains to conduct more profitable and fair trade through blockchain technology. The hope is that the new commodity exchange would give producers in poorer emerging countries more power to hedge price risks and better access funding solutions. While many countries in Africa have previously attempted to set up commodity exchanges, “the reality is that most of these exchanges have failed, because of lack of liquidity, but also the cost and lack of a supportive legal system to setting up and running them”, Quan Le, CEO and co-founder of Binkabi, tells GTR. He adds that while 28 countries across Africa currently have commodity exchange initiatives, only two have succeeded: South Africa and Ethiopia. This is a problem blockchain can help solve. The idea behind the new exchange is to lower the entry barrier for people wanting to trade commodities: instead of depending on brokers or paying expensive fees for a spot on the traditional trading floor, the decentralised platform will be a place for anyone, anywhere in the world to trade commodities in the form of digital tokens. How does it work? When a farmer or depositor brings a commodity into a warehouse, a warehouse receipt is issued and converted into a token which can then be traded on the blockchain platform. This is what Binkabi calls the “tokenisation of commodities”. “It makes the commodity tradable instantly, and you can also use the token as collateral to borrow money from a bank,” Le says. “More people can engage in it, and really make the market very liquid.” The pilot will see the tokenisation of 50 to 100 tonnes of four agricultural commodities – rice, maize, sorghum and soybean. These will be traded over a six-week period by 30 to 50 “blockchain enthusiasts” taking part in Binkabi’s ‘emerging traders programme’. As part of the partnership, TAK will provide the physical assets and infrastructure, while Binkabi will provide the technology.   Getting banks involved Binkabi’s local banking partners for the project are Sterling Bank and Unity Bank, who will take on the role of clearing banks. While the first pilot will not involve any financing, the intention is that the financial institutions will get involved in this at a later stage. “The banks want to see how it works in practice, to adapt their procedures to lending to this,” says Le. Financing warehouse receipts in the form of digital tokens is something that would draw interest from the banks, explains Edward George, head of Ecobank UK and head of group research. But, he adds, the blockchain-based system will only be successful if it can gain the same level of trust that the current paper-based warehouse receipts have today. “If you do it in a way that banks are comfortable with, absolutely they will finance it, and they would definitely gain so much in terms of managing risk better,” he tells GTR. As such, George believes the use of blockchain could be a “breakthrough” to delivering an efficient exchange that will have the potential to “transform agribusiness” on the continent. “Theoretically it’s far superior to the existing system, because blockchain is designed for fragmented information and that’s exactly what a value chain is, particularly for commodities,” he says. “Trade is all about documentation – it has to all be correct before anything can move. The problem is that if there is any kind of dispute, it can often take weeks to assemble all the documentation to assume who said what. Digitally you can do it in seconds. So if you digitise it, you massively speed up the process.” After the pilot, Binkabi will run a number of other tests to refine the design and technology. It is currently obtaining a licence to run the exchange in Nigeria, and will look to start trading in Q1 next year. “Nigeria is encouraging commodity exchanges to be set up,” Le says. “Of course once we begin the paperwork, we will see how it pans out, but it looks like the macro environment in Nigeria is right at the moment.” The plan is then to expand to other countries. The idea, Le explains, is to have a common infrastructure that individual exchanges can easily “plug into”, making it straightforward and cost-effective to set up new exchanges. “We would like to have a common technology, including the same standards for commodities, tokenisation, trading and settlement,” he says. “Another common layer is the liquidity pool. The buyers who are buying cashew nuts from Nigeria would also like to buy cashews from Ghana and Côte d’Ivoire. With every new exchange coming on board, not only do they benefit from the existing liquidity pool, they also contribute to it.” The platform will ultimately integrate with Barter Block. The post World’s first blockchain commodity exchange to transform African agribusiness appeared first on Global Trade Review (GTR).

Gallagher recruits Marsh duo to bolster UK trade credit team

From Global Trade Review (GTR) | By Sanne Wass

Gallagher has expanded its Manchester-based trade credit and surety team with two new hires, who will help the firm build out its footprint in the north of England.

Colin Cunningham and Rachel Smailes both join from Marsh, a rival brokerage firm.

Cunningham (pictured) becomes Gallagher’s national sales leader for trade credit and surety, a UK-wide role. He brings 28 years of experience, having spent the past 17 at Marsh, where he most recently held a similar position. At Gallagher, he will support the wider national teams and look to maximise opportunities arising from customers across the firm’s network of regional branches.

Smailes has joined as account executive, bringing 27 years of experience in trade credit. She joined Marsh in 1998 and was most recently client advisor leader. In her new role, she will take responsibility for managing and building client portfolios and support the business development agenda for the north.

Gallagher writes in a statement that the decision to scale up the practice in Manchester “comes on the back of strong 20% organic revenue growth across the UK niche” and “a growing proportion of both clients and new business opportunities arising in the north”.

Commenting on the two hires, Tim Fisher, UK managing director of trade credit and surety, says: “Colin’s proven track record in sales planning, delivery and leadership will ensure not only our trade credit and surety team members, but also our wider Gallagher colleagues, are fully supported in helping clients manage their evolving risk exposures. Rachel is another great addition to our growing team bringing huge experience, market insight and customer service skills as we look to build out our footprint across the north.”

The post Gallagher recruits Marsh duo to bolster UK trade credit team appeared first on Global Trade Review (GTR).

Absa to increase risk-taking appetite on African banks

From Global Trade Review (GTR) | By Sanne Wass

The African Development Bank (AfDB) has approved an unfunded US$250mn risk participation agreement with South Africa’s Absa Bank. The new deal will allow Absa to increase its risk-taking appetite on local banks in Africa and provide them with more trade finance facilities. AfDB forecasts that, when fully utilised, the agreement will catalyse trade worth more than US$2bn in three years. Under the agreement, AfDB and Absa will share the default risk on a portfolio of eligible trade transactions originated by African issuing banks and indemnified by Absa. AfDB has committed to assume up to 50% of every underlying transaction issued, while Absa will confirm the transaction and bear the remaining risk. With the deal the parties are seeking to address a challenge that most African issuing banks face: that they are relatively small and thus struggle to obtain adequate trade finance facilities from international confirming banks to support African importers and exporters, particularly SMEs. This challenge has grown significantly over the last few years as many international banks have reduced their credit risk stake in developing markets or left them altogether in what is also referred to as “derisking”. Absa, until last year a Barclays subsidiary, has itself been a victim of this trend. In 2016 Barclays quoted the regulatory costs of maintaining operations on the continent as the reason for plans to lower its 62.3% ownership stake in Absa Group (or Barclays Africa Group as it was known at the time) down to a “non-controlling, non-consolidated position”. Since then, Barclays has reduced its share to just 14.9%. “This facility, through a 50/50 risk sharing approach, will help to promote broad-based economic growth on the African continent through increased facilitation of import-export activities of African corporates and SMEs, and increase intra-Africa trade and regional financial integration,” explains Absa’s financial sector development director, Stefan Nalletamby. The post Absa to increase risk-taking appetite on African banks appeared first on Global Trade Review (GTR).
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