The Covid-19 pandemic is prompting African authorities and organisations to fast-track the digitisation of trade processes – a trend that will yield long-term benefits for the entire continent, writes Vinod Madhavan, Group Head, Trade at Standard Bank Group.


Trade, in general, and African trade specifically still relies heavily on physical documentation, including physical signatures and manual data entries.

This is inefficient and costly, and partly explains why intra-African trade remains low relative to other regions. Addressing this issue will grease the wheels of trade and promote faster, more sustainable economic growth across the continent.

The benefits of more seamless trade are well documented. According to the Organisation for Economic Cooperation and Development (OECD), streamlining trade processes generates savings worth between 2% and 15% of the value of the goods traded. The OECD also estimates that up to 7% of the value of international trade each year is swallowed up by the cost of documentation. Further, the World Bank says that for every dollar invested in trade facilitation initiatives in developing countries, there is a return of up to US$70 in economic benefits.

Africa has much room for improvement in this area. While the continent’s banking system has made material progress generally when it comes to innovation in digitisation (for example, the adoption of mobile money), trade has remained stubbornly paper-based across the continent.

The Covid-19 crisis has been a stark reminder of the inefficiencies of paper-based trade services and has provided the political and social impetus needed to change this. Authorities and organisations that were previously hesitant to accept electronic bills of lading, for example, are now starting to embrace these technologies.

In the first few weeks of the outbreak, courier companies could not deliver goods to certain countries simply because they were not able to deliver physical bills of lading documents to banks. This has prompted authorities to take more urgent steps towards digitisation.

However, making the shift is no mean feat considering that when corporates trade, at least 20 legal entities are involved in handling the physical documentation, including shippers and customs authorities.

To overhaul these dated processes and systems, collaboration between governments and industries is needed to modernise and align Africa’s regulatory frameworks.

Financial institutions are already playing a key role in driving the digitisation agenda, leveraging technologies including artificial intelligence, blockchain, cloud computing and data analytics to streamline trade processes.

Among the benefits is the ability to vastly reduce the time it takes to evaluate or validate documentation – which can consist of 100 pieces of paper – against letters of credit.

To that end, Standard Bank Group partnered with fintech company Traydstream in 2019 to digitise the process of checking these documents for discrepancies. In some of our markets, this allows us to reduce validation times from days – international banking norms allow for five working days – to less than an hour.

Given the collective task at hand, there is a need for innovative and unconventional thinking as we migrate from physical to digital documentation. Technologies including application programming interfaces (APIs) are also playing an important role in enabling the shift.


A quantum shift

Standard Bank Group has for some time been taking incremental steps to digitise components of the trade processes for clients.

However, the bank’s QuantumTrade solution – a platform on which clients can instruct the bank to issue domestic guarantees and letters of credit using a process that is completely digital – is an unconventional way to offering digital trade for clients, from application to issuance.

The traditional paper-based application process could take hours or even days and weeks, since documents would have to physically change hands. With QuantumTrade, the end-to-end processing time has been reduced to an average of just 25 minutes. The platform also instantly issues draft letters of credit to clients to facilitate supplier negotiations and speed up the entire process.

Developed in the first half of 2019, the platform is being piloted in Uganda and used by small and medium-sized companies as well as large corporates.

By October 2020, we aim to fully digitise all client transactions focused on letters of credit and guarantees in the country.

We will soon look to roll out this capability to other markets in our footprint.

QuantumTrade falls under our broader Quantum Leap innovation programme, which is aimed at reimagining transaction banking.

Alongside these initiatives, Standard Bank is also in discussions with multiple regulators across the continent to consider the best approach to amending regulations, even if only temporarily in the midst of Covid-19. Given the severe disruption to global supply chains, authorities are largely supportive and welcoming of these initiatives.

There is a broader recognition that by digitising signatures and documents, and by leveraging data, artificial intelligence and automation, we can significantly reduce friction in the trade process and boost activity. By extension, this means we will be able to partly offset the impact of Covid-19 on Africa’s trade industry.


A changing landscape catalysed by Covid-19

In addition to the move towards digital trade processes, we have also been encouraged by the entire banking industry’s move to rally together behind a common cause from the early days of the Covid-19 crisis.

Across Africa, banks, regulators and corporate clients took urgent steps towards supporting the economies, thereby allowing industry participants to avoid resorting to force majeure clauses – a scenario that would have had deep ramifications across the trade value chain. Following the introduction of national lockdowns, corporates were contending with a liquidity crunch given that cash conversion cycles – particularly for exporters and importers – suddenly became much longer.

Banks have also been sharing solutions and best practices with the International Chamber of Commerce (ICC), which has proactively distributed key learnings and insights across the industry. In a time of crisis, the industry has pulled together in the interests of clients and economies and – for the time being – put aside its competitive nature.

The entire cross-border trade landscape has been impacted significantly amidst the pandemic, with most countries shutting down borders in an effort to curb the outbreak.

Africa saw roughly half of its trade impacted in a matter of weeks, given that 49% of the continent’s exports and imports are with the European Union, China and the US – regions most impacted by Covid-19. The crisis had also sapped the demand for, and price, of commodities, meaning that commodity-exporting nations such as Zambia, Nigeria, Angola and Mozambique have encountered liquidity and foreign exchange challenges.

Solvency and liquidity pressures will unfortunately remain a feature in global supply chains for some time. To ensure their sustainability, businesses will need to work more closely than ever with firms across their supply chains.

A vehicle manufacturer, for example, will need to consider the financial position of all suppliers and partner organisations. If even one supplier runs into financial difficulties, this could have major consequences for all players across the chain. Transparency across both financial and physical supply chains is now critical, and banks also need to take on a more proactive role in this area.


AfCFTA: Africa’s stimulus package

Positively, Africa is increasingly well placed to boost intra-continental trade amid the broader retreat of globalisation. The African Continental Free Trade Area (AfCFTA), the launch of which was delayed by six months to January 2021 due to the pandemic, will stimulate trade and investment across the continent by reducing tariffs and non-tariff barriers.

Despite gains in recent years, intra-African trade still accounts for less than 20% of the continent’s total trade. That figure is set to rise meaningfully thanks to AfCFTA and the digitisation of trade processes.

Signed in Rwanda in early 2018, AfCFTA aims to achieve a single rule book for trade and investment and to establish a single continent-wide market that will allow for the free movement of businesspeople, goods and investments. The initiative covers all 54 member states of the African Union – a market of 1.2 billion people with a combined gross domestic product (GDP) of about US$2.5trn. By the time it is fully operational – with cross-border tariffs removed on 90% of goods by 2030 – it could be the world’s largest free trade zone.

The trading bloc could act as a catalyst for African economies, whose near-term growth prospects have taken a hit due to Covid-19. It could also act as a buffer against future shocks to the global economy, given that it will reduce Africa’s reliance on external markets. It should also allow for African markets to build resilience in supply chains.

At Standard Bank, we are firmly of the belief that Africa’s long-term growth prospects are incredibly bright, and that the initiatives currently underway to digitise trade processes and integrate the continent’s economies will place Africa on a sustainable path to prosperity.


Standard Bank Group is the largest African bank by assets, operating in 20 African countries and five global financial centres. For further information, go to