Trade-focused fintech Mercore has completed its first digital bill of exchange transaction in Africa, facilitating sales of organic pesticides by a Kenyan producer to a buyer in Belgium. 

The counterparties generated and signed the digital bills using Mercore’s digital platform, which is powered by trace:original, a solution developed by Swedish fintech Enigio. Mercore Capital, the company’s financing arm, then purchased the resulting receivables. 

London-headquartered Mercore says it worked in partnership with Tradeable House Africa, a company focused on facilitating trade across the continent, while law firm Sullivan drafted the digital receivables finance agreement in keeping with the UK’s Electronic Trade Documents Act (ETDA). 

Anthony Wadsworth-Hill, Mercore’s chief operating officer, hopes that wider usage of digital trade payment instruments will lower the cost of financing, improve operational resilience and help close Africa’s vast trade finance gap. 

“The trade finance gap is typically exacerbated by high know-your-customer costs, high execution costs and complex structures,” he tells GTR. “By doing this digitally, we can bring a lower cost of execution.” 

Mercore chief financial officer David Stafford adds: “The impactful aspect of this was that within 24 hours of the Belgian buyer accepting the bill, we were able to disperse funds, where typically you would have to wait a few days at least.” 

Tradeable House Africa’s managing director, Isha Kasule, says the transaction is “a monumental step towards digitalisation within the trade sphere in our region”. 

“Tradeable is excited by the growth potential that our collaboration with Mercore shall unlock,” he adds. 

The transaction has been hailed by leading proponents of trade finance digitalisation, including Chris Southworth, secretary-general of the International Chamber of Commerce United Kingdom. 

“It is more evidence of the practical benefits of trade digitalisation and particularly important to helping make trade with Africa cheaper, faster, simpler and more sustainable from which we all gain,” he says.  

“From all of the evidence we have seen to date, there are no downsides to digitalisation for any company wanting to better manage cash and be more efficient and profitable.” 

Sarah Green, law commissioner for England and Wales, adds that the deal showcases the potential of the UK’s ETDA – which gives digital trade documents the same legal footing as their paper-based equivalents – to “transform international trade by addressing the trade finance gap”. 

Mercore’s Wadsworth-Hill explains the company is “seeking to be pioneers” in taking the benefits of those reforms overseas. 

“Kenya is in the Commonwealth and has that underlying common law structure, and there is quite a lot of precedent as well as international conventions for English court judgments to be enforceable overseas, particularly in anglophone jurisdictions as many of those in the Commonwealth are,” he says. “That’s our rationale for taking it into this market.” 

Though the deal is Mercore’s first facility in Africa backed by a digital negotiable instrument, it says it has “several more in the pipeline”. 

Stafford says: “As a digital provider, and as one of the companies that is looking to be an early adopter of the digitisation of trade, we’re always keen to use digital bills of exchange or promissory notes where there is a commercial rationale for doing so. 

“The underlying trade structure we’re looking to use is pretty standard and highly replicable for us as a business where execution can be completed electronically.” 

In February last year, Mercore carried out what was believed to be the first digital bill of exchange transaction in the UK, facilitating sugar imports from Nicaragua. Again, digital documents were issued via trace:original, while financing was completed using an electronic payment undertaking.