IOTA Foundation enables paperless trade in East Africa in partnership with Trademark East Africa

BERLIN, July 6, 2021 – The IOTA Foundation, the non-profit foundation driving open source distributed ledger technology for a new digital economy, announces the initial success of its ongoing collaboration with Trademark East Africa (TMEA) which aims to build a decentralized digital infrastructure for optimized trade exports. IOTA’s permissionless distributed ledger technology helps solve one of global trade’s biggest challenges -- paperwork, clogging up nearly each link in the supply chain. 

The IOTA Foundation and Trademark East Africa are creating an interconnectivity technology highway for East African businesses and government systems to communicate in a transparent, secure, and instantaneous manner, both amongst themselves as well as with international partners. It enables traders to focus on developing their product and optimizing their business by digitizing bureaucratic processes and moving export documentation to the Tangle, IOTA’s ledger data structure. 

According to Trademark East Africa’s estimates, an African entrepreneur is liable to fill out an average of 96 paper documents for a single transaction. The system developed by the IOTA Foundation and TMEA anchors the key trade documents on the Tangle and shares them with customs in destination countries to speed up the export process and make African companies more competitive globally. 

The initial phase of the project, dubbed Trade Logistics Information Pipeline (TLIP), focused on the Kenyan flower industry which exports roughly 180,000 tonnes of flowers annually, translating to about seven million stems daily. Given the nature of the goods, the supply chains must be optimized and efficient in order to deliver fresh products on time.

Currently, flower farmers in Kenya face a mountain of paperwork and long communication chains until they can ship their highly perishable product to customers. In the pilot, the IOTA Foundation and TMEA successfully mapped the export process of Kenyan flower farmers, established improved user journeys, and engaged with the technical teams within border agencies.

As a result, trade partners, authorities, and logistics companies can now collaborate with transparency, trust, and perpetual access to reliable, verified data. By moving export documentation to the IOTA Tangle, traders could drastically reduce their time and monetary costs as well as virtually eliminate the risks of lost or inaccurate paperwork.

Under TLIP’s umbrella, project partners worked with a variety of stakeholders in Kenya – from producers to logistics companies and government agencies – to develop coordinated frameworks of operations which streamline paperless trade processes. Since regulation and paperwork are a state prerogative, the Kenyan Revenue Authorities (KRA), the Kenya Plant Health Inspectorate Services (KEPHIS), and other government agencies were among the project’s most important stakeholders. 

TradeMark East Africa has made the project a strategic priority and extended its contract with the IOTA Foundation to take it to the next level. The next stage is to expand testing into more tradelanes, such as tea export to the UK, fish to Belgium, and textiles to the US, while also working with other governments in East Africa to test the integration of the technology with their border agencies. As international trade is complex and has many stakeholders, this approach will onboard new actors and build experience and capabilities. Technology is only one part of the equation: regulation and international standards for exchange of trade data between countries are also impacted. 

“The technology we use, with the permissionless distributed ledger, is about bringing trust to all these actors at the vital point when they exchange the data. The cost of doing cross-border trade has an enormous effect on the cost of goods, which in turn affects the employment and consumer markets,” said Jens Munch Lund-Nielsen, Head of Global Trade & Supply Chains, IOTA Foundation. “The Trade Logistics Information Pipeline project will have an enormous impact on all traders in Kenya. It shortens the time goods take to cross borders, it takes out failures, and it makes the product much cheaper overseas.”

“COVID-19 challenged the project as travel became impossible. Despite many challenges the IOTA Foundation has proven to be a steady partner in development and we are excited to enhance our collaboration,” said Alban Odhiambo, Sr. Director Trade Environment, TradeMark East Africa.

The IOTA Foundation will engage governments around the world to take advantage of this innovation in the aim of making cross-border trade inclusive and easy for all.