Dubai Chamber and Emirates NBD to issue blockchain-powered trade finance solutions
Working with smaller order values and volumes, small and medium sized businesses who trade outside the UAE, or those interested in trading, are often in need of trade financing solutions, such as interim loans. However, given the paperwork involved and guarantees needed, it is sometimes challenging for banks to support them in their expansion plans.
The Dubai Silk Road, a Dubai 10X initiative being run by the Dubai Chamber of Commerce and Industry (DCCI) in collaboration with DP World and Dubai Customs, is resolving many of the challenges in the trade sector. One of its key aspects is the use of blockchain technology to digitise and simplify trade processes.
The DCCI has now also signed a Memorandum of Understanding (MoU) with Emirates NBD, one of the largest banks in the region, whereby the latter will provide trade financing solutions to businesses in support of the Dubai Silk Road initiative.
“Emirates NBD was the first in the region to successfully pilot a blockchain use case for trade finance and we look forward to lending our expertise and support to the Digital Silk Road initiative,”Hesham Abdulla Al Qassim, Vice Chairman and Managing Director of Emirates NBD.
The Dubai Silk Road initiative is set to go live next year in June 2020, introducing transparency and efficiency in the supply chain through leveraging the power of blockchain and automating processes.
It is a key initiative to strengthen the diversification of Dubai’s economy as well as stimulate growth and increase Dubai’s attractiveness as a leading business hub in the world.
In addition to the Silk Road Initiative, Dubai also has other blockchain initiatives launched to strengthen trade finance. For example, DCCI partnered with International Chamber of Commerce (ICC) and Perlin, a Singapore-based blockchain startup to offer trade finance solutions.
[Trade finance is] one of the most important tools used today to facilitate international trade and commerce.Hesham Abdulla Al Qassim, Vice Chairman and Managing Director of Emirates NBD.
Other entities in the UAE have also ventured into the same arena, such as Etisalat who partnered with First Abu Dhabi Bank and Avanza Innovations in July this year to launch of UAE Trade Connect.
While the details of these trade solutions have not been made public, it is expected that they could make it easier for SMEs to gain access to letters of credit, insurance and bank guarantees.