Pan-African Bank, ABSA, Set to Join Contour Blockchain Network to Enable a Digitized End-to-End Letter of Credit Solution Across Africa

Described as a Pan-African diversified financial services group, ABSA (formerly Barclays Bank) has a presence in 15 African countries and is banking on innovation to drive sustainable growth. The duration for Letter of Credit will be reduced from an average of five to 10 days to under 24 hours.

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Contour, a global network of banks, corporates, and trade partners digitizing trade financing documents such as letters of credit, has announced that Pan-African ABSA Corporate and Investment Bank (Absa CIB) is finalizing negotiations to join the network.

This means that clients of the banks shall be able to adopt a fully digital end-to-end Letter of Credit (LC) settlement process, with the The African Continental Free Trade Area (AfCFTA) which is predicted to boost intra-Africa trade by 52.3 percent and expand the size of the continent’s economy to US$29 trillion by 2050, one of the incentives for the deal.

“Africa is an emerging and exciting opportunity for trade finance digitisation, especially with the promise of AfCFTA in creating the first continent-wide free trade area. This will be crucial in unlocking more potential for trade growth across Africa and to its key trading partners. ABSA is placing itself at the forefront of promoting sustainable growth and development for its clients.” said Carl Wegner, CEO at Contour

A letter of credit, or a credit letter, is a letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount. If the buyer is unable to make a payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.

 

“Currently, many of the continent’s trade transactions are manual and paper-based which slows down trade growth by creating another layer of complexity and costs,” Contour said.

 

On the other hand, presenting digital LC documents can be done from an average of five to 10 days to under 24 hours.

 

Described as a Pan-African diversified financial services group, ABSA has a presence in 15 African countries and is banking on innovation to drive sustainable growth.

 

ABSA Bank lists the following countries on its website where it operates:
  • South Africa
  • Seychelles
  • Ghana
  • Tanzania
  • Kenya
  • Mozambique
  • Uganda
  • Botswana
  • Mauritius
  • Zambia

 

See also
Some of the benefits from digitization include a reduction in the barriers to trade financing and Contour indicates there is an opportunity for fintechs and financial institution to work together towards these benefits.

 

“Digitisation is essential to the democratisation of Trade Finance in Africa, assisting SMEs to gain access to the much-needed financing to stimulate trade. Absa has been investing in digital capabilities over the past five years, our future access to Contour’s platform is a step forward in further developing our digital roadmap and supporting our clients in their growth ambitions across the continent,” said Michelle Knowles, Head of Trade and Working Capital at Absa CIB.

 

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