Barter 2.0: Leveraging Blockchain and AI to Unlock AfCFTA Trade Potentials.

Abstract

Barter systems, widely used during the formation of early commerce, lack sufficient information flows today. The African Continental Free Trade Area (AfCFTA) is Africa’s largest free trade initiative. It offers free trade access to 1.3 billion people and is expected to significantly boost intra-African trade. Intra-African trade peaked at 21% in 2008 and dropped to 15% in 2021, largely due to non-tariff barriers. Among Non-Tariff Barriers, only 4.4% of firms are aware of AfCFTA, and only 3% of the firms ship goods abroad. Barter enables digital platforms to trade goods without currency, thereby tackling Non-Tariff Barriers and boosting intra-African trade.
The first barter system dates to 6000 BC, making it the oldest mode of transaction. The Mesopotamia tribes first introduced it, and later, the Phoenicians embraced it as a form of trading. They bartered goods to diverse people located in various cities across the Nile and beyond. Barter is a commodity exchange that does not require money. One trades goods in return for remuneration or settles the transaction later on. Counter trade distinguishes between barter-based and non-monetary trade. At these two junctions, settlement units, value exchange, collateral, and risk transfer come into play. In counter trade, two transactions are independently fulfilled, while barter-based trade relies on a single transaction. With barter, both sides can trade their valued goods without the need for money (Mihajlov et al., 2019) ; (Tedeschi et al., 2018).