Egypt expands customs management via blockchain and shifts to multimodal


© Alexei Novikov

Following the launch of its National One-Stop Shop for Foreign Trade Facilitation (NAFEZA) last year, 80% Egyptian-owned public company Misr Technology Services (MTS) has extended its agreement with CargoX to provide Ethereum blockchain services for the next five years.

Ethereum is a decentralized and open source blockchain with smart contract functionality. Since the use of NAFEZA was made mandatory in Egyptian ports last year, the transfer system has processed more than 1.1 million commercial and financial documents for some 75,000 customers.

The new agreement extends it by five years and incorporates air cargo, expanding the program to encompass 30 ports, airports, border crossings, free zones and warehouses.

The system operates through immutable entries in a distributed ledger system, allowing legal agreements such as bills of lading to be processed without paperwork, simplifying the process. CargoX says the NAFEZA/CargoX system has reduced average cargo release time from nearly a month to just nine days and reduced compliance costs for shippers by $600 to $165.

MTS CEO and President, Capt Ossama al Sharif, said that “…the establishment of the National Single Window for Cross-Border Trade” would enable “the transformation of 19th century manual and paper-based customs procedures into a digital ecosystem modern and state-of-the-art”. .”

The deal provides for a state-owned entity to take the lead, an unusual development in blockchain technology. A CargoX spokesperson said The Loadstar the clout of government entities would be needed “to bring the market to the tipping point where adoption becomes mainstream.”

The spokesperson added: “When the government dives into the data and realizes that such a one-stop shop will increase government revenue, improve compliance, increase the efficiency of resource allocation and facilitate cross-border trade in general, the choice of a one-stop shop instead of several is obvious. ”

Based on Polygon, CargoX’s consensus mechanism is able to avoid the deleterious energy demands of conventional bitcoin-based blockchains, by using proof-of-stake rather than a proof-of-work consensus protocol, like bitcoin. .

The Polygon network would consume approximately 0.79 GWh (or approximately 0.0005% of Egypt’s annual energy consumption).

“It mainly depends on the consensus algorithm; the more blockchain implementations move to proof-of-stake (as opposed to the more power-intensive proof-of-work), the lower the energy footprint,” CargoX explained.

“The choice of blockchain technology depends a lot on the energy footprint and CargoX makes sure to use sustainable solutions.

“In terms of blockchain interoperability, our distributed application can currently be deployed on any EVM-enabled blockchain that supports smart contracts. If cross-chain compatibility is required for the lifetime of a single document, we can link it from one string to another without any extra effort.

“Extending to other types of blockchains is simply developing additional connectivity adapters that can be integrated into our system to transfer data over other types of chains that support non-fungible token transfer (that’s as well as our documents are represented on the blockchain).