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How digital can expand free trade

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Free trade has been an enduring goal of the international community for more than a century. Despite broad technological progress, modern transaction systems remain heavily burdened by antiquated practices. This creates “friction” that slows global commerce and hinders service delivery.

Banks, for example, still issue letters of credit to importers, a practice that has remained virtually unchanged for 700 years since its origin in medieval Italy. The practice requires the costly and time-consuming entry of a banking intermediary into many transactions. Cross-border regulations, customs delays, fraud and corruption are also frictions that add a significant layer of costs, time, and complexity to global trade and business flows. An IBM test determined that paperwork alone accounted for 15 percent of the cost of a shipment of produce from Africa to Europe.

Emerging digital technologies, in the form of blockchain and artificial intelligence (AI), can help reduce or eliminate these frictions by enhancing “digital trust” in transactions.

Blockchain became famous as the technology underpinning the digital currency Bitcoin, but its uses go far beyond payments. Blockchain puts data into shared, distributed ledgers that allow every participant access to the entire history of a transaction using a “permissioned” network—one that is highly secure and can distinguish who can see what.

And because it can process and analyze massive quantities of data, AI can use blockchain data to gain valuable insights and detect patterns in nearly-real time. AI systems can employ this data to generate hypotheses, piece together reasoned arguments, and make recommendations for action.

IBM and Everledger, a company that tracks and protects high-value goods, have built a system based on this approach. It applies AI to analyze secure data on one million diamonds that are kept on a blockchain in a fraction of the time humans could do this. Among other things, the platform ensures that diamonds are authentic and compliant with thousands of regulations, including those imposed by the United Nations to prevent the sale of conflict diamonds.

Friction not only inhibits trade and business flows, it also inhibits people. Small farmers, evaluating the costs of shipping produce overseas—from bank fees to paperwork to bribes—may decide it is simply not worth the time and money to try to sell outside of local markets.

Digital technologies can remove barriers to economic participation by lowering costs and building trust into business relationships. For example, blockchain eliminates the prospect that a trading partner will have to engage in an expensive and time-consuming audit should a transaction with a smaller, lesser-known party go wrong. With a single version of transaction data on a ledger, all the required information to settle a dispute may be evident and visible to everyone who has permission to see it. The audit trail is laid out in one place and there is no need to involve costly intermediaries.

IBM estimates that more than $300 billion in the underlying costs of global commerce can be optimized with digital technologies like AI and blockchain. A simulation conducted by our Chief Economist’s office of the impact of blockchain adoption on the economies of Kenya, Nigeria and South Africa found lower prices and significant improvements in real GDP and fiscal balances across each country. These findings are detailed in a new book published by the International Monetary Fund called Digital Revolutions in Public Finance (ISBN 9781484315224).

The good news for governments is that these technologies can be adopted at relatively low cost through the internet and cloud computing. Moreover, their benefits have been shown so far to require small changes to legal and regulatory frameworks. However, private sector cooperation and participation are essential. Businesses must agree to a new set of government policies on transactions and data-sharing built around blockchain.

The democratization of secure transaction processing depends on effective public-private partnerships. National governments have every incentive to create them. Millions who have been denied access to the marketplace will benefit from the removal of friction from international commerce. In this way, the expansion of digital trust can lead us to a new era of freer and more equitable trade.

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Kenya tool to help companies prepare for emergencies

After its team members survived last week’s Nairobi terror attack, Ushahidi decided to release a new preparedness tool for free, writes its CEO, NAT MANNING

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On Tuesday I woke up a bit before 7am in Berkeley, California where I live. I made some coffee and went over to my computer to start my work day. I checked my Slack and the news and quickly found out that there was an ongoing terrorist attack at 14 Riverside Complex in Nairobi, Kenya. The Ushahidi office is in Nairobi and about a third of our team is based there (the rest of us are spread across 10 other countries).

As I read the news, my heart plummeted, and I immediately asked the question, “is everyone on my team okay?”

Five years ago Al-Shabaab committed a similar attack at the Westgate Mall. We spent several tense hours figuring out if any of our team had been in the mall, and verifying that everyone was safe. We found out that one of our team member’s family was caught up in the attack. Luckily they made it out.

At Ushahidi we make software for crisis response, including tools to map disasters and election violence, and yet we felt helpless in the face of this attack. In the days following the Westgate attack, our team huddled and thought about what we could build that would help our team — and other teams — if we found ourselves in a similar situation to this attack again. We identified that when we first learned of the attack, nearly everyone at Ushahidi had spent that first precious few hours trying to answer the basic questions, “Is everyone okay?”, and if not, “Who needs help?” 

People had ad-hoc used multiple channels such as WhatsApp, called, emailed, or texted. We had done this for each person at Ushahidi (their job), in our families, and important people in our community. Our process was unorganised, inefficient, repetitive, and frustrating.

And from this problem we created TenFour, a check in tool that makes it easier for teams to reach one another during times of crisis. It is a simple application that lets people send a message to their team via SMS, Slack, Voice, email, and in-app, and get a response. It also works for educational institutions, companies with distributed staff, as well as part of neighbourhood networks like neighbourhood watches.

This week when I woke up to the news of the attack at Riverside, I immediately opened up the TenFour app.

Click here to read how Nat quickly confirmed the safety of his team.

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Kia multi-collision airbags

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The world’s first multi-collision airbag system has been unveiled by Hyundai Motor Group subsidiary KIA Motors, with the aim of improving airbag performance in multi-collision accidents.

Multi-collision accidents are those in which the primary impact is followed by collisions with secondary objects, such as other vehicles, trees, or electrical posts, which occur in three out of every 10 accidents. Current airbag systems do not offer secondary protection when the initial impact is insufficient to cause them to deploy. 

However, the multi-collision airbag system allows airbags to deploy effectively upon a secondary impact, by calibrating the status of the vehicle and the occupants.

The new technology detects occupants’ positions in the cabin following an initial collision. When occupants are forced into unusual positions, the effectiveness of existing safety technology may be compromised. Multi-collision airbag systems are designed to deploy even faster when initial safety systems may not be effective, providing additional safety when drivers and passengers are most vulnerable. By recalibrating the collision intensity required for deployment, the airbag system responds more promptly during the secondary impact, thereby improving the safety of multi-collision vehicle occupants.

“By improving airbag performance in multi-collision scenarios, we expect to significantly improve the safety of our drivers and passengers,” said Taesoo Chi, head of the Hyundai Motor Group’s Chassis Technology Centre. “We will continue our research on more diverse crash situations as part of our commitment to producing even safer vehicles that protect occupants and prevent injuries.”

According to statistics by the National Automotive Sampling System Crashworthiness Data System (NASS-CDS), an office of the National Highway Traffic Safety Administration (NHTSA) in USA, about 30% of 56,000 vehicle accidents from 2000 to 2012 in the North American region involved multi-collisions. The leading type of multi-collision accidents involved cars crossing over the centre line (30.8%), followed by collisions caused by a sudden stop at highway tollgates (13.5%), highway median strip collisions (8.0%), and sideswiping and collision with trees and electric poles (4.0%). 

These multi-collision scenarios were analysed in multilateral ways to improve airbag performance and precision in secondary collisions. Once commercialised, the system will be implemented in future new KIA vehicles. 

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