There’s no doubt the agriculture industry in Africa needs a total transformation. Over half of the population in Africa rely on agriculture as a source of livelihood. Majority of which are smallholder farmers, living in rural areas that restricted to financial services.
Africa’s agriculture industry has been plagued with a series of challenges ranging from access to finance, poor infrastructure amongst others. All these are constraints on why the industry is not yielding the desired result.
But how can an innovative technology like the blockchain improve an old industry like agriculture?
The word ‘blockchain’ is often associated with cryptocurrencies such as bitcoin; the first application of this innovative technology. However, its applications broaden beyond finance. The blockchain technology has been proclaimed to disrupt traditional industries agriculture inclusively.
Farmers today are faced with diverse challenges in order to ensure quality production of crops. In this part of the world, the problem is overwhelming. Apart from the common problem of pest and disease, farmers in Africa suffered from have inadequate access to finance, infrastructure which means they still rely on the use of old-fashioned equipment such as the hand hoe.
Leveraging a transparent technology like the blockchain can be the answer to the challenges Africa’s agriculture industry is facing.
Traceability, Logistics and Supply Chain
One major application of the blockchain technology in agriculture is the area of traceability, logistics, and supply chain. A distributed and immutable ledger that can be used to store value, record and update transactions; blockchain technology can solve the complex value chain system faced in the agricultural industry. By cutting down paperwork thereby making logistics business efficient, tracking and movement of agro commodities and through the use of smart contract, payments and transactions process will be swift. With a transparent value chain in play, farmers can be able to get international pricing for their crops and sell directly without passing through many third-party intermediaries. Binkabi is a blockchain startup based in Nigeria is hoping to transform the agro-commodity supply chain in Africa.
Access to Finance
If Africa’s evolving food system leaves its smallholder farmers behind, the continent will not reach its immense potential. — Sir Gordon Conway Professor of International Development, Imperial College London and Director of Agriculture for Impact
Access to capital for smallholder farmers is another area the blockchain technology can improve. Getting fund is one of the big challenges farmers in Africa’s face. Smallholder farmers, especially those living in rural areas struggle to get capital from banks, with no credit history, or proper land documentation, financial services providers are constrained from issuing loans to them. The farmers, on the other hand, are left with no choice than to borrow from ‘cooperatives’ (money lenders) at a high rate. Blockchain-focused agriculture start-ups are already utilizing the technology to provide finance to smallholder farmers. AgroPlexi is an example of a blockchain start-up in Nigeria that is catalyzing financial inclusion for farmers by leveraging on digital assets to secure loans for short, medium and long-term farmers.
Based on the premise above, Africa’s agriculture industry will experience tremendous growth, opening doors for investment opportunities, as farmers will produce quality crops, increase their income level and overall improve the standard of their living.