Blockchain technology will be used by AFEX commodities exchange, Binkabi and Sterling Bank Plc to make it easier for Nigerian farmers to get access to funding.
Speaking to CNBC Africa, Akinyinka Akintunde, Business Development Manager at Afex Commodities Exchange said this would be achieved by linking up farmers to local and foreign investors using blockchain. In this case, the investor can fund a farmer without bearing the risks involved in the farming process.
Statistics show that we need 83 billion Naira to get Nigerian Agricultural sector to where it needs to be over the next two to three years. With this technology being deployed we see an avenue where we can easily and seamlessly direct credits through the sector
Smallholder farmers could get at least $10-20 billion within the next two years according to the official.
Roles Played By The Different Partners
As a licensed commodities exchanges, AFEX will work to bring in capital market participants to the agricultural sectors according to Mr. Akintunde.
Commodities exchange platform Binkabi is expected to build the solution while the banking instincts of Sterling Bank will be employed to distribute the investor funds to farmers in the rural area who may not have access to sophisticated tech devices.
The Role Of Blockchain
Blockchain will bring about traceability and accountability across the value chain. The source of products being consumed by buyers to the farmer who is bringing the commodity to the market is traceable.
Additionally, with blockchain at the helm, it is easier for anyone to get into the process at any point. This leave opens the opportunity of the platform including small lenders to provide funding to farmers.
The blockchain-based solution is an “infrastructure designed to meet farmers at their level” and indeed will boost Nigeria’s agricultural sector.
The latest event follows recent reports that Interswitch and Microsoft are working to introduce another blockchain-based solution for entrepreneurs in Nigeria. Blockchain technology has the potential to revolutionize Africa, and maybe Nigeria will finally get to play a big part in it.