Is Blockchain an Agricultural Solution in Africa?

Besides being the subject of lively debates and presented as an important technology of our time, Blockchain could also be an opportunity for agriculture in Africa. Provided that certain problems it poses are solved. Let’s go back again to the definition of the Blockchain.

The Blockchain or chain of blocks is a digital register of transactions that is shared by those who are part of the network. So decentralized (no center controls the network) and in which all transactions are kept very secure. Controllable and permanent.

Simply put, according to Jean-Paul Delahaye, professor of computer science at the University of Lille, you should think of a large notebook. This on which everyone, connected to the network, can read freely and for free and on which everyone can write, but which is impossible to erase and indestructible.

In other words, each shared element contains the elements necessary to guarantee the integrity of the exchanged data, thereby fully trusting the system itself. Several newspapers are full of praise for the Blockchain. The highly influential British magazine “The Economist” called it the “Trust Machine”.

Blockchain technology therefore opens many doors in terms of application in the agricultural sector. The first major asset for the Blockchain in food is traceability. This confirms to some extent the improvement of transparency at the level of the entire food chain.

From financing farmers to distributing food products to consumers, the Blockchain ensures transparency and traceability. We are already talking about 31 billion in food fraud savings globally by 2024 by tracking products in the supply chain. Needless to say, these resources can be reinvested in agriculture to improve production.

This is what farmers expect. Particularly in Africa, where they are constantly struggling to access funding, the majority of them remain poorly funded or not funded at all. This financial challenge is therefore permanent: farmers must advance endorsers who often also need money and receive commissions on these still very limited resources.

Banks lend money to those who don’t need it as they say. We only lend to the rich. Farmers are therefore obliged to provide guarantees in order to be entitled to a credit and agricultural producers usually have no money. In addition, they have no real estate that they can give as collateral. Banks are never sure of getting their money back from farmers. Nothing is certain and so this uncertainty makes it more difficult for farmers to obtain loans or other forms of financing. Will the Blockchain Solve This Constant Problem for Farmers?

Not right away anyway. When farmers in Europe are subsidized, they are left entirely to themselves in other parts of the planet, especially in Africa. The African farmer produces little to feed himself and his family. The Blockchain has not yet opened major financial opportunities for African agricultural producers.

But the Agri-wallet application seems like a start. The Agri-wallet is an electronic wallet. It is a mobile financial tool made for the agricultural sector. This wallet allows farmers to acquire a professional account. They can then save with it, make purchases and most importantly, earn money.

Opening the Agri-wallet account is free for farmers. They can be paid by M-Pesa when they sell their products. M-Pesa is a Kenyan mobile phone payment system. Or they can also choose to be paid with tokens (for part of the amount) which they then use as with their electronic wallet.

Dodore, a voucher-like system, validates agricultural input dealers. It is from these traders that tokens can be allocated for the purchase of inputs. The tokens are therefore used to pay for the input for the next harvest season. Moreover, since these credits are offered in the form of tokens and not in coins, creditors are willing to extend loans to farmers.

It is in this ‘ecosystem’ of specifically allocated credits that Agri-wallet enables farmers to save. With the money they save, they manage to get short-term loans. Farmers therefore receive money through Rabobank without having to produce mountains of paperwork. It is estimated that 35% of farmers currently use this portfolio and are able to save money.

To fund Agri-wallet, the Dodore system has gained more support from major financial institutions and other development agencies. These include Rabobank Foundation, MasterCard Fund, Dutch Development Organization, International Fertilizer Development Center (IFDC), Agriterra and others.

In Africa, the issue of Bitcoin should be approached with caution. It is related to the Blockchain and the explanation of this technology can more often yield the opposite result than expected. In Kenya, for example, the explanation of the history of Bitcoin and Blockchain technology does not pass. It is complicated, if not impossible, to convince buyers. The chosen strategy was therefore to simplify the concept. Since Kenyans tend to view a “coin” as an object of little value (and yet the word “token” can also destabilize them) it was necessary to focus on individual value propositions and of course the M-Pesa.

And so the concept could give farmers a line of credit and they could use it or not. Anyway, if they didn’t use it, it didn’t cost them anything. This method works well in Kenya, with farmers, but also with many artisans who are in the same situation as agricultural producers. This is how Dodore therefore recommends adapting to all environments according to the environment, beliefs and habits. It is imperative to change the jargon, listen to customers to understand them better and simplify things as much as possible. Blockchain can change everything. In addition to its technological breakthroughs, it still needs to use new jargon and integrate it into existing networks to work with Africans.