AFEX commodity exchange, Sterling bank and Binkabi have launched an end-to-end blockchain commodity trading and financing platform to provide credit finance for farmers, and at the same time reduce post-harvest wastage of farm produce through its agricultural blockchain commodity marketplace.
Speaking at the press briefing announcing the blockchain commodity marketplace, Abubakar Suleiman, Chief Executive Officer, Sterling Bank, said Nigeria loses about half of its agricultural produce yearly to post-harvest processes.
“By introducing and establishing a viable and efficient agricultural blockchain-commodity marketplace, we are able to tackle this sort of challenge. Cereal grains such as rice, maize and soya beans which are among the basic staple foods across Nigeria suffer the most loss among all agricultural commodities. By applying some of the latest scientific storage technologies and providing liquidity, we can help reduce this problem and increase margins for the farmers.”
The partnership which is initiated by AFEX is centered on the lack of adequate agricultural finance. The partnership works such that AFEX would provide secure storage and a ready market for both farmers and buyers to transact, Binkabi provides the Blockchain technology platform, and Sterling bank offers access to credit to lead the creation of a reliable source for financing.
What has always been the trend in the agriculture sector for small-scale farmers precisely is that they are restricted to farming practices that result in low productivity. However, traditional alternative for loan lending is expensive as loans are charged at very high rate contributing to indebtedness likewise poverty.
However, this partnership brings a solution to financing problems as it leverages on blockchain technology to unlock financing through the AFEX warehouse receipt system. This would lead to the creation of new opportunities and relationships for players in the commodities markets.
According to the Country Director of AFEX, Mr. Ayodeji Balogun, this initiative is needed to change the lives of farmers and the Nigerian economy, by establishing a direct link between farmers and consumers/retailers.
“Blockchain does not require physical branches since it is operated on a distributed network. It would create alternative financial structures, liberating farmers from the inefficiencies of the existing financial system. This partnership would empower smallholder farmers, create a tokenized system and develop smart agriculture.” Mr. Ayodeji said.