block chain is an emerging way for businesses to make and verify transactions, using a digital ledger. As the block chain hype grows, stakeholders are testing the potential of the technology. AFEX Commodities Exchange Limited (AFEX Nigeria), Binkabi and Sterling Bank have established a digital block chain-based commodity trading and financing platform to boost agriculture. DANIEL ESSIET reports.
AFEX is a Commodities Exchange, providing solutions to challenges faced by Nigerian smallholder farmers around aggregation, storage, financial inclusion as well as provision of ready market for both farmers and buyers.
By digitising commodities exchange process, using block chain, the necessary verification time will be reduced. As the block chain hype is growing, stakeholders in the agric industry are now testing the potential of the revolutionary technology.
This is what AFEX Commodities Exchange Limited (AFEX Nigeria) Binkabi and Sterling Bank are planning to achieve with the establishment of the world’s first fully digital block chain based commodity trading and financing platform to boost agriculture in Nigeria.
Country Director, AFEX Nigeria, Mr. Ayodeji Balogun, said the initiative was needed to change the lives of farmers and the nation’s economy by establishing a direct link between farmers and consumers/retailers, while empowering smallholders to better organise themselves to access the market without interference from middlemen. The transparency of the block chain system in the supply chain will also enable farmers get fair prices for their produce and reduce the challenge of low income.
“Block chain 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 tokenised system and develop smart agriculture,” he said.
Information about the entire cycle of agricultural activities can be available through the technology to enable a transparent and trusted source of information for the players. This means that farmers can get instant data relating to seed quality, soil moisture and climate/environment related data before cultivation, payments, demand and sale price, all in one platform – an important role in resilience of agriculture to climate change and long term food security.
In a partnership, AFEX Commodities Exchange Limited (AFEX Nigeria) Binkabi, and Sterling Bank will be involved in a trading process which will be fully digitised, from the documentation process of sales contract, to letter of credit and certificates. To avoid the task of duplication and manual checks, automatic data matching will be implemented.
Binkabi’s Chief Executive Officer, a London-based start-up firm that leverages block chain technology, Mr. Quan Le, said the block chain technology would be leveraged to make agriculture commodity trading more profitable. Nigeria, according to him, has been experiencing high risk and low profit due to lack of trust, poor financial and market infrastructure in the agriculture sector. “With the’Commodities 3.0 System’ that Binkabi presents, farmers can trade their produce easily and quickly, reducing excessive middlemen in the cross-border,” he said.
He said anyone can trade on agriculture commodities, using Binkabi tokens and the more one trades the more discounts the person will get. He further said farmers would be rewarded instantly, when they sell their goods through an online wallet, which is decentralised from blockchain. He, therefore, assured traders that with the legal protection that Binkabi will provide, there would be no room for fraudsters.