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Across the continent, cashew farmers – among those in a growing range of agricultural markets – are making use of blockchain to digitise their finances and track the numbers more effectively. Hannah Duncan reports.
For the 57% of Africans without a bank account, getting a business loan is a community affair. Armed with a rattling box of their own cash, local groups of savers – usually women – will consider the application and negotiate interest rates together.
These village schemes – known as savings groups – are popping up all over Africa. In Uganda, a country of 50 million people, there are already more than million groups and counting. These microfinance movements are a lifesaver, especially for farmers who urgently need funding to adapt to the climate crisis.
Working together, these groups – which resemble community banks – are changing the face of Africa’s rural economic landscape. Little by little, microeconomies are growing and finance is becoming more inclusive.
Enter blockchain
While savings groups are generally trusted and financially literate, there is a serious snag in the system which risks a dangerous unravelling – the lack of reliable record-keeping. Poorly scribbled IOUs change hands on scraps of paper, and in some cases, money can mysteriously vanish.
“We heard a story about $17,000 going missing in Tanzania […] that was attributed to witchcraft,” says Sofie Blakstad, CEO and founder of humanitarian blockchain Hiveonline.
Focusing on Africa’s agricultural sector – specifically the cashew industry – she is on a mission to build trust, improve data and cut out questionable middle-men. For her, the only answer is blockchain. “Everyone can see how much money is in the pot,” she comments. “The records are immutable.”
Along with her team, she has developed a system where farmers can record their harvest and receive digital vouchers, which can later be cashed in.
In stark contrast with the past, thousands of cashew farmers across rural Africa now gather around a phone once a week to scrutinise their digital wallet. By the end of the year, Ms Blakstad will have a staggering 60,000 farmers on the books, and counting.
Finance without infrastructure
But it is not a straightforward process. Africa’s vast geographical landscape is largely empty, and something as simple as finding a phone signal can be difficult and time-consuming. “Most people don't have a good internet connection. Many don't have electricity. Some are quite a long way from the nearest road,” explains Ms Blakstad.
Working around this has been challenging. According to her, as much as 50% of the farmers she works with do not have a mobile phone, and for those that do, phone signal is sparse.
Creating a blockchain system for cashew farmers in such a fragmented environment calls for some serious work-arounds. But it is possible. In one of the agricultural savings groups – where the nearest water source is a four-hour walk away – Ms Blakstad explains how one of the members will walk to the market once a week to get a signal and check the data.
As the adage goes: where there’s a will, there’s a way. And these farmers are extremely keen to continue down the digital path.
Blockchain marketplaces are growing
Getting a taste of digital record-keeping has been transformative for farming cooperatives. They “love the fact they can access their accounts and their records and everything adds up,” Ms Blakstad explains.
Better still, the blockchain market is expanding to new and uncharted markets. After all, with better data and forecasting tools, more is possible. “We are trying to encourage diversification into other value chains,” she says. “So we are doing horticultural things, tomatoes, cucumbers, tropical fruits, chickens, goats, maize, you name it.”
In addition, Hiveonline is also “recording chickens and small animals” like goats in Kenya. After all, it is just a matter of recording and tracking data.
These forecasting tools are also used to create new financial products and manage cash flows. Today, the team is developing a payments system where farmers can receive their money in instalments in advance, rather than taking out expensive bank loans. The blockchain is also helping farmers attain much-needed credit history, further boosting their terms.
Payment in digital nuts
Perhaps most fascinating of all, Ms Blakstad is now digitising the barter economy. Instead of holding digital currency, farmers can now carry digital ‘nuts’. “One of our earliest things is going to be paying for cashew tree saplings in nuts,” she adds. “Because nuts go up in value over time, whereas money goes down”.
Over the coming months, the team plans to digitise payments for social capital too. Amazingly, blockchain tokens could emerge for things like childcare enter rural villages.
But for now, it is mostly about cashews. And one thing is for certain: African farmers are going nuts for blockchain.
