Tech Innovation and the Future of Farming in Africa
How mobile and blockchain technologies are changing farming
More than half of Africa’s population is involved in agricultural production in some way. Many are smallholder farmers, which usually means they own small plots of land and grow one or two cash crops that rely almost exclusively on family labor. Smallholder farmers in Africa often have inadequate access to the financial services that many of us take for granted. Their lack of access to resources results in ineffective commodity pricing and logistics, leading to weak profits.
Technology is starting to make a difference, however. Mobile phones are helping farmers conduct transactions and gain access to payment services. One organization that’s helping lead the way is FinComEco, a platform that helps farmers get current market prices on commodities through their mobile devices. The platform also helps them bring surplus crops to warehouses so they don’t miss out on potential income.
Many banks in Africa don’t have the infrastructure or the money to offer electronic resources like mobile apps for banking, so tech companies are filling the gaps. Farmers who are paid electronically through mobile apps can allocate payments towards buying necessary services. In the future, tech entrepreneurs plan to offer more banking services including loans.
Since FinComEco launched last year, it’s forged agreements to work in Zimbabwe, Mozambique, Ghana, and Uganda, and is in discussion to operate in 18 other African countries. The company plans to bring in external investment to make new warehouses for farmers. FinComEco has a joint venture with UK listed company Block Commodities called FACES (Food Asset Commodities Ecosystem) Blockchain. FACES Blockchain has partnered with Swarm Fund to help raise capital using blockchain technology via a cryptocurrency called FarmCoin. This partnership aims to provide a massive influx of capital to help a good proportion of the estimated 700mn unbanked farmers in Africa.
Cryptocurrency could play a major role in the future of smallholder farming in Africa. With platforms like Swarm, investors all over the globe can support these initiatives in Africa and the innovative technologies that support new paradigms for the continent’s millions of smallholder farmers.
With an influx of investor capital, companies like FACES Blockchain can provide loans to farmers. Crypto assets unlock an alternative means for finance, partly because crypto asset holders aren’t earning interest. Crypto loans can therefore be provided much more cheaply than traditional banking loans, unlocking millions of dollars that otherwise wouldn’t have been available. FarmCoin can be used as a means of alternative finance, which can help farmers buy more cost effective and better inputs (pesticides, fertiliser and seeds) as well as much needed farming equipment aiding automation and therefore facilitating capacity building and increased productivity. It therefore acts not only as a utility token but also an asset backed infrastructure investment token.
Further down the line, FACES Blockchain – working with other entrepreneurs in tech and crypto – hopes to build an “app store” for African farmers that allows them to access resources and boost their profits more effectively using FarmCoin as a medium of exchange. This app store could also link farmers to warehouses and banking solutions, along with other services like loans, crop insurance, and agricultural inputs. Farmers will benefit by competition from service providers to deliver the best service at the best price, and service providers will benefit by having access to thousands of farming customers.
FACES Blockchain and others are excited about the future of technology and cryptocurrency in Africa, and are keen to work with development finance institutions such as the African Development Bank to create value add. There’s great potential for tech leaders in Africa to make an impact by collaborating with the World Food Programme, the Food to Market Alliance, the United Nations and more. Many projects are working to make a difference in Africa, and connecting farmers through cutting edge technologies and access to investment is just the beginning.