The real life impact of an integrated efficient blockchain ecosystem

The core aim of technological developments is ultimately to improve human lives and drive positive change in the world. Blockchain, a truly revolutionary tool, is enabling the evolution of an integrated system which can take African agriculture to higher levels and improve the quality of life of millions of farmers across the continent.

Mankind has witnessed only a few revolutions throughout modern history: the first industrial revolution was the start of the world as we know it today, with the introduction of steam power to mechanise production; the second revolution escalated production by bringing electricity to factories: and the third revolution, with its use of electronics and information technology, allowed production to be automated.

We have now entered the fourth industrial revolution as technology takes over nearly every sector in oureconomy. The use of artificial intelligence, virtual reality and blockchain systems are changing what once were fundamentally static structures into better versions of themselves.

Yet, the most important thing about revolutions is not their ability to increase production, but instead to be a substantial tool for improving people’s quality of life. This is what blockchain is doing for African farmers.

Despite enjoying a richness of natural resources and expansive territories, Africa’s farming culture remains unsustainable, leaving the continent as a net importer of food. Most farmers in sub-Saharan Africa are subsistence and small-scale farmers, which means their production only yields enough to feed their own families.

Lack of information, funding and financial incentives, as well as poor exchange practices all hold back farmers’ production by 50% of its potential if the system worked at an optimal level.

A change in the current system is sorely needed in order to bring sustainable development to a continent whose population will keep growing for many years to come. By 2100, an estimated 33 percent of the world’s population will be found in sub-Saharan Africa and beyond 2050, the region will be the only one in the world to have a still-growing rural population.

“Africa’s annual food import bill of $35 billion, estimated to rise to $110 billion by 2025, weakens African economies, decimates its agriculture and exports jobs from the continent,”said president of African Development Bank (AfDB).

The food deficit in sub-Saharan Africa has grown 570% since 2001, reaching over US$40 billion in 2015. Twenty million Africans face food insecurity, particularly in South Sudan, Somalia, Nigeria, Kenya, Ethiopia and Uganda.

“There is chronic under-spending on research and development. In addition, we need an extension system that communicates well with the farmers. There must be bi-directional learning between the agricultural research system and the farmers,” said Thomas Jaybe, Professor of Food, Agriculture and Resource Economics at Michigan State University in the US.

With the aid of technology, use of fertilisers and proper care, production can achieve an exponential result, reaching 10x the value of the input. This is what happened to Monica, a subsistence farmer in Zambia. After having been given fertilisers, she was able to produce not only enough for her and her family, but surplus which can be commercialised and turned into income. Thanks to her increased production levels, Monica is now earning nearly 70% more than the Zambian minimum wage .

Local interest rates can be as high as 45%, so they are not a viable option for smallholder farmers. The pilot project run by Block and its partners Dala Wala offers farmers a cryptocurrency loan for the purchase of fertilisers at a 12% interest rate, which will only be paid once the farmer sells the crops. Kicking off in Uganda, then spreading all across sub-Saharan Africa, the partnership will enable 50,000 smallholder farmers to scale up their agricultural production without being subjected to abusive interest rates.

The application of blockchain all along the supply chain, coupled with efficient use of the continent’s resource-rich land , can turn the scenario around and make Africa a net food exporter, believes Chris Cleverly, Exec-Chairman of Block Commodities.

“When we look at the problems holding back production from smallholder farmers, such as lack of information and financial exclusion, we think those can all be solved with technology that is available to use,” says Clinton van Eden, Head of Africa Operations of Block Commodities.

Watch below an interview with Clinton van Eden, speaking directly from Africa about the real impact of blockchain on African farmers.

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