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It is eight o'clock in the morning in Kinangop, a small rural town 55 miles north of Nairobi. For Joseph Kimani, a small-scale farmer, today is a great day. Kimani has been a farmer for two decades, but finding a market for his products has been a thorn in the side. There have been many intermediaries to facilitate the sale of agricultural products, but they are all ready to exploit farmers.
Today, Kimani is taking his vegetables Twiga Foods, an agricultural market that is changing the lives of many farmers. The company buys food from farmers and then distributes it to thousands of sellers across the country.
Convenience alone is a real boon for farmers, but there is more. Twiga buys at a higher price than local brokers and pays instantly through M-Pesa, the world-famous mobile payment network. It also allows its customers to obtain loans for their businesses, using blockchain technology.
The informal sector continues to be marginalized
For most people, blockchain is the technology that powers Bitcoin. Beyond that, they do not know much about it. However, in Kenya, the blockchain is doing a lot more. He gave the thousands of farmers an immutable and real-time measure of their creditworthiness.
Twiga uses blockchain technology to track transactions made by its customers. Using your data, customers can also evaluate their ability to access loans and other financial products. While in most developed countries such data are easy to acquire, the narrative is quite different in Kenya and Africa as a whole.
Agriculture in Kenya accounts for over 50% of GDP and provides livelihoods for 80% of the population. However, those involved in this sector continue to be marginalized by financial institutions, who consider them not creditworthy. Because most of the trading is done informally, the data is difficult to collect.
Blockchain Changing Lives
Twiga is not only changing the lives of farmers, but also sellers. More than 5,000 sellers using the platform can request the required products, which are then delivered with one day's notice. First they had to go to the market, where quality is not guaranteed and where they had to negotiate prices. After making the purchase, they had to transport the products in their stalls. This consumed time and resources.
Sellers also get the benefit of having their data collected and stored in the immutable distributed ledger. For sellers, data is even more crucial than for farmers because they require constant funding to grow their businesses.
Second at the World Bank, the lack of a consolidated credit office is one of the biggest challenges for small businesses. These companies face a $ 330 billion deficit, with Kenya – the largest economy in Eastern Africa – which has $ 7 billion.
The IBM partnership
Twiga – which is Swahili for giraffes – was founded in 2014 and has since grown by leaps and bounds. It was the collaboration of last year with IBM, however, to turn it into multimillion-dollar company and one of the most promising startups in Africa.
IBM leveraged its expertise in distributed ledger technology, machine learning and data processing to develop Twiga's blockchain platform. Now, users can get the loan application process entirely on the blockchain, making it easier, faster and more transparent.
Isaac Markus, a researcher with IBM, has explained:
We analyzed purchase records from a mobile device and then applied machine learning algorithms to predict credit reliability, which in turn gave creditors the confidence to provide microloans to small businesses. Once the credit score was determined, we used a blockchain, based on the Hyperledger Fabric, to manage the entire loan process from application to receiving bids and accept the terms to be repaid.
Providing real solutions
Blockchain technology has been hailed as revolutionary, and rightly so. In the future, the Internet could also be decentralized. However, it is the solutions available at the moment that count.
For the 15,000 farmers and sellers, blockchain is not just a word to cheat that people use to attract finance. It is a real solution to a real problem that has tormented them for decades.
The author is not invested in any digital resource.
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