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How DeFi Revolutionizes Agro Financing
Discover how decentralized finance (DeFi) is revolutionizing agro financing by providing smallholder farmers with more accessible and efficient financing options, reducing transaction costs, and increasing transparency.
- Agrofinancing faces challenges due to lack of digitization, limited access to basic infrastructure, and smallholder farmers’ inability to pool resources.
- The production and arable land in many countries, including Nigeria, are mainly in the hands of smallholder farmers, making it a unique sector with specific challenges.
- Decentralized finance (DeFi) can help bridge the gap by providing a more accessible and efficient way to finance smallholder farmers, reducing transaction costs and increasing transparency.
- AgriFi, a platform using DeFi, aims to connect capital to borrowing needs, providing farmers with financial credits and commodity financing, and partnering with digital cooperatives and extension services.
- The platform addresses challenges such as lack of formal credit history, limited access to basic banking infrastructure, and lack of digitization in rural areas.
- Blockchain technology does not solve all the problems with smallholder farmer financing, but it can provide transparency, programmability, and enforceability.
- The farmer’s wallet is the central touchpoint, and the farmer is not concerned with the underlying technology, only with the access to inputs, services, and credit.
- AgriFi’s approach is to connect digital supply chains,partner with digital cooperatives, and leverage USSD (Unstructured Supplementary Service Data) technology to facilitate transactions in areas with limited internet coverage.
- The platform aims to address hunger and poverty by providing access to capital for smallholder farmers, increasing their yield, and promoting sustainable agriculture practices.
- The challenges in agrofinancing include lack of funding, limited access to insurance, and general harvest uncertainty, which can be addressed through DeFi and the development of digital ecosystems.