Named as one of LATTICE80’s Top 100 influencers in 2019 under the UN Sustainable Development Goals agenda for pioneering the use of blockchain technology to help smallholder farmers in sub-Saharan Africa, Hirander Misra shares his expert insights on how blockchain solutions hold out the promise to transform the financial inclusion landscape in developing economies.


The 2030 Agenda for Sustainable Development, adopted by all United Nations Member States in 2015, provides a shared blueprint for peace and prosperity for people and the planet, now and into the future.

At its heart are the 17 Sustainable Development Goals (SDGs), which are an urgent call for action by all countries – developed and developing – in a global partnership. They recognise that ending poverty and other forms of deprivation must go hand-in-hand with strategies that improve health and education, reduce inequality, and spur economic growth – all while tackling climate change and working to preserve our oceans and forests.

Against this broad context, mobile and electronic banking as well as payments systems can add real value if rendered in an integrated manner to many millions who do not have access to financial services, thus delivering against many of the SDGs. In particular, the use of blockchain technology for social good is an enduring theme that promises to transform the financial inclusion landscape in Africa.


Farmers to harvest blockchain benefits in sub-Saharan Africa

Agriculture is indeed a huge market in Africa supporting many livelihoods – 700 million Africans are farmers. Yet, Africa is a net food importer, with its annual bill being USD35 billion and estimates pegging it at USD110 billion by 2025. In this vast continent of over 30 million km2, poor management of land resources, coupled with inefficient banking practices bound in red tape, hinders economic growth and leaves most farmers marginalised.

Furthermore, infrastructure continues to be a grave concern. The lack of access to services that developed countries would take for granted sees millions of Africans unsupported when it comes to financial infrastructure. Loans, credit lines and savings accounts are some of the opportunities which remain unavailable to many. The current financial system has made individuals reliant on many middlemen.

This is where blockchain, with its ability to cut out the middlemen, promises to make a significant change to smallholder farmers’ plights. Lower costs and greater coverage through use of new technologies such as blockchain via initiatives such as FinComEco are geared to enable unbanked smallholder farmers in sub-Saharan Africa to feed their families by providing transaction security, eliminating corruption, reducing borrowing costs, and ensuring liquidity for the purchase of inputs by guaranteeing the sale of produce.

In the case of the ACE agricultural commodity exchange in Malawi, introducing prices on the mobile phones of farmers and making the banks compete online to lend, coupled with making the exchange more accessible so they could sell their produce directly, saw 47,000 smallholder farmers’ incomes go up 31%, with US$10 million of finance provided during 2017.

Tokenisation could also provide a massive influx of capital to help unbanked farmers in Africa. A token-based ecosystem would enable farmers to deploy the profits from the sale of their surplus crops in the wider economy. The intention is to recruit local vendors and service providers as well as medical and educational institutions to redeem the tokens. As incomes grow, as does access to capital, it can facilitate the process of taking business loans, purchasing cars and buying homes, helping to enhance standards of living.


Blockchain embraces financially marginalised communities

Banking and financial services are a privilege for many in the developing world. According to the World Bank, as of April 2017, 1.7 billion adults globally remain unbanked, yet two-thirds of them own a mobile phone that could help them access financial services. Digital technology could take advantage of existing cash transactions to bring people into the financial system, the report finds.

For example, paying government wages, pensions, and social benefits directly into accounts could bring formal financial services to up to 100 million more adults globally, including 95 million in developing economies. There are other opportunities to increase account ownership and use through digital payments: more than 200 million unbanked adults who work in the private sector are paid in cash only, as are more than 200 million, who receive agricultural payments.

In view of the above, the overriding challenges for financial institutions are to address the constraints of poor connectivity, non-existent credit history and diverse customer profiles, and to scale up their operations in unbanked sectors. To help the banking sector counter these pressing challenges, the United Nations, along with the World Bank, has come up with a commitment for creating “Universal Financial Access” by 2020. This will cover 25 countries and target 75% of the financially excluded.


Mobile money matters

A recent World Bank report on the use of financial services finds that, globally, 69 percent of adults – 3.8 billion people – now have an account at a bank or mobile money provider, a crucial step in escaping poverty.

Indeed, the mobile has been revolutionary in creating a new paradigm for the spread of financial services in unbanked areas. Though technology is being seen as the biggest enabler in boosting financial inclusion, it is the collaboration and alliances between Fintech and traditional financial institutions that will define its future. As of now, while it is clear that financial inclusion is on the rise globally, accelerated by mobile phones and the internet, gains have been uneven across countries.

The most significant example of achieving financial inclusion is M-PESA in Kenya and its adoption by other countries. No wonder then that, according to the World Bank, as of April 2017, in Sub-Saharan Africa, mobile money drove financial inclusion. While the share of adults with a financial institution account remained flat, the share with a mobile money account almost doubled to 21 percent.

Since 2014, mobile money accounts have spread from East Africa to West Africa and beyond. The region is home to all eight economies where 20 percent or more of adults use only a mobile money account: Burkina Faso, Côte d’Ivoire, Gabon, Kenya, Senegal, Tanzania, Uganda and Zimbabwe. Opportunities abound to increase account ownership: up to 95 million unbanked adults in the region receive cash payments for agricultural products and roughly 65 million save using semiformal methods.


Beyond blockchain

Going forward, blockchain and artificial intelligence are increasingly likely to complement each other as some of the technological constraints are eliminated. As the internet of things (IoT) is setting us up for a revolution of connectivity, the advent of decentralised blockchain and centralised artificial intelligence could result in a huge positive social impact and financial inclusion in emerging economies. Likewise, a significant number of Fintech companies have adopted crowdfunding as the model of financial inclusion.

Getting all the stakeholders together and creating a win-win proposition for each and every one will lead the way towards creating a financially included society. All in all, new technologically-enabled structures are fast emerging to shake up the status quo, at just the right time.