All farmers, including the ones in Burundi, are plagued by fear of losing crops due to appalling weather conditions during the growing season. The fear is compounded by the fact that, in addition to climate risks, farmers are also financed at very high rates. The available liquidity is in the hands of a few private individuals. No banks. No savings bank in the most remote regions of the country. All the money is concentrated in the hands of officials and merchants in these rural areas. To give you an idea. Picture this: A mayor, prosecutor, judge or police officer whose primary mission is to protect citizens from any kind of scam becomes a local financial mobster himself.
And suddenly it is those senior local officials who pose as local financiers and who ask high amounts for the credit granted. Farmers who are often overwhelmed by all kinds of needs during the growing season. The children have to go to school, they sometimes, if not often, get sick. The farmer himself or his wife may also become ill and there may be other circumstances that call for extra money. And at the same time, he has to finance his production: purchase of seeds, fertilizers, etc…. So he needs money. No Burundian farmer escapes these financial markets that provide loans at usurious rates.
Burundian farmers live in a double nightmare. First the expensive credit. The repayments often exceed 100% interest. Many farmers never get out: they are in debt for life. It even happens that they lose their land when the debt becomes unbearable and therefore impossible to repay.
The other nightmares are also climate disturbances: showers or severe drought. Either way, either form can cause him to lose all his crop. Unfortunately, the state is absent. It does nothing to try to subsidize the farmer’s production costs or at least allow easy access to credit at reasonable interest rates. A support that the Blockchain can give would mainly concern the control of interest rates and climate disruptions. Blockchain technology could cover both this thorny issue of interest rates and the coverage of the damage caused by climate change.
Like Aon, Oxfam and Etherisc in Sri Lanka, the Blockchain has helped farmers access micro-insurance to protect them from the risk of losing their agricultural production due to very bad weather conditions for their fields. This Blockchain technology, of course new, enables the automation of processes and gives farmers easy and cheap access to insurance. Claims requirements are also automatic without the need for manual submission by the farmer. This has resulted in lower operating costs. Since most premiums are willing to pay claims immediately.
On closer inspection, the Blockchain, which was deployed in several phases, relied on the expertise and operational support of local institutions in Sri Lanka. And in this case, the local insurance company was Sanasa.
In the first phase, micro-insurance policies could therefore be stored publicly. Using the Blockchain linked to weather conditions so it can be automatically activated based on weather data. Simply put, the Blockchain technology makes the payment available and triggers the payment automatically as soon as the weather data turns out to be bad. The use of the Sanasa company made it possible to respond to certain technical problems: in particular to enable the integration of farmers who do not have access to the Internet and a computer.
Since most farmers today are still dependent on cash, the second phase was devoted to the development of mobile payment solutions. Mainly due to mobile phones and the popularization of payment counters. It was also necessary to diversify sources of meteorological information. The weather information remains very unreliable so it was necessary to focus the work on this level as well in order to have real weather information.
How the Blockchain can help improve agriculture in Burundi? Burundi brings two solutions to the two facet problem. The first is the abolition of the system of lending at usurious rates which are simply unbearable for Burundian farmers and which have contributed to their ruin. The second solution is to insure against the risks of the weather. Climate problems create a permanent state of stress for farmers. The loss of agricultural crops is therefore the risk that must be covered.
A banking institution is therefore required to set up a credit system equipped with this Blockchain technology. That would first aim to have all beneficiary farmers and the management of the funds distributed in the form of a loan at affordable interest rates. An insurance company affiliated with the chosen bank is also essential like the example we had in Sri Lanka. Oxfam, in partnership with Aon and Etherisc, has relied on Sanasa Insurance to leverage its local expertise and operational support capacity. This facilitated the integration of farmers without internet access and a computer. In Burundi, the insurance company therefore played the role of operational support in the most remote corners where it is difficult to connect to the internet.
In Burundi, therefore, once microcredit and insurance products related to the Blockchain can be paid to farmers, (which will confirm that the functioning of the Blockchain in this area is feasible), the use of the Blockchain will allow on the one hand to automatically assess credit redemption risks while verifying risks of climate disruption. The Blockchain will also help to simplify all bureaucracy which will make operations much faster and more efficient. Finally, Blockchain technology will make it possible to do good credit estimates and affordable insurance for Burundian farmers. This is very important because the farmer will no longer be suffocated by debt but will have credit that he can repay to better develop their business. Oxfam used Blockchain technology on a sample of 200 farmers to harvest and this work was successful. There is no doubt that the use in Burundi can be successful in loan banking and insurance with crops as the product to be insured. But you need a very clear agricultural policy to finance the agricultural sector and that could then rely on the Blockchain.
