Introduction Food Asset Coin Eco-System (FACES) is a joint venture between Block Commodities and FinComEco (subsidiary of GMEX Group). The venture will sponsor the development of commodity ecosystems and using tokens (from third-parties initially) as currency for the transactions.
The primary focus of the venture are financial inclusion and social responsibility—it is aimed towards providing the infrastructure & resources to the 700M unbanked farm community in Africa to enable them to feed their families, and support their countries, and the world by providing security of transaction, eliminating corruption, reducing costs of borrowing.
By 2030 the population of Africa will have doubled to 2.5 billion, and unless a financing and supply chain infrastructure is put in place, this could lead to unimaginable human catastrophe. The blockchain enables market inefficiencies such as corruption, market access and perception-based debt costs to be removed.
Strategy / Model Our strategy is based on using our unique ecosystem to create real value for the 700mn farming community enabling them to trade responsibly with an objective of increasing income to those farmers, enabling them to move from subsistence farming, and to be able to deliver economic wealth across Africa.
Delivering into many African countries at a governmental level ensures that our ecosystem can work with trusted partners in each country.
Offering an innovative approach that can be tailor-made for each country but based on secure technology and partners from Exchanges, Data, Food processing, transport, Warehousing to Mobile banking etc. which will enable farmers to increase their income considerably.
Our strategy is based on:
Global Commodity buyer agrees to buy a certain commodity from the exchange under a smart futures contract.
The Commodity Exchange informs the Token provider that it needs to lend $XX milions of tokens to the farmers in the programme.
Token provider informs the local fertiliser distributor that xx MT of fertiliser will be needed. Local fertiliser distributor buys this from the global market under a letter of credit. They are paid in tokens by the farmers.
Once the commodity (for example, a crop of tea) is harvested & sold to the commodity exchange (fulfilling the smart futures contract), local fertilizer distributor’s tokens are redeemed by the commodity exchange for fiat or tokens paid in interest.
This Blockchain and tokenization means that the global supplier of fertiliser knows they are going to get paid once the commodity is sold from the series of insurable smart contracts that run from the global buyer of the commodity, the commodity exchange, the Token provider and farmers, as well as the local fertiliser distributor.
The farmer can wait for payment until the cycle is completed and at a decentralised rate of interest which the participants can agree covers their risk
This could easily be more than 50% less than the current bank lending rate and 75% less than the commercial rate – making a significant difference to the income of the farmer.
We believe that by bringing in a digital currency this will ultimately replace coins where mobile money schemes are more suited to school fees than basic goods – The average transaction in Kenya’s M-Pesa is more than $20.
As women form a major part of the agricultural work force – when they have money they spend it on education, nutrition and health care – which is a significant element in improving the lives in the community and ultimately the country.
The strategy generates data which can be used to reduce the risk of the processes and increase efficiencies. Other efficiencies come through the deployment, use and networking of “leap-frogging” technologies into one ecosystem the centre of which is the African Farmer.
Helping build communities through the increased income derived from our ecosystem – will help build credit histories with data and access to low cost micro loans. This is vitally important in generating wealth across Africa in a way that is relevant and stable
Optimistic scenarios have the average African living on $6 a day in 2030 compared with $1.20 today – Through our strategy we can more than achieve by linking digital currencies to digital banking creating an ecosystem that works for all.
Our strategy is based on a robust business plan; significant resources have been put in to develop the correct infrastructure and partners to work with. It is a long-term strategy but in that long term strategy there are many quick wins that will enable farmers to see the benefit very quickly creating trust and growth.
Market Emerging Market regions with unbanked farmers.
There are 700 mn farmers across Africa 97% of African farms are small family farms, 98% of these farms are owned by low income individuals and 60% of Africans are employed in the agricultural sector. At the same time, the vast bulk of the African rural population has extremely limited access to any financing options; for example, only 5% of subsistence farmers in Tanzania have such access.
It is estimated that over $35bn a year could be saved by African countries if they moved into food processing from raw agriculture produce and the existence of agricultural exchanges is essential to enable food processing.
There is a lack of trust amongst many of these farmers with the local infrastructure including banks where the loan interest rate can be over 75% and the ability for a farmer to move from subsistence farming to increasing their income is limited at best – impossible at worst.
Utilising a token that can be understood by input supplier, farmer and commodity buyer creates trust and with the ability to lend money to the farmer at low interest rates creates the real opportunity to move these farmers into economic regeneration
Return Profile FACES aims to deliver sustainable and increasing improvement in the living standards of smallholder farmers and their families brought about by a commercial venture – not a charity – which links agriculture to the latest financial technology via a model which is adaptable to local requirements. The model is owned and regulated within each country but has an underlying common ecosystem of technology and finance infrastructure.
We expect to make a 12% return on the money loaned twice a year as there are two farming seasons. Therefore a 25% ROI less cost of insurance.