AFEX advocates for digital financial inclusion for smallholder farmers

AFEX, Nigeria’s leading commodities exchange player helps a side event at the 2021 African revolution Forum (AGRF) to advocate for digital financial inclusion for African smallholder farmers.

AFEX, and Smallholder and Agri-SME Finance and Investment Network (SAFIN) hosted the side event themed “Digital Financial Services for Agriculture”, which focused on the adoption of digital financial services for agriculture in Africa.

The Vice President of AFEX Financial Market, Oluwafunto Olasemo during the panel session stated that it is important to integrate digital financial solutions for smallholder farmers because “70% of global food production comes from local farmers, therefore it is vital to create digital financial services to allow smallholder farmers have an abundant harvest and so they can live above their means.”

She added that “Smallholder farmers are first customers. Everything a Digital Financial Service customer needs, it must be extended to them too”.

The financial market expert said the adaptation of these products would help boost the sector’s productivity.

Also, at a separate panel session focused on upgrading agricultural value chains for improved competitiveness and inclusivity, Ayodeji Balogun, the CEO of AFEX said the financial gap for agri-SMEs is the “missing middle”.He said the factors that inhibit the rural and market potential of Africa are a mix of infrastructural and financial deficits.

“The infrastructural deficits speak mainly to the availability of affordable and adequate storage for farmers among others”. He added that “limited finance also affects the value chain from a demand and supply perspective. Farmers and agribusiness may not be able to obtain financing for their operations to players in other sectors.”

Balogun cited Nigeria as a case study of the financial gap in the sector, that in 2020, the domestic credit given to the agricultural sector was around 5.2%.

He added that “possible reasons for allocating a low credit to the sector may be from the information asymmetric in determining the creditworthiness of the Agri-sme, the high-risk nature of the sector, and the non-suitability of conventional financing instruments.”

Balogun, however, stated that AFEX is helping to bridge the gap or probably providing solutions to eject the risk of the sector by providing the required data and ensure a clearer context of the industry is made available to potential financiers.

AFEX is known for its vision to make Africa self-reliant in food, has more than 100 agribusiness and 200,000 farmers registered on its Exchange and has significantly reduced the market fragmentation in many states of operation while it creates shared prosperity of all stakeholders.

The Exchange through its technologies ComX and WorkBench assists in storing and tracking relevant data for players in the space to make better-informed decisions. It has implemented a working formula that creates chances for farmers’ pre-production financing, AgriBusiness working capital financing, through innovative products listed on its Exchange.