Terry Slavin reports on BanQu, a blockchain platform based on widely accessible SMS technology that is bringing transparency to the ‘last mile’ of global supply chains
Social entrepreneur Ashish Gadnis got the idea of BanQu, a platform that uses blockchain to help fight poverty among the millions of smallholder farmers in corporate supply chains, while working on USAID’s volunteer CEO programme in the Democratic Republic of the Congo.
Gadnis, who emigrated to the US from India at the age of 26, came from a poor background in Mumbai, but was unprepared for the levels of poverty, inequality and violence he saw in DRC.
The real shock, however, came when he witnessed someone in a local bank tell a female cocoa farmer, who had been working several years in the supply chain of a major brand, that she could not get credit because she didn’t have proof of her economic history.
“The guy said [to us both]: ‘I can’t bank her, but I can bank you.’”
Gadnis tells the story to explain how he came up with both the name and the concept for BanQu, a non-cryptocurrency blockchain platform based on widely accessible SMS technology that aims to bring transparency to what it calls the “last mile” of global supply chains.
I realised that despite the fact that we consume the coffee and cocoa they produce, the people who work very, very hard in global supply chains, [effectively] don’t exist
“It was like a punch in the gut,” he recalls. “I realised that despite the fact that we consume the coffee and cocoa they produce and wear the jeans they make, the people who work very, very hard in global supply chains, [effectively] don’t exist,” because they lack a verifiable economic identity.
Gadnis quit the USAID programme to go back to the US, where he developed BanQu with two other partners in 2016. One of them, Hamse Warfa, had spent three years in the Dadaab Refugee Camp in Kenya and was aware that many of the people he left behind in the camp would languish there because they can’t prove a single thing about their past histories.
With nearly 2.7 billion people worldwide lacking access to credit and services due to a lack of an economic identity, Gadnis sees great potential for the technology to be used by NGOs and governments.
The technology is being used to give Syrian refugees in Jordan economic identities, and by the Inter-American Development Bank in Costa Rica to help young people verify their academic qualifications.
But the biggest take-up of the technology, which is now in 13 countries, has been by brands, including Anheuser-Busch InBev and Mars Inc, who want to help improve conditions for the smallholder farmers in their supply chains.
Katie Hoard, global director of agricultural innovation and sustainability at AB InBev, said they turned to BanQu last year, after the company set a goal to have 100% of the estimated 20,000 smallholder farmers in its direct supply chain “skilled, connected and financially empowered” by 2025.
“First we needed to know who those farmers are. That necessitated a level of transparency we didn’t then have in our supply chain.”
Before the farmers had no way of proving they were farming in the AB InBev supply chain. Now they have this digital ledger
She points to problems this has caused in Uganda, where AB InBev had been sourcing local crops like cassava and sorghum for its locally produced beers for years. While the brewing giant would set a price for aggregators to pay farmers, it discovered that farmers were often not getting the full price.
Under the BanQu system, which AB InBev piloted in Zambia last year, the 2,000 cassava farmers registered on the platform have to produce an ID card and a basic SMS phone. Then when they sell a bag of cassava to the aggregator, they get a SMS message confirming the price, weight and pay-out – data that is also shared with AB InBev.
“Before the farmers had no way of proving they were farming in the AB InBev supply chain. Now they have this digital ledger and banks can now provide them financial services,” Hoard said.
As part of the Zambia pilot, AB InBev partnered with mobile phone company Airtel Africa and mobile money service MTN, which provided discounted phones and free Sim cards to farmers, and boosters to network connections in buying locations.
Farmers can now have payments put straight into bank accounts instead of having to be paid out in cash – something that was particularly dangerous for women, who were most vulnerable to attack when travelling home with their earnings.
Gadnis remembers when the first woman farmer saw the credit in her mobile money account. “She started laughing and said ‘Now I have mobile money I can pay for a solar home system and the kids’ school fees'. … That’s an ecosystem that she’s never been able to participate in before.”
Hoard said BanQu has only been operating for a year in Zambia, so it is too early to fully quantify its impact, but the company has already started rolling out the system with 2,000 barley growers in Uganda, after BanQu joined its 100+ Sustainability Accelerator programme, and it will be extended to 4,000 farmers in its Indian supply chain by the end of this year. Hoard said further expansion, to 8,000 farmers in its Ugandan sorghum supply chain, is in prospect.
Just by implementing blockchain you don’t get transparency and all the benefits. It’s not the blockchain that’s transformative, but the partnerships it allows
Not only is the transparency BanQu offers beneficial to farmers, it is driving operational gains for AB InBev, she says.
“We now have full visibility of when the crop is moving through our system until it arrives at our facility,” says Hoard. “I can log into the system from anywhere in the world and see who is selling to us and the price they are receiving when they deliver their crop.”
But she emphasises that blockchain technology is not a cure-all for supply chains. “Just by implementing blockchain you don’t get transparency and all the benefits. It’s not the blockchain [that’s transformative], but the partnerships it allows.”
This article is part of the in-depth Tech for Good briefing. See also:BanQu AB InBev Blockchain Ashish Gadnis Mars Inc financial inclusion smallholder farmers