Bridging the Data Gap in Africa’s Ag-Trade Industry


Agriculture, Africa’s backbone, lacks timely and accurate raw data, inhibiting evidence-based planning and implementation of policy. Agricultural development continues at a slow rate because farmers cannot confidently make informed decisions, investors cannot identify and take advantage of the lucrative opportunities to channel their capital, and the government can neither predict nor measure the effects of their policies, all ultimately leading to poor decisions when allocating resources.

Since its inception in 2018, Dbuntu Africa has focused on bridging the data gaps in the agriculture industry, with the introduction of D4Ag; an online data dashboard with a two-fold mission to:

  1. Provide mobile electronic record-keeping and analytics tools, and in return gather valuable data insights for our clients.
  2. Deploy technology & data products with the aim to facilitate lucrative investment opportunities in inter-African trade.
Intra-African exports as a percentage of total African exports have increased from about 10% in 1995 to around 17% in 2017, but it remains low compared to levels in Europe (69%), Asia (59%), and North America (31%).

Due to farmers' inability to know market prices & customers' inability to directly access farmers (information asymmetry between farmers & customers in the marketplace), markets are prone to heavy exploitation & manipulation. As a result, we are integrating a new blockchain-based systems aggregation & procurement system for merchants & traders on top of Dbuntu’s already existing Data for Agriculture (D4Ag ™) ecosystem for farmers intended to bridge this data gap.

D4Ag; a simple mobile record keeping and farm management suite that fosters data-driven decision making and empowers small, medium, and large farms in Uganda & East Africa to optimize their food production and improve their productivity/performance.

Bunyonyi Distributors Limited

Executive Summary

Bunyonyi Distributors Limited (BDL) is a Logistics & Distribution company founded in 2009 that aggregates and supplies an array of fresh/dry produce & fast moving consumer goods to & from the Greater Kigezi region from our suppliers & farmers to our clients including hotels, restaurants, wholesale buyers & bulk exporters.

“As Bunyonyi Distributors Limited, agricultural marketing is our main goal. This covers the services involved in moving an agricultural product from the farm to the consumer. Numerous interconnected activities are involved in doing this, such as planning production, growing and harvesting, grading, packing, transport, storage, agro and food processing, distribution, advertising, and sale. It also involves the acts of buying supplies, renting equipment, and paying labor.
We also intend to establish a network of low cost cold chain & silo structures for storing bulk materials. Silos are used in agriculture to store grain or fermented feed known as silage. These Silos will be used for bulk storage of grain, and other food products. We may also look at packaging some of these Products like Maize Flour, Millet flour, coffee beans, rice, potatoes, etc.
More than 80% of Uganda’s population depends on agriculture. About 7 million households in Uganda cultivated land or reared livestock in 2019 (UBOS 2022, Table 2.1). They represented 80 percent of the total households in Uganda (UBOS, 2022, p. 3). Agriculture was the main economic activity for most of the heads of those agricultural households. Goods produced in factories and/or commodities in agriculture should reach customers, the primary purpose of Bunyonyi Distributors is to get these goods from the producers to their respective customers.
Agricultural products are highly related to the food and ancillary industries. Agro-products include a broad category of products related to agriculture and a wide range of products offers a wide range of opportunities globally. Broadly we can classify into 3 classes. One is resources like feed, seed, fertilizer, pesticides, machinery, etc. Another is processed commodities of food and fiber. And the third one is fresh food items like fruits, vegetables, etc.”
- Andrew Akampereza (GM — Bunyonyi Distributors Limited)

Problems

  1. Access to Markets: Many smallholder farmers in Uganda are unable to access markets for their agricultural products yet people rely on agriculture as their primary source of income & there is a growing global population demand for commodities.
  2. Access to Financing: Many farmers live in poverty, often supporting multiple family members, and work hard all year round to nurture their crops and earn enough money to provide the following essentials for their families: Food, Shelter, Healthcare, and Education. This is suffering a notable impact on food security.
  3. Poor Agro-Infrastructure for Quality Assurance: Limited post-harvest storage facilities (both cold chain & dry), & irrigation systems. As well as poor packaging equipment of which producers are encountering a problem when supplying the global market in which their produce is not marketable/competitive due to the lack of adequate packaging.

Solutions

  1. Connecting Farmers to Global Markets: Our aim is to connect farmers directly to global agricultural markets for their produce. We have been working closely to obtain buyers across East Africa ie; Rwanda, Tanzania, and, DRC, and obtained a large sustainable market.
  2. Financial Services: We plan to work closely with HBC Uganda; a financial institution that organizes and trains farmer groups, and establishes packages of inputs, technology, and cash that farmers apply to significantly increase the productivity of a specific crop (or animal) in a specific location. Can then work with organized farmer groups whose members guarantee one another’s loans. HBC provides financial education and encourages farmers to open bank accounts and deposit savings.
  3. Portable Cold Chain Equipment & Grain Silos: We look to acquire multiple portable Solar Powered Cold Chain Storage Facilities & Grain Silos in Kigezi Sub-Region Kabale District to store Maize, Beans, Coffee, Peas, Wheat, Millet, Potatoes, e.t.c This will allow for greater mechanization during filling and feed out.
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BDL also offers quality assurance on fresh & dry agricultural produce & does regular deliveries and pick-ups around Kigezi, regularly adding new pick-up sites and delivery times.

  • BDL currently aggregates Potatoes (currently Kinigye & Rwangume) from other farmers & cooperatives, with help from other traders, brokers, and its own in-house agents.
  • BDL has built a relationship with BAJ Service Stations Limited — a network of strategically located gas stations around Uganda (heavily saturated in remote areas in Kigezi) to serve as collection points & quality control centers.
  • BDL has also built a relationship with Voice of Kigezi — a leading radio station in Kigezi that can help with sensitizing farmers about best practices, market prices as well as, and training.

MerchantX by Bunyonyi Distributors

Following the opening of the African Continental Free Trade Area (AfCFTA), in January 2021 together with our partners, we launched the MerchantX by Bunyonyi Distributors (MerchantX ™).

MerchantX ™; is a peer-to-peer electronic trading network (ETN) for physical commodities in Africa. Built by traders & for traders that provides members with real-time market price data feeds for grains, fresh produce, and many more commodities across various markets, as well as alternative data feeds & analyzed insights on overall market trends, news, as well as an order book with current buy/sell (bid & ask) orders available in the given market in real-time.

It leverages a simple approach to collaboratively financing trades called “Trade Staking” that we believe will not only better facilitate stakeholder alignment & incentivize traders to demonstrate an affirmative outcome to their investors and encourage profit maximization, but also transform the way contracts are financed & have a lasting positive impact on one of the region’s most lucrative industries.

What is Trade Staking?

The act of multiple organizing (traders/dealers) & non-organizing (investors) partners investing/buying a stake in a trade (i.e. 1000 mt contract to supply Masavu Beans) with the hope of generating a positive return on investment from the proceeds of the trade.

How does Trade Staking Work?

  1. Traders & Investors Buy Shares of Contract SPV IPO on a Regulated Public Exchange (i.e. Uganda Securities Exchange or AltX Africa).
  2. Exchange transfers funds onto a Protected Escrow Account (i.e. Absa, Stanbic, Standard Chartered).
  3. Revenue (Client Payments, SBLCs, BGs, Pre-Financing, e.t.c.) all run through the Escrow.
  4. Expenses (Supplier/Farmer Payments, Logistics, Processing Fees, e.t.c) all run through the Escrow.
  5. At the end of the trade, the Escrow Account is closed and 100% total balance is transferred to the exchange.
  6. Proceeds are dispersed proportionally to all shareholders (including 3rd parties bought shares from a non-organizing investor after IPO).

Example:

Product: Sugar-31 (Masavu)
Quantity: 1000 mt
Strategy (Delivery & Payment Schedule/Logistics): 10 Lots of 100 mt
Investment Required Per Lot: UGX 265,000,000 (1 Lot of 100 mt x UGX 2,650*)
Expected Payout Per Lot: UGX 270,000,000 (1 Lot of 100 mt x UGX 2,700*)
Spread (Expected Profit) Per Lot: UGX 5,000,000 (100 mt x UGX 50,000 pmt)
For all 10 Lots … is *Price Guaranteed (Yes/No), Supply Guaranteed (Yes/No) ?
  1. @ Trade SPV IPO: 265,000 Shares @ Price Per Share = UGX 1,000
  2. Investor B Sells Shares to 3rd Party
  3. Total Escrow Account Balance at the End of Trade: UGX 315,000,000 / 265,000 Shares = 1,188.67924 (Price Per Share at Trade End)
Note: P2 — Sale Price Determined by Total Escrow Account Balance at Time of Transaction / # Shares Outstanding.
Expected ROI: 18.87%
Though in its early stages, it has already shown traction & value in the market with the potential to facilitate lucrative inter-African trade by bringing data-based decision capabilities to the broader agriculture industry throughout the continent & closing this data-gap (information asymmetry) between market participants.
The MarchantX Protocol is an agricultural produce aggregation mechanism created primarily to enable 5PL (5-Party Logistics) coordination & deliver on end-to-end supply chain traceability in the areas of: 1) contract farming/mapping/analytics, 2) post-harvest aggregation & quality assurance, 3) procurement management, 4) storage/handling/packing, 5) freight/insurance/trading
“The long term vision & goal of this project would be to tokenize these commodities & facilitate the cash settlement using blockchain based stablecoins or NFTs as this would fully decentralize the trading network/platform and increase trust between market participants.”

Business Case Study: Keirungi Mixed Farms

COMMERCIAL AGRICULTURAL PRODUCTION & AGGREGATION

Bunyonyi Distributors Limited (BDL) in close collaboration with Keirungi Mixed Farms (KMF); shall guarantee market accessibility for KMF and its out-grower network and establish post-harvest distribution channels using the MerchantX “Contract Farming” Protocol.

A subsidiary of Batuma Holdings Limited (BHL), KMF represents a unique high-growth opportunity for commercial farming that is strategically poised to tap into the growing demand for high-quality Kigezi Potatoes.

Action Plan (Value Chain Approach)

In addition, through the Batuma Community Foundation, KMF pledges to support the sustainability of the BGE-Delphy Improvement & Training Centre (ITC); a partially subsidized SDGP social initiative that promises to drive the economically viable value chain development in the Potato sector of Kigezi.
  1. Potato Seed Multiplication for Sale to Potato Farmers — BGE-Delphy ITC
  2. Micro-Loans to Potato Farmers in Out-grower Network — Ensibuuko
  3. Contract Farming/Market Guarantee Protocols — Bunyonyi Distributors
Batuma Community Foundation has partnered with Ensibuuko Technologies to establish efficient online-based supply chain financial services & establish the Keirungi Fund; a revolving social impact fund (SIF #KPFL001) primarily focusing on potato farming in Kigezi with the aim of enhancing the sustainability potato farming industry & value chain. This SIF will provide easy-to-access micro-loans to Farmers in the Kabale region. These Micro-Loans enable Farmers to increase their capacity & maximize their productivity and efficiency.

Team Dbuntu

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