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Proponents of blockchain, a public digital ledger of transactions, say the technology has the potential to disrupt everything that we do today. They also say that in doing so, it has the potential to bring in people that are otherwise excluded from the global economy, by virtue of where they live or what they do, helping in the redistrubution of wealth.
On this basis, when Block Commodities, formerly African Potash, decided to move its operations onto the blockchain, the management worked on the assumption that it would be the start of big things for the entire African economy. Chris Cleverly, executive chairman of AIM-listed Block Commodities, tells IG that this is the beginnings of a new era for Africa.
Africa’s wealth remains rooted in the commodities markets. While it benefits from tourism, has an income from the wine trade, and exports locally made clothes and furniture to people around the world, all these sectors are dwarfed by the production of commodities. Food, sugar, coffee and other agricultural crops are grown widely for export. Block Commodities also believes potash has the potential to be a profitable business, and it is the minerals that are found widely across the African continent that can transform the future of the 1.3 billion people that live and work there.
Cleverly says that Block Commodities has recently set up agreements and a process with companies that already specialise in providing finance to small farmers and suppliers, and (by using blockchain and cryptocurrencies) will be able to ‘engage in a huge and unexploited market’, avoiding expensive agents and other ‘middle-men’. He also says that attractive low rates of interest are going to help small producers, who are usually burdened with high rates of repayment rates and are then susceptible to become tied into exploitative deals.
However, blockchain has merits beyond making the process of commerce more reachable to otherwise disenfranchised corners of the market. Cleverly says the digital ledger is a process that is ‘un-useable by exploitation’. This opens up a whole new opportunity where unwanted government intervention renders local trade deals impossible.
Why are larger companies which already specialise in African commodities not already involved? Cleverly says that disruptive moves, such as engagement in the blockchain, often depends on ‘small start-ups and incubators’, and it is only when it is proved that it works that others begin to take notice. Does this put Block Commodities in the frame as a takeover candidate? Much will depend on the next few months, to see how quickly and efficiently the company can deliver on its strategy of employing this, still new, and largely untested, framework.
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