Sterling Bank Nigeria has committed to providing at least N10bn (approximately US$30mn) in financing against ‘tokenised’ warehouse receipts in a partnership agreement with AFEX, a Nigerian commodities exchange, and Binkabi, an Africa-focused blockchain firm.
Binkabi’s platform uses blockchain-based smart contracts to secure and automate commodity trading and financing. Through the new programme, a farmer can deposit commodities for sale at one of Afex’s warehouses throughout Nigeria, which in turn will issue a warehouse receipt representing the ownership of the commodity. This warehouse receipt will then be converted into a token— which can be traded on Binkabi’s blockchain platform and used as collateral for financiers to fund it.
This brings huge opportunities to a bank like Sterling Bank, which has never provided financing on the back of warehouse receipts before. “It will enable us to finance more and provide better pricing,” Awosanya says. “Before, the bank would need additional collateral — something more tangible than a warehouse receipt, such as a mortgage.”
Binkabi’s long-term ambition is to build a broad network of individual commodity exchanges across Africa that share a common blockchain-based infrastructure. The firm is already working with TAK Agro, a local agricultural conglomerate, to acquire a license for another exchange that will run on the same platform.