AFAN Signs MOU With ChainTech to Tokenize $500M in African Agricultural Commodities
Abuja, Nigeria – The All Farmers Association of Nigeria (AFAN), representing over 35 million farmers, has signed a groundbreaking memorandum of understanding with blockchain infrastructure provider ChainTech to tokenize $500 million worth of agricultural commodities. This initiative—the largest of its kind in Africa—aims to leverage blockchain technology to address chronic financing, storage, and market access challenges that have long plagued Africa’s agricultural sector.
The partnership will create digital tokens backed by physical agricultural commodities including cocoa, sesame, cashew, and sorghum, enabling fractional ownership, transparent pricing, and real-time settlement for farmers, traders, and global buyers. Here’s how this transformative project aims to reshape African agriculture.
Tokenization Framework: How It Works
Commodity-Backed Digital Assets
- Cocoa Tokens (1 token = 1kg premium cocoa beans)
- Sesame Seeds (1 token = 5kg cleaned sesame)
- Cashew Tokens (1 token = 2kg raw cashews)
- Sorghum Tokens (1 token = 10kg grade A sorghum)
Technical Architecture
- Blockchain: Ethereum-based with Layer-2 scaling
- Oracle Integration: Real-time price feeds from AFAN warehouses
- Storage: IPFS for immutable quality documentation
- Compliance: Built-in KYC/AML for international investors
Token Standards
- ERC-3643 for security token compliance
- ERC-1155 for multi-asset representation
- Custom governance for farmer voting rights
Market Impact: Solving Core Challenges
Financing Revolution
- Pre-harvest financing: Farmers can tokenize future yields
- Fractional ownership: Global investors can buy $100 fractions
- Reduced costs: Financing costs drop from 25% to 8% annually
Price Discovery & Transparency
- Real-time pricing: Based on actual transactions rather than broker quotes
- Quality premiums: Certified organic/fair trade tokens trade at 15-30% premium
- Global access: Farmers connect directly with international buyers
Logistics Optimization
- Smart contracts: Automate payments upon delivery verification
- IoT integration: Sensors monitor storage conditions
- Supply chain visibility: Full traceability from farm to consumer
Implementation Timeline & Targets
Phase 1 (Q4 2025)
- Pilot program: 50,000 farmers in Ogun, Kaduna, and Oyo states
- Initial tokenization: $50M worth of commodities
- Exchange listing: AFAN tokens on licensed Nigerian digital exchanges
Phase 2 (Q1-Q2 2026)
- Scale to 500,000 farmers across 12 states
- Expand to include maize, palm oil, and ginger
- International exchange listings (Binance, LSEG)
Phase 3 (H2 2026)
- Pan-African expansion to Ghana, Côte d’Ivoire, Kenya
- Total value tokenized: $500M
- Farmers served: 2 million+
Stakeholder Benefits
For Farmers
- Immediate liquidity: Sell future production at planting time
- Price stability: Lock in prices before harvest
- Access premiums: Differentiate based on quality and sustainability
For Investors
- Inflation hedge: Commodity-backed digital assets
- Diversification: Access to previously illiquid markets
- Transparency: Real-time audit of underlying assets
For Government
- Increased tax revenue: Formalized commodity trading
- Reduced waste: 25-40% less post-harvest losses
- Job creation: New tech and logistics roles
Regulatory Framework & Compliance
Approvals Obtained
- SEC Nigeria: Digital asset classification as commodities
- CBN: Foreign exchange access for international investors
- NAFDAC: Quality certification standards integration
Safeguards Implemented
- 100% collateralization: All tokens fully backed by physical commodities
- Monthly audits: By PwC Nigeria and ChainTech
- Insurance coverage: Lloyd’s of London policy for stored commodities
- Dispute resolution: Multi-sig escrow for quality disputes
Technology Partners & Infrastructure
ChainTech’s Role
- Blockchain infrastructure development
- Oracle integration for price feeds
- Exchange connectivity and liquidity provision
Supporting Ecosystem
- Warehousing: Integrated with AFAN’s 200+ storage facilities
- Logistics: Partnership with GIG Logistics for transport
- Payments: Flutterwave integration for fiat settlements
- Insurance: Leadway Assurance coverage framework
Comparative Advantage Over Traditional Systems
| Aspect | Traditional Trading | Tokenized System |
|---|---|---|
| Settlement Time | 7-30 days | Instant |
| Transaction Cost | 15-25% of value | 2-5% |
| Price Transparency | Opaque broker quotes | Real-time market pricing |
| Access to Finance | Limited to large traders | Available to smallest farmers |
| Market Access | Through multiple intermediaries | Direct to global buyers |
Risks & Mitigation Strategies
Price Volatility
- Hedging: Futures contracts for underlying commodities
- Stabilization fund: 5% of tokens reserved for market making
Quality Risks
- IoT monitoring: Sensors in storage facilities
- Third-party verification: SGS quality certifications
- Insurance coverage: For quality degradation
Technology Risks
- Multi-sig wallets: For asset protection
- Regular audits: Smart contract security reviews
- Traditional backups: Paper-based fallback system
Global Context & Opportunities
African Agricultural Potential
- $1 trillion market value by 2030 (AfDB projection)
- 60% of world’s uncultivated arable land
- $48 billion annual import bill for food products
Tokenization Trend
- Gold: $15B tokenized globally
- Real estate: $8B tokenized in 2024
- Agriculture: Emerging but rapidly growing segment
Investment Interest
- BlackRock: $200M allocated to tokenized commodities
- Binance Labs: $50M African agritech fund
- AFDB: $500M digital agriculture initiative
Farmer Testimonials & Expected Impact
Smallholder Experience
- Amina Lawal (Kaduna, 2-hectare farm): “Previously waited 6 months for payment—now I get 50% upfront”
- Chukwuma Okeke (Oyo, 5-hectare cashews): “Received 30% higher price for certified organic tokens”
Economic Projections
- +15-25% farmer income increases
- -40% post-harvest losses
- +$200M new foreign investment in first year
The Road Ahead: Scaling Across Africa
2025-2026 Expansion Plan
- Nigeria: Full national rollout
- Ghana: Cocoa tokenization pilot
- Kenya: Coffee and tea tokenization
- Senegal: Peanut tokenization initiative
Long-Term Vision
- African Agricultural Token Standard by 2027
- $5B tokenized commodities by 2030
- 20 million farmers integrated into digital markets
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