Afex, a commodities exchange company, wants to introduce a blockchain-based application for warehouse receipt checks as part of efforts to reduce fraud for funders and increase liquidity for African farmers.
The Warehouse Receipt Check solution the company offers will be available with its existing electronic warehouse receipts system (e-WRS). When agricultural producers deposit commodities in one of Afex’ warehouses, they receive an electronic warehouse receipt, which can be used as collateral to obtain financing from a lender. Afex then stores the commodities in its warehouse until such time as the goods are sold and released.
The new blockchain solution, which has been developed by trade finance fintech Trade Finance Market (TFM), is aiming to support this process and reduce the risk of warehouse receipt fraud, by encrypting the receipts and storing them on the blockchain.
By using the blockchain solution, banks and other lenders can check to see if a warehouse receipt has been previously financed. Access to loans will be made easier for farmers as the risk of fraud is reduced.