Highlighting the challenges of blockchain adoption in the food supply chain in West Africa

Enterprise Blockchain Solutions

Enterprise blockchain solutions are integral to validating blockchain technology and accelerating adoption, especially in emerging markets like West Africa. Supply chain is one of the industries prominently stipulated as a viable use case for blockchain technology. Food supply chain in particular, which requires active collaboration between participating organisations in the value chain, seemed ripe for the transparency feature inherent in blockchain technology. The impact of globalisation with the opportunity to source raw materials from global suppliers, food safety challenges, government regulations, changing customer preferences and environmental concerns has made the food supply chain more complex and in need of transparency. However, Enterprise solutions have not been exempted from the challenges of new technology adoption.

TradeLens Discontinued

TradeLens, a block-chain enabled global trade platform created through a joint collaboration between IBM and Maersk, set to revolutionise the supply industry when it was founded in 2018. According to the TradeLens website, it has tracked over 3.7 billion events, published over 36 million documents, and processed over 70 million containers. IBM and Maersk successfully onboarded major shipping companies and other companies to their permissioned blockchain platform despite initial pushback from other industry actors who showed concerns regarding using a platform created by a competitor. After five years of operation, IBM and Maersk recently announced that TradeLens will be discontinued and cease operations by Q1 2023. Rotem Hershko, Head of Business Platforms at A.P. Moller – Maersk shared the reason for discontinuing TradeLens. 

“TradeLens was founded on the bold vision to make a leap in global supply chain digitization as an open and neutral industry platform. Unfortunately, while we successfully developed a viable platform, the need for full global industry collaboration has not been achieved. As a result, TradeLens has not reached the level of commercial viability necessary to continue work and meet the financial expectations as an independent business.”

Adoption in West Africa

For my MSc dissertation, supervised by Saverio Romeo, Associate Lecturer at Birkbeck University, I conducted an exploratory study on the adoption of blockchain technology for supply chain transparency by food and beverage companies in West Africa. The main aim of the study was to evaluate the importance of transparency for food and beverage companies and identify the relevance of blockchain technology using the diffusion of innovation theory as the theoretical framework. I interviewed global blockchain service providers and supply chain practitioners working in Nigeria and Ghana’s food and beverage industry. 

Blockchain is a digital ledger that records transactions on a decentralized network, which means that it is not controlled by a single entity. This makes it difficult for any single party to manipulate or alter the records on the blockchain, which can help to increase transparency and trust in the food supply chain.

Transparency in the food supply chain is important to food and beverage companies operating in West Africa, especially those exporting to international markets, however, supply chain practitioners have little to no knowledge of blockchain technology as a solution to transparency challenges. This is in contrast to the popularity of cryptocurrencies, also powered by blockchain, in the region. According to ChainAnalysis, Nigeria ranks 11th in its 2022 Global Crypto Adoption Index, and Ghana is expected to achieve similar levels of adoption to Nigeria and Kenya. In addition, the governments of Nigeria and Ghana are one of the earliest countries to test or implement a central bank digital currency (CBDC) initiative. 

Challenges of blockchain adoption in Africa

  1. Limited understanding of blockchain: There is a lack of understanding and awareness of blockchain technology among farmers and other stakeholders in the food supply chain. This can make it difficult to gain buy-in and support for the implementation of a blockchain system.
  2. Lack of digital infrastructure: The lack of digital infrastructure and access to the required technology exacerbated by unreliable electricity and internet connectivity makes it difficult to implement and maintain a blockchain system.
  3. High cost of implementation: The high cost associated with adopting blockchain technology is a barrier for stakeholders and could lead to higher food prices, thereby creating a negative impact for local consumers who are price sensitive. 
  4. Data privacy and security: There are concerns that sensitive company data about suppliers and partners or innovation made available on the blockchain could be used to remove the company’s competitive advantage, if shared with competitors.

Implementing blockchain in the food supply chain in West Africa will require the right infrastructure, awareness, standards, support, and partnerships. The technology has the potential to improve traceability, transparency, and efficiency in the food supply chain, which can benefit farmers, consumers, and other stakeholders in West Africa. However, addressing the challenges and implementing effective solutions will be crucial for the success and viability of blockchain in the food supply chain in West Africa.

Ibukun Onitiju (ionitiju@gmail.com)

1 Comment

  1. If there are buy-in by the various governments and policies and standards put in place, adoptions will be well underway.

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