Kennedy Ng’ang’a’s blockchain of trust for Kenya’s smallholder farmers

Kennedy Ng’ang’a studied engineering as an undergraduate, and is currently building an integrated chainlink oracle technology to run parametric insurance for smallholder farmers in Kenya. In this interview, we discuss his startup, Shamba Network, the challenges of scaling up in today’s Web3 and crypto space, and the absence of Africa in the carbon credit conversation.

Shamba Network was founded in 2020 – or was it 2021?

The idea came to me in 2020; that’s when I started doing research. But Shamba itself was founded in 2021, around September or October.

So you are one year old now. How has it been for you as an entrepreneur?

Before founding Shamba, I had actually been involved in another startup. I’m used to the grind of the startup world; Pulling long hours is something I’m comfortable with. Not just long hours, but also odd hours. The most important thing in any startup is the willingness and flexibility to be able to learn new things, and adapt and implement changes quickly. The more you do it, the easier it gets.

When you get to your job at Shamba, there is increased agitation around climate concerns, with fears that the earth needs saving. Where exactly is Shamba Network in this conversation?

At Shamba, our mission is twofold: to put mechanisms in place that will promote regenerative action to mitigate climate change; and building solutions to help farming communities adapt to the changing climate. So we are dealing with both mitigation of climate change and adaptation to climate change.

A good example is that we provide carbon credit data to encourage people to do things like plant trees; and we build solutions that monitor it. We also provide data for insurance for farmers to power solutions that provide crop insurance to some of the most vulnerable people.

When you say you provide solutions to farming communities, what do you mean?

We have two pillars we work with when it comes to climate change.

The first is the adaptation pillar, where we provide farming communities with access to solutions that help them adapt to climate change. We do this by delivering data that can be used for index-based insurance. We operate in connection with geospatial data (which is data collected by satellite) and blockchain technology. We bring to the blockchain satellite data and other forms of data that can be used to check whether a place has been affected by climate change.

The second pillar is reduction, where Shamba provides data that can be used by projects working on regeneration. So, for example, projects that want to create carbon credits on the blockchain can use Shamba’s data obtained from satellite as well as other sources to do monitoring, reporting and verification, which is basically a way to ensure that if they are to create a carbon credit for a place, they are able to confirm that regenerative action was set up there. And that has had the effect of sequestering a certain amount of carbon.

So why have you decided to put or host this data on the blockchain and not on some other medium that already exists?

It boils down to the core benefits of web3 and blockchain-based solutions. One of them is transparency. By the nature of the blockchain, many solutions built on it have increased transparency, therefore people find it easier to trust that solution.

For example, farmers in Africa have typically shied away from insurance solutions, because they are not affordable for them, and the people offering such solutions are not reliable. But when these insurance solutions are implemented on the blockchain using smart contracts, they can be fully automated; there is no risk of another party deciding not to honor an agreement because they want to save money. These are systems that are driven by data. When an insurance solution is baked into a smart contract, it will only wait for the expiration of the insurance contract, and then retrieve data from the outside world to determine whether it will pay out to the farmer if a risk has occurred. .

What is the digital skill level of the farmers you work with? How do you ensure that you include them, and any other stakeholders in the agricultural sector?

We use a lot of new technology, that’s fine. We are deep in the Web3 area and build many smart contract-based solutions. We use ground-breaking data from satellites – what is called remote sensing data. In addition, we also use a lot of ground-breaking analyzes using machine learning and artificial intelligence. But the people who will use the solutions we build don’t really need to know about these technologies that are in the backend.

So what we do with the farmers we work with is we educate them and build their capacity to understand solutions like crop or livestock insurance. We teach them how to interact with the solution, show them the benefits and what they can expect from working with it. But we don’t really go into explaining geospatial analysis or smart contracts or machine learning running in the backend.

Let’s talk about green bonds in Africa. We have only had 16 green bonds issued to the continent. Is it good or bad?

I think it’s good. A bit small, but it definitely builds momentum.

Why are we where we are with these bonds? And what could be better?

Green bonds are in their infancy in Africa. I think this is part of the paradigm where people are starting to become very climate-focused and look at the climate economy. This is a reimagining of the financial system that allows us to put environmental protection at the core of the economic system – to be able to get to a point where funds can be pooled and used for activities that have a huge impact on the environment.

I want us to talk about Africa’s absence in the carbon credit conversation. Why do you think this is?

In terms of the carbon credit space and the voluntary carbon market, the methods that have been accepted to create carbon credits are not applicable to Africa because they are designed for large landowners – people who own 5,000, 10,000 hectares of land, basically large ranches, which you probably will find in the global north.

Across most of Africa, as well as Southeast Asia and Latin America, you have smallholder farmers – people who typically own less than five hectares of land, where they grow their crops to feed their own families and only sell what little is left . The methods that exist to create carbon credits are designed for places where people have large stakes, they cannot be used in Africa.

One of our biggest missions at Shamba is to fix this problem and come up with methods that can be used to create carbon credits on smallholder farms; methods that strike a balance between the rigors of monitoring, reporting and verification.

Are you currently breeding at Shamba?

We plan to raise a seed round, probably in December 2022 and early 2023. We have had some interest from some investors.

How much do you intend to raise?

A million dollars.

What will you do with the money?

The seed round will help us get to our milestones, which will help us to the next fundraiser. One of them is that we want to complete the development of our software, roll it out and register a certain number of farmers on our platform, people who will use it to create carbon credits, and use the platform as a community to start engaging. in the carbon market.

But we’re also going to use those funds to do quite a bit of marketing. We have many products we have built, an example of this is our data oracle which already serves some solutions, such as insurance, all based on satellite data. We believe that if we can get this information out, then we will have more people willing to use this technology.

I want to talk about your value proposition. Climate is probably not number one on the list of sectors that investors entering Africa are looking at. What is your experience with seeking funding, especially with investors saying no to you?

Apart from the fact that we are in the climate space, we are also in the Web3 space. As you know, right now, the crypto space is taking a beating in the credibility department, after the recent FTX fiasco. So when you’re trying to raise in Web3, in a climate where there’s a lot of fear and doubt, the investor due diligence process will take a while. But those who have said no to us have not done so because of the uncertainty in the crypto sector. Rather, it was because previously, when we had tried to raise, we had not yet reached a point where we had traction and a good adaptation to the product market. But now we’re doing it, and we’re aiming for the end of January to be income positive.

My Life in Tech (MLIT) is a bi-weekly column that profiles innovators, leaders and shapers in the African tech ecosystem, with the aim of putting a human face to the startups and innovations they build. A new episode comes every other Wednesday at 15.00 (WAT). If you think your story would be of interest to MLIT readers, please fill out this form.