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Rough draft for discussion purposes. Need to flesh out further. Sharing so we have some anchor for the FY23 budgeting process. |
DeFi for Smallholder Farmer Group Climate Adaptation + Resilience [+ Mitigation] / SDG Achievement
Context
If we pursue an "access to capital" path, I think we should give grants to farmer groups (where they put up say 33% of the required proceeds to have skin the game) rather than debt. The pool of grant financing that could be mobilized is pretty large and it feels closer to our DNA.
Mobilizing capital at scale does require some return to flow back to capital providers; given all the challenges w ag lending (which results in low risk adjusted returns) I think we could provide tooling to enable blended finance consortiums to come together and make it easy for capital providers to slot into whatever part of the capital stack makes sense given their mandate, all the way from donors/govts/extended govt (eg, NABARD) that provide first loss guarantees to DFIs to commercial investors.
This summary of a fund that OAF is working on in Rwanda with avocado value chain is a useful reference (disregard the venture studio stuff, not relevant for our discussion)
I found this model on mangrove restoration interesting bc there is a nonprofit arm developing the Forest Smart Ledger which is open software and then the funding platform (GROVE) sits alongside.
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User Journey
Farmer groups develop funding proposals to make investments for climate adaptation / resilience and mitigation (could broaden this to cover achievement of other SDGs like livelihoods and gender as well)
Each project and its associated data is aggregated in an NFT
Projects are listed in a website where donors can fund a portion (similar to GoFundMe)
Donors/funders are buying “shares” in an NFT which aggregates a bunch of info about a project (which is captured via KDE) incl headline stats on the farmer group and impact metrics (performance on SDGs, maybe even climate outcomes like emission reduction, reduction in water usage, biodiversity improvement, etc) associated w the project
Sponsoring a project gives funder a “claim” on the impact metrics generated by the project which he/she can display to their stakeholders
5% of proceeds to platform provider, 10% to data verifiers (could be fixed $ amount based on size of project) and remainder to project / farmer group. Farmer group puts up [33]% of cost of project
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