Krzysztof Kajzar/123RF

Ethic Hub: Blockchain-Based P2P Lending For Farmers Across the World

  • 8 March 2018
  • Expert Insights

Our new Disruption by Blockchain series aims to highlight companies that are leveraging the incredible potential of blockchain technology to disrupt and revolutionize their industry. Through one on one interviews, we'll speak directly with industry leaders to cut beyond the hype and get directly to the heart of practical use cases and examples of how it will change the world, one industry at a time.

The following is an interview we recently had with Jori Armbruster, CEO of Ethic Hub.

1. What’s the history of EthicHub? How and where did you begin?

JA: I was lucky to grow up between Mexico and Spain, as the son of a Mexican mother, Spanish father, and grandson of three German grandparents.

During Spain’s economic crisis, I directly experienced how solid companies were lost while similar German companies were financed without problems. And I know firsthand that Mexico’s financing costs are quite higher than europe’s. Why do Mexican growers meet more financial obstacles than Spanish ones?

So I thought: “-What if there were a way to financially connect everyone and make access to equal opportunities become true? What if European investors could directly finance small Mexican farmers and get a great profit?”

If you seek you will find: I found there was a new powerful technology that allows for an international transfer of value at a very low cost; the technology is called Blockchain and the solution we created is called Ethic Hub.

2. Who are the founders and key team members?

JA: To make this project possible I needed first someone who knew perfectly well how to select projects, and I convinced Pablo, who has financed more than 8,000 small coffee producers in México with a default rate of less than 3% to join the team. I also needed someone who understood the technological challenge and was able to carry it out and I met Raul. My business background comes from 10 years as CEO of a leading retail business with over 100 sale points. Together we have already convinced more than 10 people to work been paid in our tokens and have build a solid team with the necessary experience to create a solution to this uneven access to financial opportunities.

3. What problem are you solving? Who are you solving it for?

JA: We have two faces of one problem: uneven capital location. On one side there is lack of access to financial services for over 2 billion unbanked people (a large majority of them are farmers). On the other side, there is lack of access to international investments opportunities. Ethic Hub makes both ends meet turning both problems into solutions to each other.

4. What is your solution to this problem?

JA: Agricultural unbanked producers are used to pay over 100% interest on cash loans and their payments are not registered. Little investors in Europe and other high-income countries, in general, get very low interests from their banks, if any. By directly connecting both through Ethic Hub, we can offer a real peer-to-peer solution: providing agricultural producers with affordable loans that will allow them to increase their productivity (thus raising their income) and a record of their credit history; and also offering the investors an attractive portfolio of investment opportunities related only to positive impact projects, rated according its risk level with a system that turns reputation into an asset.

Ethic Hub crowdlending platform will provide credit only to productive projects capable of generating benefits (opposite to credit for consume, that only generates debt). Project selection is carried out by a properly motivated and trained person (Local Node) in direct contact with the borrowers' community thus able to verify their productive capacity. An individual credit history is generated even when the loans are collective. We also count on the community and its positive synergy: trust, personal relations, proximity, confidence, and support: they will be their own filter to exclude unreliable members from a collective loan. It is not intended for the investors to take advantage of the current situation, but to become part of a solution where both parties win. We truly believe the mutual benefit is the real driver for sustainable global economic development.

5.  Why is agriculture ripe for disruption?

JA: We are not disrupting an industry since the banks are not able to reach these people, we are creating a new one. There is a huge inefficiency in the global financial system when two people equally solvent have to pay more than 100% different interests and this is one of the main reasons why poor countries struggle to develop. Statistics are unnecessary to understand the huge opportunity it means to incorporate over 2 billion people into the global market.

6. What’s the future of your industry?

JA: Crowdlending is expected to grow an average rate of 51% annually according to Morgan Stanley report. But this is linear thinking, not considering blockchain's ability to break domestic borders for money and to bring in the unbanked.

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