Blockchain and it’s Potential in Africa

There are plenty of problems that need solving in Africa. These problems potentially can also be solved with a few key principles that are inherent to the blockchain, such as transparency, and decentralization. From elections to international remittance, as well as energy services and alternatives to banking; Africa has many broken systems that could be fixed by new technology.

Why Blockchain?

Firstly, looking away from the financial side of things, blockchain technology is aimed at eliminating intermediaries. The bad track records of governments, institutions and even corporations operating across the continent mean that citizens rarely trust those in positions of power. Blockchain’s P2P system allows trust between strangers without recourse to any middlemen or hierarchical structures. This feature is both a crucial and timely solution for many forward-looking Africans.

Also, citizens will benefit from blockchain’s ability to tackle issues of transparency and accountability. Yet governments and institutions are spearheading the adoption of blockchain technologies too, due to its efficient management of large quantities of data which might otherwise be non-existent.

Africans are embracing the shift towards more technocratic leadership. A few examples of how governments across the continent are responding to the blockchain revolution.

In January 2018, Tanzania’s Central Bank Director expressed concerns over the East African Community (EAC) states plan for a single regional currency.

South Africa’s newly appointed president Cyril Ramaphosa made an announcement in February 2018, stating that a ‘digital industrial revolution commision’ would set up in partnership with the private sector and encompass new technologies, such as blockchain.

The same month, Kenya’s Ministry of ICT appointed a team to produce a blockchain roadmap. Led by Dr. Bitange Ndema, the 11-member team will spend three months researching artificial intelligence and the potential use of distributed ledger technology in Kenya.

Featured Innovations Around Blockchain

There are a number of instances where blockchain technology can improve matters. Stated below are some African brands and institutions harnessing blockchain technology, to provide citizens with complete control, total transparency, and low prices.

Interpol & VoguePay

February 2018 saw the International Criminal Police Organisation(Interpol) partner with online payments provider Voguepay to develop a blockchain-based information portal for crime control in Nigeria. The citizen-focused platform, named interport, will allow accessing information and manage stakeholder engagements and crime-reporting.

The growth of e-commerce on the continent continues to be stifled by consumer anxieties, from the lack of effective security measures to anonymity. But now individual data can be properly recorded in publicly accessible digital ledgers, partnering with organizations that can bold those that commit crimes accountable is a step in the right direction and will surely put the minds of vulnerable retailers and customers at ease.

Eloncity

Andy Li, CEO, and founder of Eloncity, a company that is looking to both greener electricity in Africa, but also decentralized electricity which is controlled by communities, explains how this solution works better than the current set up on the continent. “I am perhaps a bit biased, but I would say energy would be a good start for trying out blockchain in Africa. The infrastructure is missing and there is not much-modernized productivity”.

Li touches on this idea of community — a strong African value which is also prevalent in the blockchain model. Blockchain infrastructure, with its advancement and how it progresses, and in this case, energy and electricity which is community-run rather than by inefficient centralized government agencies would be beneficial to the population.

Wisekey & Microsoft

October 2017 saw Switzerland-based cybersecurity company WISeKey partner with Microsoft to help the Rwandan government develop blockchain-based initiatives. The partnership is part of an ongoing collaboration to turn Rwanda into a blockchain and IOT center of excellence. The first phase of the initiative includes digitizing Rwanda’s Land Registry to aid authenticity — proving ownership of land and property in developing countries is a well-documented problem.

Blockchain solutions are like gold dust for governments in Africa, who have long been plagued with issues surrounding data collection, organization, and integrity. Using blockchain technology to digitize, secure and keep track of records will not only circumvent the issues around information mismanagement that many institutions struggle with, but could also restore trust in the public sector — which many African citizens have lost faith in.

Issues Facing Implementation of Blockchain

A number of industry pioneers even in seeing the enormous potential the blockchain technology has in Africa, attest to a number of difficulties in doing so, some of an African context, and some of a more general blockchain context.

Lack of Internet Infrastructure

One of the most challenging development issues would be the lack of internet infrastructure. Most of the connection goes through satellites and the throughput is very limited. This means nodes might have trouble staying synced with the blockchain, and that it would be probably more expensive to mine or run a node independently, rather than in developed countries.

Shortage of Talent

Another challenge would be the development itself. Programming a blockchain requires knowledge in cryptography and databases, and there is a huge demand for blockchain developers worldwide. Why should they go to Africa? The ecosystem must be worth their while, and that creates an issue for the future.

Policy Constraints

There are basically more traditional blockchain implementation issues bordering around policies not suited for it within an African context.

Blockchain technology exists largely in a regulatory grey zone. Companies and businesses are reluctant to invest time and resources into research and development because they feel that regulators might retroactively punish them. What is needed is the assurance and frameworks provided by regulators before sufficient effort can be invested.

Scalability Issue

Additionally, most blockchains are not suited for the use cases for which they are being applied. This is largely due to the issue of scale. Scaling blockchain technology to many users has been difficult. This must be addressed before blockchains can gain wide-scale usefulness.

What’s the Way Forward for Africa?

As clearly pointed above, it’s clear the potential is here, but with that comes a host of issues regarding implementation, so where does Africa stand in terms of its blockchain ecosystem currently? It has clearly not taken off, but it is neither being left behind and abandoned.

There are a number of companies across Africa that are researching blockchain technology. There are still no implementations that are in full-scale production apart from crypto related initiatives. Most of the companies that are offering services that leverage blockchain technology is operating outside of existing securities, currency and commodities laws.

Most experts believe that it is important to engage and operate with governments and regulators to be a blockchain solution that can survive the African environment.

Earlier this year, Safaricom’s chief executive Bob Collymore said the telco company is considering applying blockchain technology to its mobile money transfer platform M-pesa. Mobile money transfer costs in Kenya are high especially under the recently implemented finance bill 2018 where the transfer charges were increased from 10% to 12%, an opportunity exists here for the ability of blockchain to reduce transaction costs.

Conclusion

Understanding, the road is a long one for the continent of Africa if it’s to embrace blockchain technology. It is easy to point to problems and match them with blockchain solutions for the technology is so far-reaching, but it is another situation to try and get these solutions to be viable and adopted to any useful scale.