Look into the block future
Blockchain is often thought of as just the rails for cryptocurrencies, like Bitcoin, which grab most of the media attention.
Indeed, the first wave of blockchain-focused companies in Africa followed this trend, with companies like Kenya’s BitPesa – now AZA – using Bitcoin as a means of sending and receiving money more easily. In recent years, platforms like Luno and Coindirect have helped establish South Africa as a leader in the Bitcoin exchange space.
But, increasingly, companies are using blockchain in other areas, as entrepreneurs catch on to the benefits of distributed ledger technology in promoting transparency and trust on a continent where both are often in short supply.
Jehiel Oliver is CEO of Nigerian startup Hello Tractor, which helps farmers access necessary equipment via a blockchain use case that incorporates microfinancing and smart contracts. He says there are various developments on the African continent that indicate a huge interest for blockchain outside of cryptocurrencies.
“We failed in the past three industrial revolutions, and if we fail to take advantage of the Fourth Industrial Revolution, which will be characterised by, among other technologies, blockchain, we can kiss our role on the global stage goodbye,” Dr Bitange Ndemo
“In various African countries, local tech startups are using blockchain technology to solve many of the economic and political problems that plague the continent today,” he says.
“Its decentralised nature makes it relevant in various use cases. For example, corruption greatly undermines the image of most countries across Africa. Blockchain could play a huge role by fostering the creation of tamper-proof transaction records in both public and private sectors, helping to fight fraud and other forms of corruption.”
Multiple use cases are emerging. Swiss company Agora used blockchain to transparently track results of the March 2018 elections in Sierra Leone, while Ford, IBM, LG Chem and Huayou Cobalt have launched a blockchain project to track cobalt supplies from the Democratic Republic of Congo.
Meanwhile, Barclays Africa completed the first blockchain-based trade finance transaction, and a number of startups are working on smart contracts. Kenya’s RideSafe allows customers to enter into smart contracts with each other, Nigeria’s HouseAfrica is putting property and land registrations on the blockchain, and South Africa’s Registree is storing student data there.
Kenyan agritech company Shamba Records uses blockchain to store sensitive harvest records from farmers, with co-founder George Maina saying its unique benefit is its levels of trust.
“As human beings, we’ve failed to maintain trust and a technology that can help us achieve that is important,” he says.
“We foresee that blockchain can help us, especially here in Africa, create more trusted markets. The transactions will be transparent, there will be tracking of goods in the different value chains and there will be minimal hindrances for trading. This will eventually result in a more economically empowered Africa.”
This vision of the future has some African governments slowly coming around to its potential benefits. Kenya put together a blockchain taskforce to identify areas of beneficial usage, while the South African Reserve Bank is evaluating the use of a central bank digital currency that potentially could operate on a blockchain.
Dr Bitange Ndemo, who is a former permanent secretary of Kenya’s Ministry of Information and Communication and headed up the Kenyan taskforce, believes blockchain is a foundational technology just like the internet.
“It’s up to the users to create their own solutions. For example, here in Kenya, blockchain has been used to streamline agricultural supply chains, removing middlemen and making food more affordable for people,” he says.
“We plan to use blockchain in creating greater transparency, especially with elections. The shared ledger will enable candidates to view their performance in real-time.”
All of this means blockchain’s potential in Africa is far greater than anywhere else, since most of the continent’s problems can be solved by technology, and it has no legacy issues holding it back. Ndemo says Africa must seize the opportunity.
A support ecosystem
“We failed in the past three industrial revolutions, and if we fail to take advantage of the Fourth Industrial Revolution, which will be characterised by, among other technologies, blockchain, we can kiss our role on the global stage goodbye,” he says.
To ensure this doesn’t happen, Ndemo urges African governments to create enabling environments for technologies like these to thrive.
“For example, our task force made recommendations for the creation of legal sandboxes where regulatory mechanisms don’t exist. They need to digitise the entire government,” he says.
Beyond governmental assistance, however, blockchain innovators need other types of support. Gradually, focused incubators and accelerators are starting to develop in the space, like Kenya’s BitHub and South Africa’s Blockstarters.
BitHub founder John Karanja says good progress has been made, but there are many, many more potentially high-growth sectors that can yet be powered by blockchain.
“These include energy, trade finance, remittances, peer-to-peer markets and cross-border trade. Many of these opportunities remain to be fully explored,” Karanja says.
“Blockchain is increasingly powering the global digital economy through automation for various sectors, like gaming in the West and Asia, and trade finance and remittances in Africa. These sectors can create many jobs within the digital economy.”
Yet for all the attention it gets now, and all its potential, the chances are that users of digital services in the future may not even be aware of the impact of blockchain around them, or even that they’re using it.
“In the future, we won’t see or feel blockchain, just as we don’t see or feel centralised databases as we browse the web or use our phones,” says Co-Pierre Georg, CEO of South African startup Registree, which has built a privacy-focused platform that allows universities to integrate sensitive student records into larger data ecosystems.
“But the infrastructure that blockchain provides has the potential to become the backbone of a new economy. We already see existing financial institutions use blockchains to build entire data ecosystems on top of. Without blockchain, these integrated data ecosystems wouldn’t be possible. In the future, it’s likely that we’ll see a massive integration of different data ecosystems running on myriad different blockchains, all integrated and interacting in a way that preserves the privacy of the underlying data.”
This article was originally published in the March 2020 issue of ITWeb Brainstorm magazine.