Blockchain Revolutionizing Africa’s Economy
Blockchain technology has the potential to change Africa's economy as a whole. However, without needed impactful knowledge and practical improvement, it wouldn’t be possible.
Blockchain - a distributed ledger technology that bundles transactions into groups called 'blocks' and chains those blocks together and then spreads them to the nodes of a peer-to-peer network to create an immutable, distributed database of those transactions. Blockchain homes the platform called cryptocurrency. Blockchain is a platform that can be likened to other software and cryptocurrency as one of its applications. Blockchain has several applications, ranging from health, finance, e-commerce, trade, security, and lots more.
Over the years, Blockchain technology has displayed the potential to enhance transparency and reduce retarding banking transactions within Africa's multiple trade and commerce sectors. From upgrading the online payment systems to intelligent contracts, blockchain-based solutions can transform non-existent technology infrastructures in African countries and drive a new era of inclusive growth.
Let's quickly take a look at the current state of Blockchain technology in Africa.
Blockchain in Africa
With most countries battling inflation, a lot of African citizens are already delving into crypto. With the decentralized feature of crypto, it offers an alternative way to boycott central bank policies. Of course, it renders the government's policy powerless. For example, Nigeria, the giant of Africa's economy, is battling an inflation rate of about 13%; this does not affect crypto.
There has been a massive increase in Africa's economy through Blockchain and cryptocurrency for e-commerce and basic trades. Most private sectors in Africa are already embracing mobile cash and virtual currency technologies. This is because such technologies offer multiple advantages towards easing business transactions across the countries.
Let’s take a look at companies harnessing the use of Blockchain in Africa.
Cryptocurrency in Kenya
Research shows that the use of this technology grew from 3% to 80% within 2011-2020. Using Kenya as a case study, before M-Pesa, with the help of BitHub, the platform, which is focused on using Blockchain solutions as contributions to improving societal structures in areas like; financial service, Identity Management, Internet of Things (IoT), etc. have been helping Africa in bringing together Blockchain expertise to drive the development and adoption of Blockchain in Africa.
Cryptocurrency in Nigeria
VoguePay, in conjunction with Interpol, has been used to tackle crime. This Blockchain platform has helped in the growth of cybersecurity and e-commerce in the country. From lack of adequate security to proper data management, this Blockchain innovation has helped individuals record data in digital ledgers; partnering with companies that can hold criminals accountable is a step forward in Africa's revolution.
Cryptocurrency in South Africa
De Beers is a South African-based diamond company that introduced Blockchain technology to authenticate diamonds across Africa. This company uses Blockchain to confirm the authenticity of the diamonds being produced. Also, in terms of registration, with Blockchain, there’s a permanent record for each diamond made.
Now let’s look at the challenges Blockchain tech is facing.
Challenges of African Blockchain
Primarily, the major problems are knowledge and information. A more significant percentage of Africans don't know what Blockchain is. Fine, most people have heard of the name; however, they lack the knowledge of it.
Another challenge of Blockchain in Africa is the inadequate skillset. Since Blockchain can be regarded as new tech, young developers are in limited supply; hence, the market lacks developers and doesn't offer skilled people in this field.
Unregulated government policies - among several uncertainties the governments bring, there are unstable regulations on Blockchain's uses in banking, energy, elections, and public records linked to public services.
Another challenge is poor internet access and an inadequate electricity supply – this is quite common in most African countries.
Blockchain Solutions for African Economy
Lack of proper education on Blockchain and cryptocurrency in Africa is a significant problem. Solving this by incorporating Blockchain courses into the school curriculum, whereby students are taught the basics of Blockchain, will go a long way. While Blockchain solves significant problems in Africa, there is a need to develop the skills required to build those solutions.
These challenges can be easily overcome by training homegrown developers to drive the introduction and expansion of Blockchain technology in Africa: people, who live on the continent, understand its challenges and know how to work around them.
Research shows a great potential of Blockchain creating efficiency and disrupting traditional mechanisms for international trade, resource management, and governance. Current transaction costs are high due to existing bottlenecks such as poor infrastructure, corruption, and mismanagement in Africa.
However, some the countries like Kenya's National Land Commission have welcomed the use of the Blockchain network in creating transparency of land ownership. This is an incredible feat in curbing fraudulent sales of land and confusion over title to land.
Cryptocurrency can be a solution to many homeless African citizens with access to primary financial institutions like banks. Cryptocurrency could be their go-to.
There are lots of worthless currencies in Africa. It has gotten to that time when many people are boycotting these currencies and opting for cryptocurrency, as it allows them to do business globally using the preferred mode of payment.
There are many opportunities to streamline the current intermediation of services through Blockchain technology. Once entrepreneurs appreciate the options, we can single out start-ups that could use this technology to advance their businesses and gain commercial traction.
By harnessing Africa's young population to use Blockchain and crypto and deploying these in trade and commerce management, Africa could use this revolutionary tech to improve its trade.
Africa is reported as the second highest population without banking facilities and technologies among adults in the world. This population is about 1 billion people across the continent, totaling up to 17% of the global population.
African countries can take advantage of this challenge and allow Blockchain-related technologies to provide alternative financial solutions and exploit the benefits of cryptocurrencies across the continent.