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African countries open for blockchain acceptance

During the whole month of November we are going to visit Southern Africa again, travelling around. So it’s time again to look at this continent from a blockchain point of view. Since my last blogs on this topic a lot has happened (See: South Africa and Blockchain: changing the face of Africa, 15 November 2016).

Even though Africa did not get a lot of attention in the press when talking about blockchain and its acceptance on this continent for long, that is fundamentally changing. Did you know that last year African countries had the highest number of online searches for “blockchain” and “bitcoin” last year. This especially goes for Ghana and South Africa. And did you now that a growing number of blockchain events and conferences have been  organised throughout the continent.

There are various developments on the African continent that indicate the growing interest for blockchain. We are seeing some impressive inroads on the use of blockchain in various African countries. In those countries local tech startups have taken up blockchain technology to counter many of the economic and political issues that exist within the continent today.         

In this blog I will be diving somewhat deeper into why it may be important for Africa to use blockchain, what are the main use cases and what blockchain initiatives, experiments and projects have been launched both by governments, financial institutions and companies.

 

Why blockchain in Africa?

To date, blockchain adoption has been sporadic across Africa, but that is changing. Studies have found out that blockchain technology could solve a number of fundamental political and societal challenges facing Africa.

One of the main pulls of blockchain technology in Africa is that it is decentralized, and transparent, leading to many possible use cases based on combating corrupt political and voting systems. In South Africa (but also in other African countries), where corruption is undermining the image of Africa’s most advanced economy, blockchain could play an important role. By implementing blockchain’s “tamper-proof” record of transactions in both the public and private sectors, one could combat fraud and corruption across the whole region.

Blockchain technology through social media based models could also contribute to a more open and inclusive economy. This opportunity is particularly relevant for Africa, where a large portion of the population is excluded from the formal economy, because they can’t open a bank account, don’t have a birth certificate, passport, driver’s license, etc. Blockchain may help to overcome many of these challenges.

Foreign aid and charity donation do not (yet) reach its full potential. Less than 40% of charity money reaches the intended beneficiary in Africa.  But also the use and distribution of medicines and food by the many NGOs is far from optimal. Using blockchain could make these streams much more transparent.

And there are many other economic and financial areas including agriculture, where African countries are behind Western countries, in which blockchain can help Africa accelerate into the future.

Blockchain use cases for Africa

The genuine use cases of blockchain in Africa are many. From bringing efficiency in voting systems, to registering land titles,  enabling seamless transactions online, allowing people to seamlessly send, save and receive money etc.

One fascinating blockchain use case is the digital identifier. Economic identity is critical to social and financial inclusion in emerging economies. And also smart contracts capabilities for real estate transactions in Africa is a good use case too.

Another important use case for African countries is in the area of foreign aid, charity donation, medicine and food distribution. Using blockchain  technology for track and trace purposes could be a perfect game-changer.

Blockchain could also be used to solve a number of problems in the trade cycle. There is currently high cross-border and domestic transaction costs in Africa compared to other continents that is limiting cross border trade transactions. Blockchain technology could address many of these related trade issues.

“In Africa, blockchain innovations could also be used in other domains. There is huge potential beyond the financial sector, like in other sectors that could benefit from streamlining of supply-­chain processes such as agriculture and energy.” John Karanja, founder of BitHub Africa


Blockchain initiatives/experiments/projects in Africa

Though many African countries are (still) undecided about the use of blockchain, a growing number of  countries are already welcoming the technology either in government or through private businesses. Countries like Kenya, Sudan, South Africa, Nigeria, and Ghana have already adopted the blockchain in one way or another. Main initiatives, experiments and projects are described below.

According to a report by Global Risk Insights, the most important factors that have influenced the development of Africa’s blockchain markets include its large informal sector. But also formal companies are seeing opportunities for the use of blockchain technology and even the adoption of cryptocurrencies. This latter especially goes for countries like South Africa and Kenya.

Botswana: Plaas – manage daily agricultural production and stock
The Satoshi Center, Botswana’s only blockchain hub has an interesting startup in its incubation program called PLAAS (Afrikaander word for farm). This is a mobile platform that enables individual farmers or co-operatives to manage daily production and stock on the blockchain system.

Ghana: Bitland – land registry
The government of Ghana has requested the help of local startups to develop blockchain systems that can provide Ghanaian landowners with documents of landownership that will dispel problems of cartel corruption. Ghana is an interesting case since 80% of the nation’s land is owned communally. Currently, Ghana does not have a reliable land registry which can lead to land disputes, the inability to prove ownership to banks and other barriers to development.

 Bitland, a Ghanaian company has announced plans to create an “immutable, transparent and universal,” land registry system using blockchain technology. By using its own blockchain, the Bitland network, to store all land registration activities, the Bitland project has been helping settle land disputes since 2016. The project has now been trialled in 28 communities in Kumasi, and by using blockchain technology Bitland hopes to reduce illegal displacement and corruption in the area. 

Kenya: combat corruption
In Kenya, where there is a Kenyan Blockchain Association, president Uhuru Kenyatta, launched a blockchain and artificial intelligence (AI) task force for the purpose of deploying blockchain technologies within the countries existing economic framework. The eleven-member team has been mandated with the task of creating a 15-year roadmap that will help Kenya reduce political corruption and so-called “red-tapism” that nowadays has a negative societal impact.

Kenya’s government wants to promote and encourage blockchain technology for a wide array of applications, including land registry and voting.

“For Africans with blockchain, we can interact and participate with the rest of the world. You don’t have to be trusted, the system already works for you”. Joseph Mucheru, Kenya’s minister of information, communications, and technology

An interesting example of blockchain use in Kenya is the research partnership between Twiga Foods and IBM. This partnership involves granting microcredit loans to retailers by leveraging blockchain technology to track certain metrics. There’s also a Kenyan blockchain association.

Mauritius: Regulatory Sandbox License
The government of the  island Mauritius has created a Regulatory Sandbox License (RSL) that allows investors come in to the country and develop their blockchain-based solutions under the supervision of the Board of Investment of Mauritius.

Rwanda: land registry
Also in Rwanda blockchain activities have started. Through a partnership with WiseKey, a cybersecurity and IoT solutions firm based in Switzerland, and Microsoft, Rwanda's land registry will be digitised using blockchain technology via WiseKey’s WiseID apps and Microsoft’s Azure cloud. WiseKey also plans to open a Blockchain Center of Excellende in Rwanda’s capital Kigali.

Sierra Leone: elections
During the March 2018 general elections in Sierra Leone, Swiss tech company, Agora, used its technology to test whether the blockchain could contribute to the transparency of national elections, and ensure a fair count of electoral votes. The results indicated that blockchain can mitigate election problems, and that the technology can improve the current voting system (and ideally, ensure transparent and trustworthy elections).

South Africa: Funds aid
A South African entrepreneur has developed a blockchain based solution called Funds Aid,  a platform that does the transfer of donation from the donors to the beneficiary in a transparent way with complete lineage. Beneficiaries are handed their private keys to redeem their allocated tokens.

Tanzania: unbanked
An interesting project in Tanzania is Humaniq. The London-based FinTech firm released an application for unbanked last year, which is now available in five African countries, including Tanzania. The Humaniq app can be used on low-end mobile devices and, thanks to peer-to-peer transactions and referral programme, it is connecting people who do not have access to traditional banking services while not supplanting the latter. In 2018, the company has plans to build on this and achieve one million users.

Uganda: public services
Earlier this year, Uganda announced that the “government is going to use blockchain technology where it is appropriate to provide seamless services to the general public.” Uganda also held the Africa Blockchain Conference on May 23 and 24 2018 which was running under the theme of The role of Blockchain Technology in Africa’s transformation.


Blockchain for African banks

Though African banks are new to the blockchain space (excluding South Africa), they are beginning to see the potential of blockchain. Part of the reason African banks are a fertile testing ground for this new financial technology is that they have a relatively low customer base and smaller assets.

“It is encouraging to see the financial services sector, including banks in Africa, leading the way in developing proto­types and possible financial uses,” “It is likely to be the first industry with widespread adoption of blockchain technology.” Narushka Bowan, consultant trainer at the Blockchain Academy

 Blockchain is especially topical in the financial sector in South Africa, where they are exploring blockchain’s potential since 2016. South Africa has just completed a blockchain trial for the banking sector which was undertaken by the country’s central bank, the South African Reserve Bank (SARB). This new blockchain initiative with crypto startup ConsenSys was based on enterprise blockchain Quorum. It determined that about 70,000 transactions processed through the automated settlement system can be completed within two hours at an average of two seconds.

The trial of blockchain deployment by the Reserve Bank has buoyed other players including banks and corporates in the country. South Africa’s third-biggest bank, Barclays Africa Group, for instance announced that it had joined the R3 blockchain bank consortium.

 
Blockchain for African companies

Several African companies, including Alexander Forbes Group Holding,  have already made advances on blockchain. For Alexander Forbes, blockchain can be a game changer and it has set up an innovation team to work on technological platforms and possible deployment across its operations and across its South African and rest of Africa markets. The innovation team will investigate blockchain usage and adoption alongside other digital platforms

“Blockchain is an exciting technological platform that the company is investigating and assessing”. Andrew Darfoor, Alexander Forbes CEO

Education and support

But African companies need to educate, and become educated, about blockchain technology before they can move forward with comprehensive applications. Also here we are seeing a lot of activities and initiatives throughout Africa.

South Africa: Blockchain Academy
One main example is the Blockchain Academy, a South African startup situated in Cape Town. The Blockchain Academy provides training about the advantages of cryptocurrencies and blockchain technology to local startups and upcoming entrepreneurs and advises local businesses on how to best adopt and use blockchain technology into their business models. Not only to maximize profits but also to streamline everyday accounting processes. It also provides training in Johannesburg at the AlphaCode Club. The Blockchain Academy is working closely with local financial institutions and counts Barclays Africa, Standard Bank, and the Central Bank of Swaziland as partners.

Kenya: BitHub Africa
And there is the BitHub Africa, based in Nairobi Kenya, a blockchain accelerator for local startups. Founded already in  December 2015, BitHub provides consultancy services for organizations interested in deploying blockchain solutions across Africa and the Middle East. BitHub  also helps local blockchain startups hit the ground running. The organization has a special focus on establishing micro-lending startups based on blockchain technology. BitHub Africa also engages with local regulators to advocate for the adoption of blockchain in Kenya’s tech policy and for favourable regulations for ICOs and cryptocurrencies.

Nigeria: CDIN Initiative
Also Nigeria’s blockchain community has experienced considerable growth over the past two year. We have seen the launch of a number of new blockchain startups including SureRemit and the CDIN initiative, which aims to inform and educate Nigerians about the potential benefits of blockchain and cryptocurrencies.

Rwanda: Blockchain Hub
In Rwanda, this year the Blockchain Hub, part of the Smart Africa Initiative,  was installed. The Hub's activities will be exploring the wider applications of the technology and form the basis to which a roadmap to adopting Blockchain technology in Africa will be created.

Blockchain has the potential to dramatically change how Africans trade, removing unnecessary middlemen and commissioners”. “Trust has always been the cornerstone of trade, but blockchain achieves trust amongst Africans and with the world. It can create better supply chain management, reduce environmental degradation, and better use of resources.” Norbert Haguma, the head of Blockchain Hub


Looking ahead

Though blockchain is yet to hit mainstream consciousness in Africa, it is very likely that Africa will become an early adopter of blockchain rather than a follower compared to many other continents. One of the great advantages that Africa maintains over other continents in accepting blockchain  is that there are far fewer legacy systems “to get in the way”. Experts argue that a lack of legacy systems could facilitate faster, smoother adoption of emerging technologies such as blockchain. As a developing region, Africa can use blockchain in public service industries to leapfrog these inefficient systems, providing a similar leap into the future, as the straight-on-movement into mobile and mobile phone use.

Whether the blockchain will be Africa’s next leapfrog technology, ultimately, depends on government response to the opportunities and challenges of the technology. Countries like South Africa and Kenya could eventually lead the way as potential blockchain hubs for other African countries. If so, it has the potential to make a huge impact on African economies and societies.

In a next blog I will try to explore the longer term implications of greater blockchain acceptance for Africa.

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