How Kenya can Tap into the Power of Blockchain Technologies
Shannon Kariuki recently had the pleasure of talking to Dr. Bitange Ndemo about how Kenya can leverage the power of blockchain technologies to strengthen their economy.
Article by Shannon Kariuki, ARYZE Ambassador
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of ARYZE.
Dr. Ndemo has had a long and impressive career in Kenya’s ICT sector. He currently serves as an Associate Professor of Entrepreneurship at the University of Nairobi’s Business School. He is the immediate former Permanent Secretary in the Ministry of Information and Communication, where he served from 2005 to 2013 under the former Kenyan president Mwai Kibaki.
Check out this interview from 2018 where ARYZE co-founder Carl Jenster spoke with Dr. Ndemo
During his tenure in the Ministry of Information and Communication Permanent Secretary, he implemented various ICT policies and projects such as the installation of undersea submarine cables, the development of business process outsourcing industry, the reduction in mobile termination rates (MTRs), initiating Kenya Open Data, and the growth of tech hubs such as iHub and mLab in Kenya through effective regulation.
Dr. Ndemo leads a Blockchain and Artificial Intelligence Taskforce commissioned by the Kenyan government to explore the use of distributed ledger technology and AI for development in Kenya.
I sat down with him to talk about the conclusions made from the task force and the next actionable steps the government will take to implement the recommendations of the taskforce. The 192-page report looked at various fields where the blockchain technology can be applied in line with the Kenyan government’s Big Four Agenda. The report has not yet been released for the public, but plans are underway to release it soon.
In our discussion, Dr. Ndemo highlighted four key areas the taskforce looked into.
Establishing a Legal Framework
Dr. Ndemo emphasized the need to establish a legal framework that can regulate the implementation of these new technologies. A legal framework would focus on ensuring the security of data accessed and used. One of the major applications of blockchain technology is cryptocurrency. Although Bitcoin and other cryptocurrencies are legal in Kenya, the adoption has been slow.
The Central Bank of Kenya (CBK) issued a circular to all banks in the country in April 2018 warning them against dealing with cryptocurrencies citing the crypto’s prevalence in illegal activities, it’s anonymous nature and its lack of centralized control as the reason for the ban. Kenya is not the only country facing the challenge of adopting cryptocurrencies while ensuring the safety of the public. Innovation’s nature is disruptive, it forces us to adopt new ways of being and transacting with each other.
The new wave of decentralized trust is being adopted in other sectors such as transportation (Uber) and hospitality (Airbnb). Ten years back, it would have been unthinkable to enter a stranger’s car or sleep in their guest bedroom. However, due to innovation, decentralized trust has become the norm. Adopting blockchain technologies does have its legal challenges, but these challenges must be faced head-on if Kenya does not want to be left behind in the technology revolution.
The Huduma Number is a free Kenyan government service that consolidates information from different identifying documents such as one’s passport, ID, birth certificate and driving license to provide a ‘single source of truth’ regarding a person. It is the equivalent of the social security number in the US. The number will be used by the government for national planning and provision of services such as health care. Although there has been a lot of security concerns about the use of the data collected, Dr. Ndemo emphasized the importance of this new technology to streamline access to government services.
Smart Contracts and Smart Assets
Smart Assets are unique virtual currency tokens that may represent a tangible real-world asset or non-tangible ownership that can be purchased, sold or exchanged as defined by the rules of smart contracts on the blockchain network. A smart contract is a self-executing contract that uses automation. Rules are put in place so that if an event occurs it generates action. Smart contracts allow the performance of credible transactions without third parties.
For example, a rule can be put in place to give out the title deed to the owner once they have completed all mandated steps. Different parties involved in the land registry process can be privy to this information on a private blockchain network. By using blockchain, corrupt and illegal practices will be curbed because any amendments made to the private ledger will be seen by all the parties involved. Land has historically been a source of tension in Kenya since the colonial days. Having the land registry process on the blockchain could increase public trust by curbing corruption.
An Initial Coin Offering (ICO) is a great tool for funding Small and Medium Enterprises (SMEs). SMEs, which are not able to offer an IPO, could use ICOs to raise funds to grow and expand their businesses. The ICO space is still immature and a lot of work would be required to grow the ICO space.
If Kenya wants to establish itself up as a technology hub in Africa, we must invest in these new technologies. Kenyans have benefited from technological innovation before through the mobile money service, M-PESA, and we can reap even greater benefits by adopting blockchain and AI.