Kenyan Economic Ascendance Through Blockchain Adoption

Kenya’s current economic rise in Africa is leading the country to new heights in prosperity and influence. Kenya is still experiencing high population growth, which has steadily increased over the last two decades. At the same time, Kenya is in the midst of a rapid technological transformation, as millions of Kenyans begin to adopt mobile phone technology, increasing the demand for internet services and connectivity. This transformation is leading to a critical demand for modern infrastructure across Kenya.

This digital transformation has the ability to bring billions more in economic activity through a new technology called blockchain. Sometimes referred to as crypto, blockchain is simply a digital solution to record data more publicly. Blockchain technology can leapfrog Kenyan infrastructure to the 21st century, and usher in a technological revolution in the economy, which can serve as a model for the rest of Africa.

The Economic Growth Potential of Kenya

In the World Bank’s biannual report, GDP growth in Kenya is expected to increase 5.8% in 2019, and is expected to continue rising in 2020 to 6%. This compares very favourably, with IMF projections of growth for SubSahara as whole as 3.4% and 3.6%. The United States, is estimated to fall over the same period in terms of growth from 2.9% in 2018 to 1.9% in 2020 by the IMF.

In 2018, 52.5% of the economic growth in Kenya was driven by professional services. This is a key sector where blockchain can improve efficiency of supply chain economics, and improve the ease of doing business in Kenya. Agriculture accounts for 23.7% of economic growth, which can be improved due to efficiencies gained from blockchain distributed ledger technology. For a country that experiences routine droughts, utilizing DLT could save millions in damages for the Kenyan economy.

Blockchain can also aid in introducing millions to the global financial sector, and expose them to global credit and capital markets. With inflation climbing to 6.6% just this past month, Kenyans could access more stable returns by investing through cryptocurrency and blockchain technology.

Population Growth

Population trends are preparing Kenya for increased economic growth. In 2019, the population of Kenya pushed past 52 million Kenyans. Much of the Kenyan population is skewed younger, as the current median age is 19.7 years. Almost three-quarters of the population is under the age of 30 and Kenya has grown from 2.9 million to almost 40 million people within a century. With such a young population, it is critical that Kenya plan for job growth for this generation, so they are engaged in the economy and the building the future of the country.

Rising Cell Phone Adoption

Cell phone usage and digital literacy in Kenya continues to increase, with mobile phone penetration reaching 100%. Kenya joins Namibia as the only other sub-saharan country to reach this milestone. The number of mobile money transfer transactions stood at Ksh 730.2 million and valued at Ksh 2.02 trillion, while person-to-person mobile money transfers were valued at Ksh 718.2 billion.

Smartphones accounted for 97% of all phones sold, with 68% of sales taking place in the capital city of Nairobi. With the rise of smartphone adoption comes increasing use of internet services. Just last year, 83% of internet access came through the use of smart phones in Kenya, a dramatic increase from the past couple of years.

Increasing social media use is a big driver of internet adoption, with 8.3 million Kenyans active on the major social media sites and apps. The average Kenyan user spends close to 3 hours a day on social media, with the most used platforms identified as Whatsapp (74%), Facebook (70%) and Twitter (50%), based on users own claimed activity.

Need for Infrastructure

Kenya faces a critical infrastructure financing deficit, which is estimated at $2.1 billion annually. This deficit constricts the potential for growth and development, as the country continues to operate without the infrastructure it requires to compete globally in 2019.

One critical infrastructure project that can utilize blockchain to improve economies of scale is geothermal energy. Kenya sits on the African Rift, one of the only naturally occurring volcanic vents on land in the world. This renewable energy source currently provides power 20% of the country’s electrical demand. Geothermal energy generation capacity increased to 2,234MW against a peak demand of 1,549 MW in 2018 alone. This led to massive reductions in cost to consumers, as the energy is renewable and does not require costly fuel inputs that require constant maintenance. Blockchain can do a number of things for infrastructure in Kenya, such as improving the coordination of distributed energy resources, simplifying wholesale energy market trading, and can assist with accelerating the financing of renewable energy projects through smart contracts.

Blockchain Use Cases in Kenya

Election Integrity — Agora, a project spun out of the Swiss Federal Institute of Technology Lausanne, has created a blockchain voting platform dedicated to ensuring transparent and verifiable elections around the world. This is done by anonymously storing votes in an immutable ledger, thereby offering instant access to election results. Kenya’s last election in 2017 saw disputed results which resulted in civil strife across the continent. With verifiable election results that can’t be tampered with, the democratic transition of power can be more stable, which can further boost the economic prosperity of the country.

Verify Land Transactions — Land LayBy is a blockchain startup that is registering land ownership on the blockchain. The land registry proof will reduce the messy fight that usually comes up over land issues, which plagues Kenya from Colonial Era deed issuance mismanagement.

Agriculture and Farmers — Companies like Twiga and MPesa are transforming how farmers in Kenya are paid, and an immutable measure of their credit worthiness. Twiga uses blockchain tech to track and monitor transactions of agricultural products across Kenya, and allows their customers to access their own financial data, essentially acting as a credit bureau. This is opening up economic opportunity to millions of Kenyans because they traditionally have had to rely on paper ledgers and in-person haggling with vendors. Now they have a verified record of their transactions, from which they can leverage access to loans so they can further grow their businesses.

Mining Industry — Sawa Minerals is a Kenyan blockchain company that has built a digital platform that will transform how artisans and small scale miners interact with each other. Kenya has been plagued for decades with inaccurate mineral and metals mining ledgers, which have resulted in illegal child labor, unsafe work zones, and inaccurate pricing for the resources. By creating a platform that utilizes smart contracts and a transparent digital ledger, Sawa is creating an ethical means for miners and artisans to verify their goods and receive fair compensation for their labor.

Identity Services — BlockChain Tech can be effective in managing birth and marriage certificates, passports, national and electoral IDs and handling e-residence programs.

The Ability of Blockchain To Transform the Kenyan Economy

Blockchain has the ability to not only transform the Kenyan economy, but it can even introduce a change in the psyche of Kenyans. Blockchain works on a ‘trustless’ system, whereby users do not have to inherently trust the product or person they are working with, as blockchain logic ensures that something is true and verifiable. This will have enormous implications for the Kenyan psyche, which still sees lingering effects of British colonialism in the national and cultural discourse.

One factor of highly successful economies and industries is that their consumers have high levels of confidence in them. By introducing trust, everything from the agricultural sector to the payments sector can be transformed by blockchain technology. Companies like Kamari — a blockchain company that is transforming lotteries and gaming across Africa — will have a profound effect on the local economy. By ensuring that a sector as old as time has high levels of trust, Kamari and other blockchain companies can alter the course of the Kenyan economy.

All of the right forces are present for Kenya to achieve increased economic prosperity through the adoption of blockchain technology. With an increasingly young population that is increasingly digitally literate, Kenya has an opportunity to harness the ability of blockchain’s distributed ledger technology to radically transform some of the key industries in Kenya by improving their efficiencies dramatically.

To stay up to date, to ask questions, or to share comments make sure you connect us in one of our social channels:

Telegram Chat — https://t.me/KamariOfficial

Telegram ANN — https://t.me/KamariANN

Twitter — www.twitter.com/KamariCoin

Facebook — https://www.facebook.com/KamariCoin