Hype or Hope? How Blockchain Is Disrupting Africa… or at Least Has the Potential To

Despite how ubiquitous the word blockchain has become in the news, especially with the rising popularity (and notoriety) of Bitcoin, and the many cryptocurrency conventions and panels that have been held, many people in Africa (and the world over) still don’t understand what it is all about.

What exactly is blockchain? Well, let’s take it back to the beginning. Blockchain technology became public when Satoshi Nakamoto released the white paper: Bitcoin: A Peer-to-Peer Electronic Cash System on October 31, 2008, and is strongly characterized by decentralization and transparency.

To understand it, imagine many individuals using their computers to add new records to an excel file. Naturally, those computers need to be somehow connected and each computer needs to have a copy of the file (decentralization). In a blockchain, users can read all records (transparency), add a new record but are not allowed to update or delete any. Once a record is added, it can’t be removed or changed.

What blockchain technology can do for Africa

In the financial sector, blockchain technology can do away with many intermediaries: there is no need for a branch, cashier or agent to add a new record to the file or to know how many records were added by one individual. This is great for the players in the financial industry in Africa that are looking to penetrate the remote corners of the continent without incurring too many overhead costs.

Blockchain also has great potential in the remittances sector. According to World Bank data remittances to sub-Saharan Africa reached $37.8 billion in 2017. But if you live in Africa you know very well the total amount is more than that. There is always that friend of a friend who is flying to Europe, Asia or America that you give 100$ to give to your cousin studying abroad or 200$ to buy you something from there. Opera has jumped on that opportunity by building the first mobile browser with a built-in crypto wallet.

Blockchain technology also presents a unique solution for securing contracts and transactions against fraud that will fundamentally change how we experience value-exchange, assets, enforcement of contracts, and sharing of data across many industries. We have seen many cases on the continent where a single plot of land has been sold to multiple buyers at once or someone being legally monogamously married to multiple people due to lack of transparency in the issuing and enforcing of certificates.

We have also seen cases of people who have to travel to their home counties to get their birth certificates spending more than two days in the process. Rwanda is leading the initiative in using blockchain to solve this problem by bringing the government and its private sector closer to realizing the benefits of digital transformation with a more open, transparent and publicly verifiable system.

Hope or hype: is blockchain really taking over?

The jury is still out on whether blockchain technology is really disrupting Africa but nowhere is this struggle more evident than in its application to politics. It was widely reported that Sierra Leone became the first country in the world to use blockchain technology to verify votes in an election in March 2018.

Swiss blockchain company Agora tallied votes at 280 polling locations in Sierra Leone’s Western District, where the nation’s capital of Freetown sits. After voting, each paper ballot was announced out loud by NEC officials and manually logged by Agora employees using specialized blockchain technology.

Just like how blockchain secures cryptocurrency transactions by storing data in a public record, Agora was looking to secure the election by transparently recording the votes in real time on a blockchain network that cannot be tampered with. This can possibly prevent voter fraud and vote manipulation — two major problems that often plague elections in Africa and the West too.

However, it was later reported that Agora had inflated the role it played and the National Election Commission (NEC) of Sierra Leone took to Twitter on March 18 to clear the air. The tweet quoted the NEC Chair Mohamed Conteh saying that “the NEC has not used, and is not using blockchain technology in any part of the electoral process.” It turns out Agora was just there as an “international observer” and the data they used represented barely 15% of the whole country so this was just a demonstration.

What challenges does blockchain technology face in Africa?

The biggest challenge facing blockchain in Africa is internet penetration on the continent. Very few African families have surfed the internet let alone owning a desktop computer or laptop. However, mobile is slowly but steadily helping to solve this problem. According to the Africa Mobile Economy 2018 report the total number of smartphone connections stood at 250 million at the end of 2017.

The other challenge is the lack of technical skills in place to create the ecosystems within which blockchain can thrive on the continent. We need more people who understand the local situation and can develop the applications needed. This is where organizations like Andela, whose mission is to advance human potential by powering today’s teams and investing in tomorrow’s leaders, play a key role. They have the unique opportunity to identify and nurture tech talent that can help blockchain take root. Andela identifies high-potential developers on the African continent, shapes them into world-class technical leaders, and pairs them with companies as full-time, distributed team members.

Lastly, blockchain faces stiff resistance from official government policy. Many states across the continent still view blockchain with suspicion due to its decentralized and transparent nature and are quicker to hinder its growth than enable it. For example, in the case of Sierra Leone which was hastily hailed as an early blockchain adopter, when the NEC director proudly states: “the only results that count, are mine”, it throws a lot of doubt on how eager and willing the government is to embrace blockchain technology.

What do you think about the future of blockchain technology in Africa? It is just hype or is there hope? Perhaps a bit of both?

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