“How blockchain can transform Africa” an interview with Dr Edward George, Ecobank Head of Research
On May 16th the Africa Tech Summit was held in London and organized by Appsafrica. In an acclaimed presentation, Dr Edward George, Ecobank Group head of research, made the case for the use of blockchain on the African continent.
Why is blockchain tailored for African Markets ?
Dr E. George —
One must first bear in mind the inherent properties of “the blockchain” technology. Without getting too technical, blockchain has three key properties :
· the blockchain has perfect memory and is a truth engine : per se, a blockchain is a record of transactions that cannot be altered or tampered with without the consensus of all users. Transparency and accessibility in the blockchain make it reliable.
· you have to play by the rules : you need to abide by the blockchain’s rules of engagement in order to record transactions. Hacking the blockchain is impossible, although vulnerabilities lie in the software around access to the blockchain (e.g. crypto exchanges like Mt Gox which can be hacked).
· there is no central authority : decentralization of all records alleviates weaknesses inherent in a central authority and potentially reduces transaction costs.
Overall, I believe blockchain technology is particularly suited for Africa as it can address fragmented markets where information is imperfect. I do not expect to see an all blockchain African society soon, but there are many blockchain use cases that are tackling problems bit by bit : digital identity, cross border transfers, FMCG tracking etc.
Can you name a few blockchain projects that are game changers in Africa ?
Dr E. George —
One important segment where we see adoption of blockchain technology is the SME payments market.
Binkabi is an E-bartering platform for SMEs : it removes trade flow frictions, especially the need for USD to settle the trade. An initial focus will be trade flows between Côte d’Ivoire and Vietnam : there are $600m worth of cashew/cotton exports to Vietnam and $200m worth of rice import from Vietnam, so why do SMEs on both sides need to use USD? By grouping trades into blocks, Binkabi enables traders to settle over the blockchain and pay in local currency, greatly reducing the costs & time of trade. Binkabi has its own utility token (BKB) which is used to reduce fees on the platform and encourage SMEs to grow their business.
Bitpesa, which started out as an international remittance company but has since shifted its focus to SME international payments. They can settle SME payments using bitcoins in under 24h (whereas it can take up to 7 days with traditional bank wire transfers) and increasingly play a role of providing liquidity to SMEs in all currencies, including Bitcoins.
I believe there is great room for blockchain use cases in all type of transaction records
Everledger, founded in April 2015, has developed the “Diamond Time-Lapsed Protocol” which tracks information about diamonds (1 million diamonds from mine to buyer have been tracked so far). Another company, Dorae, is experimenting with blockchain-powered supply chain records in the Democratic Republic of Congo to track Cobalt, Coltan and Diamonds.
Finally, there are also interesting developments in digital identity
Ghana is experimenting with “inclusive ID”, a single identity verification API for unbanked Africans, and there are pilot projects like Bitrika in Ethiopia to create digital identities for first-time digital consumers, safeguarding their data digitally on the blockchain.
What do you think will drive blockchain adoption on the continent ?
Dr E. George —
Companies need to leverage the power of big data to drive blockchain adoption. Trust in blockchain-powered tech solutions, such as payments or digital identities, will come from the benefits associated with artificial intelligence (machine learning etc.). Microfinance institutions can for example leverage credit scoring with digital identities and transaction analysis to provide cheaper, faster and more secure micro-loans…
For more information, download the full presentation here and find out more about AppsAfrica here.
