Integrating Blockchain Technology in Africa: Far-Fetched or Feasible?

GLA University - B.Com | LLB | B.A.
GLA University | B.Com | LLB | B.A.

Experts throughout the world are optimistic about the boom of blockchain technology in Africa. The high praise is also because emerging blockchain-based solutions are being customised for developing countries and are touted to increase the quality of life in such countries.

While there are concerns regarding its efficacy and cautions to security, the latter is often ruled out for its immunity against data theft, and the former often goes unaddressed. Damilola Bajo explains the need for blockchain, highlighting the advantages and limitations of integrating blockchain technology in Africa.

blockchain technology in africa

By Damilola Bajo, a second-year law student at the University of Lagos. She has previously worked as a secretary for a non-profit organisation. Damilola Bajo is also a member of the Lawctopus Writers Club.

Introduction 

Blockchain technology increasingly gained attention and build resources in several parts of the world.

Investopedia defines blockchain technology as a transaction/distributive ledger that maintains identical copies of transactions across each member computer within a network.[1]

This distribution and duplication process reinforces the security and minimises the risks of being compromised.

Much like Artificial Intelligence (AI), many experts testify to the disruptive nature of blockchain technology.[2]

Many have raised eyebrows over its swift adaptability and inclusion in African countries. For instance, all the five geopolitical zones in Africa adopted blockchain technology-based solutions.

While focusing on African countries as prominent technology users, the article will highlight a few possibilities and problems when integrating blockchain technology in Africa. This article does not seek to glorify blockchain technology but discusses its potentiality.

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The Many Benefits of Integrating Blockchain Technologies

Some people say blockchain is the future,[3] and they’re not wrong.

From improving healthcare[4] and modernising agriculture[5] to revamping education,[6] the merits of blockchain technology have reverberated throughout many industries, redefining the limits of technology.

Even the MIT Sloan Management Review says that blockchain could be as ‘fundamental as the Internet’ in shaping the future of business.[7]

Unfortunately, bitcoin, the project that introduced blockchain, stole all the attention from the technology’s underlying potential.

But blockchain technology is considered different as it could enable social and economic welfare.[8]

Integrating blockchain technology in African countries could lead to an overhaul of traditional and tired systems of administration. In addition, it could synergise African countries by fostering a sense of unity and aid free trade agreement through regional digital currencies,[9] thereby promoting intra-continental trade.[10]

Speaking of trade, blockchain could also revolutionise contract-making through what is known as smart contracts.

Smart contracts are digital contracts that can self-execute the terms of an agreement. They are pieces of code that store, verify, and self-execute rules. Hence an intermediary or a third party such as a lawyer is expendable.

It requires that each party meets the agreed conditions in this type of contract before an agreement gets concluded.

Moreover, smart contracts are also used for exchange. For instance, banks use them to issue loans, insurance companies use them to review claims, and postal companies use them to accept payment upon delivery. Plus, they provide automation and speed in the execution of contracts.

Blockchain could also improve the transfer of value. Traditional transfer of value and financial transactions is a slow and expensive process because they involve multiple currencies and banks.

Blockchain, on the other hand, promises a quicker and cheaper option. Regular money remittance can get as high as 20% of the transfer amount, but blockchain costs about a fraction of that with the added advantage of speed and security.[11]

Blockchain technology has a completely decentralised network. And It could well ensure a healthy democracy as it enables transparent voting by protecting and verifying voters’ identities. Thus, it curtails the incidence of impersonation.

The system would also bring about efficiency and speed in record-keeping, and financial transactions, eliminating human errs with its automated feature. For instance, the tedious process of authenticating academic certificates and degrees[12] can be simplified by uploading the information on the blockchain network, thus, reducing document forgery.

Some tertiary institutions (like the ECPI University) have already introduced this service to their students,[13] calling such certificates ‘blockcerts’.[14]

Blockchain would provide almost impenetrable security, something other traditional platforms could never boast.

The actors or participants within the database must validate data uploaded onto the network and be notified about any alterations made to the uploaded data. And they would have to approve of such an alteration for it to stand.

In Africa, most countries are plagued by corruption and manipulation. Therefore, implementing blockchain technology in Africa could help curb nefarious activities and help track and forestall criminal exploits.

Blockchain technology could lead to cost reduction, revenue generation and capital relief in the long term.[15]

The ‘traditional’ forms of technology require much more workforce and resources, but blockchain can function without these additional costs while doubling the returns.

It could also facilitate digitisation by eliminating the risk of fraud. For instance, it could store birth certificates, death certificates and other documents on the network, saving crucial data from manipulators. [16]

Prospects of Integrating Blockchain Technology in Africa

What are the likelihoods of integrating blockchain technology in Africa? What actions did countries take to improve the chances of blockchain integration?

It is not as gloomy as you might guess.

For one, Nigeria is one of the top ten countries in the world using cryptocurrency. A 2020 online survey by Statista found that 32% of the Nigerian participants used cryptocurrencies, the highest in any country in the world.

In May 2021, Convexity, the first dedicated Nigerian Blockchain hub got launched in Abuja, the capital city of Nigeria. They plan to create a hub ecosystem that would encourage the generation of innovative solutions for Nigeria.[17]

Also, in October 2020, the National Information Technology Development Agency (NITDA) announced that it had started developing a strategy document for the ‘National Adoption of Distributed Ledger Technology (DLT)/Blockchain in Nigeria’. The paper provided the most comprehensive analysis of the adoption of blockchain in Nigeria.[18]

Also, Nigeria is not the only country investing in Blockchain initiatives.

South Africa often flaunts itself as the pioneers in cryptocurrency. For instance, Luno, a global cryptocurrency company, gained eight million customers in 40 countries worldwide, of which 300,000 were from South Africa alone.

Raise, a Bahamian and Kenyan company, used blockchain to create the first security token platform that securely tokenises assets.[19] Tokenisation converts physical assets to digital assets in a blockchain. Records of real estate ownership, titles, commodities, and private equity shares can be maintained and protected through this conversion.

In April 2021, the Ethiopian education minister announced creating a national database that will use blockchain to store students’ identities, allowing the ministry to measure their performances.[20] Some have even called this a watershed moment.[21]

Furthermore, WiseKey & Microsoft partnered with the Rwandan government to create blockchain-based initiatives. In the Democratic Republic of Congo, a pilot scheme was designed to monitor cobalt mining. Also, Ivory Coast, Tunisia, Kenya, and a host of other countries have begun one or more blockchain initiatives.

The benefits blockchain poses are irresistible. So it’s only rational that Africa leverages it.

Everything Rosy About Blockchain Technology, Then What’s Stopping It?

Although all seems shiny as far as integrating blockchain technology in Africa is concerned, there are a few hurdles to the integration.

For one, most Africans have limited to no access to the internet.[22]

According to a 2017 report by the International Communications Union, Africa has the lowest internet usage rate, and blockchain technology needs the internet to function.

This inadequacy may undercut optimistic projections of the use of blockchain technology on the continent.[23]

In many African countries, political leaders restrict the internet to control behaviour or assume their authority. Therefore, internet blackouts in response to political criticisms from their citizens are pretty standard.

Countries like Chad, Congo, Zimbabwe, Sudan and Gabon have experienced this at some point. But internet blackouts is not a prudent move anyway as it has adverse effects on the economy.  It also undermines democracy and prevents people from getting the information they need to get with the times.

Another serious issue is that there is little to no access to electricity. Throughout Africa, only ten per cent of people have access to electricity, and a large portion of the ten per cent are rich.[24]

This inadequate power supply in many parts of Africa further limits the internet access on which blockchain technology largely depends. 

Also, creating an infrastructure to integrate a business with blockchain is complex enough in itself, not to mention incorporating it in aspects of governance. Many nations lack even the basic infrastructure, so blockchain is a little bit of a stretch.

Like any other continent, Africa has experiences with corrupt, visionless and incompetent leaders who would quash any technology or innovation prospects.

Even though blockchain technology offers many benefits, it requires regulations and policies to be functional. Thus, while African countries do show promise, much is still needed to harness the potentiality of blockchain technology.

According to Harvard Business Review, while the impact of blockchain technology will be tremendous, it will take decades for blockchain to pervade economic and social infrastructure. That is, it will not immediately overtake ‘traditional and tired systems of administration’ but will set the pace for such an upgrade.

Still, it is only logical to begin sowing seeds now if one expects a harvest.

Endnotes

[1] Reiff, N. (2020, August 28). Forget Bitcoin: Blockchain is the Future. Investopedia. https://www.investopedia.com/tech/forget-bitcoin-blockchain-future/

[2] AI as a Disruptive Technology https://link.springer.com/chapter/10.1007/978-3-030-35975-1_1#:~:text=Artificial%20intelligence%20(AI)%20is%20symptomatic,disruptive%20technologies%20which%20includes%20blockchain.

[3] Reiff, N. (2020, August 28). Forget Bitcoin: Blockchain is the Future. Investopedia. https://www.investopedia.com/tech/forget-bitcoin-blockchain-future/#:~:text=Blockchain%20technology%20has%20far%2Dreaching,likely%20remains%20to%20be%20discovered.

[4]Daley, S. (n.d.). How Using Blockchain in Healthcare Is Reviving the Industry’s Capabilities. Built In. https://builtin.com/blockchain/blockchain-healthcare-applications-companies.

[5] 8 Blockchain Startups Disrupting The Agricultural Industry. StartUs Insights. (2019, January 18). https://www.startus-insights.com/innovators-guide/8-blockchain-startups-disrupting-the-agricultural-industry/.

[6] Daley, S. (n.d.). 9 Blockchain Education Companies Earning Straight A’s. Built In. https://builtin.com/blockchain/blockchain-education#:~:text=The%20blockchain%20helps%20educational%20institutions,and%20payments%20for%20each%20student.&text=Those%20certificates%20serve%20as%20a,future%20educational%20or%20professional%20applications.

[7] Lakhani, T. F. and K. (2018, September 11). What Problems Will You Solve With Blockchain? MIT Sloan Management Review. https://sloanreview.mit.edu/article/what-problems-will-you-solve-with-blockchain/.

[8] Salami, I. (2021, May 22). Ethiopia’s blockchain deal is a watershed moment. Moneyweb. https://www.moneyweb.co.za/moneyweb-crypto/ethiopias-blockchain-deal-is-a-watershed-moment/.

[9] ibid

[10] How Can Blockchain Support Intra-African Trade? https://www.tralac.org/blog/article/13921-how-can-blockchain-support-intra-african-trade.html

[11] Forget Bitcoin: Blockchain is the Future. https://www.investopedia.com/tech/forget-bitcoin-blockchain-future/

[12] Castro, R. Q., & Au-Yong-Oliveira, M. (2021). Blockchain and Higher Education Diplomas. European Journal of Investigation in Health, Psychology and Education, 11(1), 154–167. https://doi.org/10.3390/ejihpe11010013

[13]Blockchain Technology Now Utilized by ECPI University for Degrees and Certifications. (n.d.). https://www.ecpi.edu/blog/blockchain-technology-utilized-by-ecpi-university-for-degrees-and-certifications#:~:text=Technology%20Offers%20Convenience%2C%20Authenticity%2C%20and,issue%20these%20new%20digital%20credentials.

[14]Blockcerts. (n.d.). Blockchain Credentials. Blockcerts. https://www.blockcerts.org/.

[15] Carson, B., Romanelli, G., Walsh, P., & Zhumaev, A. (2020, May 20). Blockchain beyond the hype: What is the strategic business value? McKinsey & Company. https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/blockchain-beyond-the-hype-what-is-the-strategic-business-value.

[16] Tamper Proof Birth Certificate Using Blockchain Technology https://www.ijrte.org/wp-content/uploads/papers/v7i5s3/E11180275S19.pdf

[17]Oneyibo, O. (n.d.). First dedicated Nigerian blockchain hub launches in Abuja. Techpoint Africa. https://techpoint.africa/2021/05/14/nigerian-blockchain-hub-abuja/.

[18] National Blockchain Adoption Strategy https://nitda.gov.ng/wp-content/uploads/2020/10/DRAFT-NATIONAL-BLOCKCHAIN-ADOPTION-STRATEGY.pdf

[19] Africa’s first security token platform launched at Africa Tech Summit Kigali. Africa Tech Summit Kigali. (2019, February 15). https://www.africatechsummit.com/kigali/africas-first-security-token-platform-launched-at-africa-tech-summit-kigali/#:~:text=Raise’s%20is%20the%20first%20security,them%20highly%20secure%20digital%20assets.

[20] Hochstein, M., & Baydakova, A. (2021, April 30). Ethiopian Education Minister Confirms Cardano Blockchain Partnership. CoinDesk. https://www.coindesk.com/ethiopian-education-minister-confirms-cardano-blockchain-partnership.

[21] Salami, I. (2021, May 22). Ethiopia’s blockchain deal is a watershed moment. Moneyweb. https://www.moneyweb.co.za/moneyweb-crypto/ethiopias-blockchain-deal-is-a-watershed-moment/.

[22] State of Mobile Internet Connectivity 2018. Mobile for Development. (2020, November 17). https://www.gsma.com/mobilefordevelopment/resources/state-of-mobile-internet-connectivity-2018/.

[23] United Nations. (n.d.). Africa could be the next frontier for cryptocurrency | Africa Renewal. United Nations. https://www.un.org/africarenewal/magazine/april-2018-july-2018/africa-could-be-next-frontier-cryptocurrency.

[24] Wikimedia Foundation. (2021, June 24). Energy in Africa. Wikipedia. https://en.wikipedia.org/wiki/Energy_in_Africa.

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