In the last decade, Africa has been described more and more in the global economy as the last frontier, owing to the fact that it has some of the world’s biggest opportunities. Nonetheless, unlocking the continent’s full potential for business growth and investment has over the years remained rather elusive, as trust in African markets is not always there. This is where blockchain comes in – with the potential to exponentially transform Africa in the world economy by providing the means through which issues of trust can be overcome.
To begin with, the use of cryptography is adding further security to Africa’s digital assets, which is boosting investor confidence. Historically, African countries have been held back by inherited colonial systems and bureaucracies that have not always been suitable to local conditions. This is in addition to conflict in some countries, shaky democracies, natural disasters and other challenges that have led to risk averse investors shying away or only making half-hearted attempts at investing in the continent. However, the last number of years have demonstrated that Africa is a resilient business market, with those that chose to invest in the continent reaping rewards that many a time exceed expectations. In addition, in many countries around the continent, the blockchain ecosystem is breaking down barriers posed by the challenges listed above, by providing secure platforms for business transactions that are not confined to geographical and physical spaces.
Blockchain is already starting to make an impact on African markets and businesses. The continent is now seeing a number of emerging crypto and blockchain communities unlocking global access even more. Examples include Kenya’s BitHub, which provides services for start-ups and advocates for conditions and regulations which will be favourable to crypto currencies. The same can also be said for the South African environment with an example of the the Blockchain Academy in Cape Town that provides training on cryptocurrencies and blockchain technology to local startups and entrepreneurs and advises local businesses on how to best adopt blockchain technology into their business models. What is more, Nigerian Blockchain startup SureRemit just raised the largest African ICO to date — $8 million for its non-cash remittance platform.1
Conversely, it can also be argued that due to the volatility of the domestic conditions across African countries, those willing and ready to tap into the last frontier with its wealth of resources should make use of blockchain. Since blockchain is secure, in that it underpins cryptocurrency transactions, it greatly increases security for conducting business transactions on the continent. In further lending itself as a means to overcoming a lack of trust in transactions, blockchain’s huge potential has only just started to be scratched on the surface.
Corruption is often cited as one of the major reasons that hinders business growth and investment in Africa. However, the tide is turning as one of the major benefits of blockchain is that due to its decentralisation and transparency, corruption can be combatted. The technology instils further trust in financial transactions by organising transmittals and other payments in a streamlined way. An example can be seen in Ghana, where land fraud is being redressed by Bitland, that provides land registry services using Bitshares blockchain. The system allows people to seamlessly register property ownership, bypassing the bureaucratic red tape in local government authorities and systems that are prone to fraud. Furthermore, when it comes to mobile money solutions, which has a huge market in Africa, blockchain technology is already being used in countries such as Uganda, Zimbabwe and South Africa. 2
Earlier this year, the value of intra-African trade was recognised by the historical African Continental Free Trade Area agreement that was signed in Kigali, Rwanda’s capital. Once implemented, the agreement will see the continent having the world’s largest trade zone where goods and services can be traded freely among countries. Establishment of the African Continental Free Trade Area could potentially increase intra-African trade by 52% by the year 2022. In addition, ratification of the agreement could bring about the removal of tariffs on 90% of goods and also liberalise services and tackle other barriers which hamper trade between African countries, such as long delays at border posts. While the aims of the African Continental Free Trade Area will not be realised overnight, blockchain can, and is, speeding things along when it comes to investment in African markets and growth of business confidence.
In looking at Africa as the last frontier for business investment and growing markets, the World Economic Forum reports that since 2000, at least half of the world’s fastest-growing economies have been in Africa. In addition, by 2030, the continent will be home to 1.7 billion people, whose combined consumer and business spending will total $6.7 trillion.3 It is in this environment that tech savvy African entrepreneurs are looking for solutions that add to the ease with which business can be conducted. Blockchain offers just that - the potential to boost the growth of Africa’s businesses.