Several use cases for blockchain-based solutions in Africa could potentially drive the technology forward in a global context.
The Blockchain Africa conference produced a swathe of optimism for Africa to become a driving force behind the development and use of new blockchain-powered technologies.
Over the past few years, blockchain has replaced cryptocurrency as the “it” word in the fintech space. It is a fact that was mirrored by the Blockchain Africa conference itself, with speakers focusing more on the possibilities of blockchain answering a number of industry inefficiencies, and far less on cryptocurrency trading and tokenized solutions.
Africa has its own unique challenges in the global space given that many of its countries are trailing behind the rest of the world in infrastructure development. While the asymmetric digital subscriber lines and fiber internet connectivity is still being rolled out in many countries, mobile tower services have driven the proliferation of mobile payments systems.
To say that Africans have taken to these services would be an understatement. The M-Pesa mobile payment service is a prime example that shows Africans can quickly adopt technologies that improve their day-to-day lives. Mobile network provider Vodafone estimates that over 37 million people across seven African countries currently use M-Pesa, which was launched in 2007.
This is just one example of how people in Africa have benefitted from a future-forward solution to build a bridge to the people that are unbanked on the continent. In general, fintech solutions are being readily adopted and driven by African countries and companies. As Cointelegraph reported in an event recap of the Blockchain Africa conference, blockchain technology is already being explored by trade finance, supply chain and self-sovereign identity sectors. Here are the main use cases that can be observed right now:
A solution for Africa’s ID problems
The issue of Self-Sovereign Identity is a particularly interesting one in an African context, given the difficulty many people on the continent face when trying to obtain ID documentation. By way of definition, SSI refers to a situation where individuals hold and control their own identification credentials.
Victor Mapunda, CEO and founder of startup FlexFinTx, made a compelling case for a move to digital-based identities at the Blockchain Africa conference. In his presentation, data quoted by Mapunda estimates that nearly 400 million Africans do not have proper identification credentials. This then leads to a multitude of difficulties, as these people are unable to open bank accounts, apply for insurance or other financial products.
Being banked and having insurance is a luxury when considering the deeper problems that are plaguing the continent. Referring to information supplied by the Mo Ibrahim Foundation, only eight African countries have birth registration systems that cover 90% of the population.
Countries like Chad and Tanzania are only able to cover 12% of births in the country. Conversely, Egypt, Mauritius and Seychelles are the only three African countries that register deaths covering more than 90% of their population.
The key takeaway is that there is a sizable gap in providing Africans with vital identification documentation, which is primarily due to institutional inefficiencies. Data capturing and information sharing is therefore impacted, leaving various institutions lacking in information, unable to serve the public needs efficiently.
Mapunda hails from Zimbabwe and began exploring the issue of SSI when he faced his own difficulties in trying to register a bank account after studying abroad. FlexFinTx seeks to provide people with a digital ID through WhatsApp, which facilitates the issuance of a FlexID that is cryptographically secured by the Algorand blockchain. Users then have self-sovereign control over how their data is shared. Speaking to Cointelegraph after his presentation, Mapunda said that African people can quickly take to solutions that solve wide-ranging problems:
“I think Africans, when it comes to adoption of technology, are some of the most dynamic people in the world, this is because, for the most part, we don’t have a lot of legacy infrastructure and institutions. Most of the things we’ve grown up with didn’t work.”
Mapunda pointed to innovations such as mobile money and internet-based communication applications drastically improving Africans’ quality of life, saying, “Mobile money is a great example. We jumped on it,” and adding that no one even had to market it to the population. He went on to expand further:
“WhatsApp is a very good example of an application that didn’t have a single billboard, yet it managed to spread like wildfire across Africa. It solved a major problem — the cost of communication was too expensive and it’s a natural solution that people gravitate to.”
An answer to supply chain challenges
Blockchain technology has long been touted as a key tool in improving current supply chain systems across the world. In the past three years, major strides have been conducted in this regard, providing real use cases to back up the theory. The subject was covered extensively at the Blockchain Africa conference and was particularly important considering the implementation of the African Continental Free Trade Area in May last year.
The move created a free-trade area that now includes 28 African countries, which requires member states to remove tariffs to provide the free trade of goods and services. While it improves the ease of trade, there are still some hurdles to clear in the trade finance and supply chain.
Thavash Govender, a data and AI specialist at Microsoft South Africa, spoke to Cointelegraph during the summit and said that blockchain technology could hold a number of benefits for trade across the continent:
“The one challenge that we have at the moment is trust between different countries. If I’m going to drop my trade barriers and say you can bring all your products into my country, I need to know that we aren’t allowing counterfeit goods in.”
Perhaps more importantly, Govender suggested that systems that are improved through the use of blockchain technology could drastically reduce the amount of time it takes for trade to take place due to inefficiencies in various processes, elaborating:
“If I’m an SME, I’m going to open up to a whole bunch of institutions that I just don’t know. If we’re all part of the same blockchain consortium, then I know I can trust what is written on the chain. Because I can trust the information, I can move a lot quicker. It’s not going to take me weeks of investigation, so I can grant loans quicker or get the trade finance process going a lot faster.”
Public procurement and corruption
Another interesting implementation of blockchain technology is in the space of public procurement by government organizations. Corruption is not a uniquely African problem, but it is one that affects many countries on the continent. Sope Williams-Elegbe, a professor and deputy director of the African Procurement Law Unit at Stellenbosch University, gave a presentation on the possibilities of blockchain addressing corruption in public procurement.
Williams-Elegbe said that 15%–22% of South Africa’s gross domestic product goes to public procurement. The problem is that the country loses 50% of this to corruption and fraud.
The professor believes that blockchain could be used to address procurement corruption but admitted that there are few to no use cases as of now. There is a lack of technical applications for public procurement, and it presents an opportunity for new solutions.
Forget the hype, build on working tech
Michelle Nsanzumuco, who acts as a senior advisor to the government of Bermuda and the Africa lead for Fintech4Good, spoke about a number of the sectors described above as being potential drivers of blockchain technology.
In an interview with Cointelegraph, Nsanzumuco highlighted supply chain and logistics as the key industry that can leverage blockchain due to the complexities of trade created by the sheer number of players in a value chain. Nsanzumuco said that a number of entrepreneurs and SMEs that she has interacted with often complained about the difficulties they face when conducting trade inside their own country:
“They’re finding barriers just within their own countries because they’re dealing with so many different players, fill in so much documentation before they can even get their products from A to B. Now we haven’t even talked about cross-border transactions and trade. I can see it being a very strong use case for Africa specifically around supply chain and health care.”
Nsanzumuco added that blockchain solutions could improve the way health care systems track vaccinations and medications. Another factor is improving government services by digitizing a variety of manual data-capturing processes. Additionally, while strongly agreeing that the continent could be a leader in the blockchain space, Nsanzumuco cautioned against touting “blockchain” tech because of its marketability:
“A big warning for me having traveled around the world is not getting caught up in the hype. Let’s leverage real solutions in particular sectors where it can have an impact in Africa.”