Considering the turbulent global financial markets, expensive remittance costs, and restricted banking access, blockchain technology in Africa offers alternatives to tackle their day-to-day issues.
- The lack of modern agriculture, underdevelopment, unemployment, and poverty has slowed Africa’s development in the twenty-first century.
- The absence of common legacy financial institutions and a massive population of predominantly unbanked individuals have significantly contributed to the emergence and acceptance of cryptocurrencies in Africa.
- Currently, Africa is one of the fastest-growing cryptocurrency markets in the world, garnering large investments consistently.
Blockchain technology is taking over
The absence of common legacy financial institutions and a massive population of predominantly unbanked individuals have significantly contributed to the emergence and acceptance of cryptocurrencies in Africa. Experts refer to blockchain technology as the “next big thing” since it has been widely accepted. In Sub-Saharan Africa, Kenya, Nigeria, Ghana, and South Africa have rapidly adopted digital assets and cryptocurrencies. Thus, blockchain technology provides more efficient payment trails in the region.
Similar to Artificial Intelligence (AI), experts have attested to the disruptive potential of blockchain technology. However, they have in the same spirit expressed skepticism over its rapid adaptation and incorporation into African economies. The reason for this is that blockchain eliminates the centralization issue. Blockchains are thus decentralized digital ledgers that use cryptographic techniques to validate the generation and transfer of digitally encoded information through a peer-to-peer network.
Others have alluded to blockchain technology as the trust machine because individuals who generally lack trust in one another may interact without going via a neutral central authority. The difficulty of a unified currency envisioned by African leaders, which has proved a mirage for decades, might be resolved expeditiously by blockchain technology.
The acceptance and implementation of the African Continental Free Trade Area (AfCTA) by the 55 African Union member states aim to unite about 1.3 billion people with a cumulative gross domestic product (GDP) of around $3.4 trillion. This grand concept aims to unify Africans regardless of political or geographical affiliations. As the continent aspires to ascend the growth ladder, blockchain technology in Africa remains crucial.
READ MORE: NFTs and blockchain crucial in the concept of an African Metaverse community
The steady adoption of blockchain technology
The lack of modern agriculture, underdevelopment, unemployment, and poverty has slowed Africa’s development in the twenty-first century. Blockchain technology represents the future since the benefits of this new trend have resonated across several sectors, redefining the limits of technology.
Hence, the use of blockchain technology in Africa might result in the substitution of conventional administrative processes. By generating a sense of solidarity and facilitating free trade agreements via regional currencies, blockchain might facilitate intracontinental commerce among African nations.
While Africa’s adoption of blockchain technology is not the quickest, it is progressing. People and companies are starting to adopt the new trend made popular by Bitcoin’s surge. Driven by the many benefits of breakthrough technology, this new trend will take over Africa in the next few years
Integration of blockchain technology in Africa
East Africa’s largest economy is among the nations that have adopted blockchain technology in Africa. BitPesa, a money remittance network that converts digital currencies such as Bitcoin to local African currencies without involving third parties, has gained traction in Kenya.
Kenya also intends to change the health industry by introducing a blockchain-powered smart platform. Almost all public hospitals will now share a hub that facilitates data management, such as public resources and healthcare administrators.
AfyaRekod, the world’s first blockchain-based healthcare service, has established a fully automated Universal Patient Portal in Kenya (UPP). Consequently, AfyaRekod will provide patients and health personnel with real-time access to medical data and history through a secure central platform. This will provide effective continuous medical care and prompt information in an emergency. Cloud-based database development makes the project feasible.
In addition, Kenya’s National Transport Safety Authority (NTSA) has also incorporated blockchain technology into its operations to revolutionize the transport industry. Several state entities have been connected to the NTSA’s service to warn security authorities about car insurance and other crucial information, including ownership. This will ultimately take the nation to a point when all vehicles will have electronic stickers on their windscreens that can be detected by specialized devices, hence facilitating the recovery of stolen vehicles.
Further, BlockchainRaise, a Bahamas-Kenyan business, created the first security token platform that tokenizes assets safely using blockchain technology. Tokenization transforms physical assets into digital assets on the blockchain. The transformation makes keeping and securing records of real estate ownership, titles, products, and private equity shares simple.
READ MORE: Cryptocurrency offers hope for Africa’s economic resurgence(Opens in a new browser tab)
Nigeria is at the forefront of blockchain development in Africa. Africa’s most populous nation cooperated with Bitt Inc in 2022 for its digital currency, eNaira. Nigeria has also embraced Blockchain technology in the education sector, where government agencies have worked with the Cryptography Development Initiative of Nigeria (CDIN).
Nigerian Exchange Ltd. wants to launch a blockchain-enabled exchange platform to expand trading and attract new investors this year. The move results from the Nigerian Securities and Exchange Commission’s establishment of legislation to govern the trading of digital assets. It also comes from the rising enthusiasm among companies and regulators throughout the continent to use distributed-ledger technology. The exchange intends to use blockchain technology for capital market transaction settlement.
Effect of crypto adoption
Currently, Africa is one of the fastest-growing cryptocurrency markets in the world, garnering large investments consistently. By July 2020 and June 2021, the adoption rate surpassed 1,200 per cent, with strong adoption rates in Kenya, South Africa, Nigeria, and Ghana.
According to Disrupt’s 2022 report on funding for African tech startups, fintech startups raised $1.45 billion last year. The overall amount of money raised by the industry increased by 39.3 per cent from the $1.04 billion raised in 2021.
Nigeria is once again the best-funded nation on the African continent. Over 180 fintech and blockchain companies in Nigeria raised $976,146,000, or 29.3 per cent of the continent’s total. The quantity and proportion of sponsored startups in the West African country dwarfs that of Egypt, Kenya, and South Africa.
There are currently no crypto or blockchain unicorns on the continent. Nonetheless, unicorns should emerge in the next two to three years. Some IT unicorns have adopted blockchain technology, notably the Nigerian digital payment behemoth Interswitch and the Senegalese fintech company Wave. Adanian Labs, a 2020-launched Pan-African incubator, intends to foster companies and entrepreneurs striving to tackle the region’s most pressing problems.
Adanian Labs aspires to establish 300 impact-driven technology firms in Africa by 2025. Using blockchain and AI the company aims to generate one million employment for young Africans. Concerning financial infrastructure, personal identity, record-keeping, and lack of access to individual financial independence, the present state of things in Africa has established the optimal circumstances to accelerate the adoption of blockchain technology.
Mobile technology crucial
The continent-wide advancement of mobile technology has coincided with the extensive use of digital payment systems, which is gaining momentum. With over 450 million unbanked Africans, financial inclusion is one of the primary areas where blockchain can immediately impact. Cryptocurrency peer-to-peer marketplaces such as Paxful and LocalBitcoins are in the vanguard. These marketplaces provide millions of people with access to vital financial services.
Africa is a strong contender for developing technologies such as blockchain and cryptocurrency owing to the continent’s growing mobile tech adoption rates. Considering the turbulent global financial markets, expensive remittance costs, and restricted banking access, blockchain technology in Africa offers alternatives to tackle their day-to-day issues.