Grace Ashiru
Despite the surrounding excitement, blockchain technology holds a myriad of potential benefits for different industries across Africa. While some skeptics may downplay the significance of blockchain or limit its utility to cryptocurrencies alone, the reality is that the technology’s applications have grown and diversified significantly. Efforts to harness blockchain for tangible, real-world benefits are increasing.
Africa represents a significant market with untapped potential, especially in terms of simplifying payment systems for both intra-continental and global trade. Despite various efforts to strengthen financial integration, transferring funds across African countries using local banking systems remains a challenge. Moreover, remittances, which form a substantial part of the GDP of African nations, are in dire need of improvement. The conventional methods are not only time-consuming but also incur higher costs.
The advent of cryptocurrencies is transforming the landscape of payment systems throughout Africa. Cryptocurrencies are providing a viable solution to the issue of financial exclusion by creating an accessible financial ecosystem. Anyone with an internet-enabled device can set up a cryptocurrency wallet, enabling them to send and receive funds. Additionally, cryptocurrencies offer a more economical option for remittance transactions.
Bitcoin (BTC), as the foremost and widely recognized cryptocurrency, is increasingly being adopted in Africa as a means of payment. This popularity is supported by numerous fiat-to-BTC exchanges that facilitate quick and easy conversion from traditional currencies to Bitcoin. In contrast, stablecoins like USDT have also gained traction due to their stable value, offering a reliable alternative that is not subject to the typical volatility seen in other cryptocurrencies.
In addition to these cryptocurrencies, the advent of blockchain technology has paved the way for the emergence of central bank digital currencies (CBDCs). Several African countries, including Ghana, Nigeria, and Tanzania, are actively exploring and experimenting with CBDCs. Notably, the Central Bank of Nigeria has launched the eNaira, a digital currency that is also equipped for use in international trade.
Decentralized Finance (DeFi) is reshaping the financial landscape in Africa beyond just payment solutions. One of the significant challenges in the African financial sector is access to loans with favorable rates and viable savings options. Additionally, the continuous depreciation of local currencies against major global currencies poses a hurdle in wealth accumulation.
DeFi, a critical component of blockchain technology, offers a revolutionary solution. It enables users to engage with global financial products and services in a decentralized way, free from the control of any governmental or central authority.
In Africa, the DeFi sector is revolutionizing the traditional lending and borrowing landscape. Established financial institutions often come with numerous lending criteria and offer modest returns to lenders. However, African DeFi platforms like Finna Protocol are transforming the methods of lending and borrowing money. This evolution serves as a critical instrument for financial inclusion and growth throughout the continent. More individuals now have access to competitive lending and borrowing platforms, potentially bridging the capital gap in Africa.
Furthermore, the expansion of the DeFi sector has led to significant enhancements in savings, insurance, and derivative markets.
Blockchain technology presents a significant opportunity in the realm of real-world asset tokenization (RWA). This process transforms tangible assets into digital tokens on a blockchain, encompassing a range of assets from real estate and commodities. The benefits are manifold: enhanced liquidity, improved transparency, and broader access. This approach also facilitates fractional ownership of high-value assets, supported by blockchain technology, allowing multiple individuals to hold a stake.
In Africa, known for its abundant resources and land dispute issues in certain areas, tokenization holds particular promise. Various initiatives are exploring ways to tokenize diverse assets across the continent. Binkabi, for example, is working on the tokenization of agricultural produce to facilitate easier trading. The Central African Republic’s Sango project has also announced plans to extend its scope, aiming to tokenize the nation’s natural resources and land.
Elections throughout the African continent have been marred by conflicts, often stemming from accusations of vote manipulation and a general lack of transparency among those responsible for organizing these crucial events. These issues have frequently escalated into extended disputes or have been used as a basis for attempts to undermine governance in several nations. To address some of these election-related problems in Africa, the implementation of blockchain technology has been proposed.
This concept saw its first application in Sierra Leone during the 2018 elections. Leonardo Gammar, working with Agora, developed a voting system that utilized blockchain to log votes. This innovative approach was aimed at reducing costs and minimizing the inconsistencies traditionally associated with the voting process.
The art and culture of Africa are diverse and vivid, reflecting the varied ethnic groups that inhabit the continent. This rich cultural tapestry is now being showcased on a global platform through the use of nonfungible tokens (NFTs), heralding a new era for African art. Artists from countries like Nigeria, Ethiopia, Ghana, South Africa, and Kenya are leveraging NFTs to display their unique cultural expressions, thereby reaching a wider audience and achieving international acclaim. NFTs provide a novel way for these artists to merge their deep-rooted heritage and vibrant color palettes with modern technology, transporting their art into the digital space in a fresh and creative manner.
Among the pioneers in this movement is Rich Allela, a renowned Kenyan photographer and filmmaker, who was one of the first from the continent to introduce an NFT collection. Alongside him, artists such as Osinachi are gaining prominence in the NFT domain.
In Africa, the digital marketplace landscape has seen significant growth, with WeAreMaster and AFEN being two prominent examples. Notably, AFEN successfully raised $1 million through a token sale back in 2021. This platform has been instrumental in partnering with various African artists, providing them a platform to display their digital artworks in the form of NFTs (nonfungible tokens).
As the technological framework in Africa continues to evolve, the applications of blockchain technology are expanding. An excellent opportunity to explore the latest developments and innovations in this sector is the upcoming Africa Tech Summit 2024, set to take place in Nairobi, Kenya.
