Interswitch, Africa’s leading integrated payments and digital commerce company has released a paper titled ‘Blockchain Technology: The Future of Africa’s Digital Economy,’ explaining the advantages of blockchain services to modern-day businesses.
The paper, which can be downloaded here, starts by explaining how disruptive the technology is and the problems this new innovation hopes to solve. It explains that blockchain technology is ‘rumored’ to be the next big innovation, comparing it to the internet boom of the 1990s and stating, “What are the possibilities of ‘owning your bank’ or making money transfers without relying on third parties or worrying about exorbitant transaction fees? Businesses can also share information freely and improve processes without fear of malicious actors interfering with their system. These possibilities are not futuristic projections, as they are currently being enjoyed by early adopters of the blockchain technology.”
The paper provides a clear explanation on the principles that Distributed Ledger Technology (DLT), like blockchain, was built on, including decentralisation; transparency and auditability; security and privacy. A salient point would be about blockchain decentralization, about which the paper states, “With Blockchain, there is no central point of control. The absence of intermediaries promotes the ease and speed of transactions as it doesn’t require verification from any central authority.”
Under ‘major players,’ the paper explains the types of blockchain technology which ultimately relates to the level of access these DLTs provide. According to the paper, the ‘major players’ include Public Blockchain Networks, Private Blockchain Networks, Hybrid Networks, and Consortium or Federated Blockchains. It explained each one by giving examples and types of publicly known blockchains under each category.
As expected, the paper speaks at length about cryptocurrencies as they are one of the biggest by-products of the blockchain innovation. According to the paper, cryptocurrencies are a ‘major beneficiary’ of the blockchain technology. It further reads: “Cryptocurrency is a digital payment system that doesn’t rely on banks to verify transactions. Unlike physical money that is carried around and exchanged in the real world, cryptocurrency payments exist purely as digital entries to an online database that describe specific transactions, all powered by blockchain.”
Applications of Blockchain Technology
Asides from its cryptocurrency application in facilitating cross-border payments, the paper highlights other applications of Blockchain technology to other industries. It states, “Blockchain technology, although very prominent in the banking/payment industry, as popularised by the likes of Bitcoin and Ethereum, presents other opportunities and use cases. Attracted by the different advantages of the blockchain technology such as decentralisation, security and transparency, other industries have jumped on this trend, implementing strategies that meet the current realities.”
It also lists the following industries/sectors where blockchain technologies have or can be implemented. These industries include the financial sector, education, land management, law, governance, health, supply chain, travel, and insurance.
Africa and Blockchain Technology
This section of the paper tries to explain the growing adoption of Blockchain technology on the African continent, describing the adoption as ‘slow but progressive.’ The paper attributes the growth so far in the adoption of cryptocurrencies in Africa to the ‘upsurge of Bitcoin.’
The paper explains the growing adoption of blockchain technology by countries. It starts with South Africa, citing that, “Banks in South Africa such as BSA, First National Rand, Investec, Nedbank, Standard Bank, and the South African Reserve Bank, utilise an encrypted, secure distributed database. The private banks have adopted a private blockchain while the rest have adopted public blockchain.”
It went over to the adoption in Kenya explaining that the country’s “introduction of BitPese, a money remittance platform that converts digital currency such as Bitcoin to the local African currency without the involvement of third parties, is gaining ground in the country.”
Speaking about Nigeria and its adoption of eNaira, Africa’s first digital currency, the paper stated that, “Nigeria also recently announced Bitt Inc as technical partners for their digital currency, eNaira, that is set to launch before the end of 2021.” It also explained Nigeria’s adoption of Blockchain technology in the education sector stating, “Nigeria has utilized the Blockchain technology as its government agencies have collaborated with Cryptography Development Initiative of Nigeria (CDIN) in the education sector.”
Other countries spoken about include Rwanda’s application of blockchain technology in the land management sector and Kenya’s application in the transportation and health sector.
Use Cases and Benefits of Blockchain Technology
The paper lists the following as use cases and benefits of blockchain technology that have been developed in the African continent.
For Use Cases
- Online payment systems for fast growing e-commerce across Africa.
- International money transfer system, between African diaspora and their countries.
- Land security system (cadastral management), already being tested in some African countries.
- System for combating counterfeit medicines that decimates our poorest populations.
- System of traceability of the different raw materials and other mining products of our country (secure route, identifying reliable actors, removal of intermediaries not indispensable, etc.)
- Copyright management system.
- System for the attribution and monitoring of public procurement.
For Benefits
- Facilitates cross-border transactions.
- Reduces the high cost of remittance payment.
- Enables access to financial services.
- Ensures privacy.
- Creates jobs.
- Improves business environment and fosters healthy competition.
Challenges
The paper highlights challenges that hamper the adoption of blockchain technology, naming poor infrastructure, lack of human resources and capital, and political forces as the major issues dampening the adoption of blockchain technology in Africa. It further states, “But even more, technical, regulatory and institutional challenges are major aspects that are crippling the acceptance of Blockchain by both businesses and individuals in Africa.”
On technological issues, the paper acknowledges the progress that has been made in Africa so far but explains that there are still issues that need to be addressed. It states, “Although technology development is progressing, there are still hindrances that need to be addressed and attended to, if this technology is to be adopted fully by users.” It further highlights scalability, transaction speed, network security and protection and data privacy as technological challenges that need to be addressed quickly to aid adoption of blockchain technology.
The paper also touches on the regulatory climate of African countries. It states, “Another major challenge is the resistance from government and other agencies responsible for authorisation. Reasons for this vary, but lack of understanding of the benefits of new technologies is a common denominator. While cryptocurrencies have self-regulating mechanisms, there is still a need for localised frameworks that guide start-ups and organisations using blockchain technology to solve local problems.”
The paper mentions skill development as its final point to the challenges affecting the adoption of blockchain technology in Africa. It states, “Despite the rise of fintechs and software development, there is still a huge gap in expertise. Blockchain technology is labour intensive, from installing to feature development, mining and security. This calls for skill development amongst technical enthusiasts.”
Conclusion
In the closing remarks of the paper, it acknowledges blockchain technology’s promising future and the need for both private and public stakeholders to make necessary adjustments and infuse blockchain technology into their policies.
“Finally, blockchain technology has the potential to foster innovation and broaden access to banking systems for entire countries and provide greater access to financial services in developing and emerging markets like the African continent. Therefore, African financial institutions need to position their business strategically to embrace this new and disruptive technology,” it stated.
To download the whitepaper, visit https://www.interswitchgroup.com/blockchain
I was just conned by a Blockchain consultant named Paul Jordan .He took Me to a hole process of investing ,transfering funds from My Bank to Luno then into Atomic.
And then when everything was done He transfered everything into wher only He has excess.
How does someone take from hard working honest people.
He was on the phone the hole 2 weeks until the final moment yesterday at 14h23 the made the tranfer at 14h56 without Me knowing He transfered the funds to another account .
Hope to get some clarity or help its no use wanting to invest but crooks are everywhere.
Regards
Russell