Potential blockchain applications can be broadly grouped into three viz. (1) digital payments (2) contracts and (3) database and record management. Based on the PositiveBlockchain.io database, Smart Africa (2020) identifies 69 active blockchain projects across different sectors on the African continent. The financial services and agricultural sectors have the most use cases. Regional giants Kenya, South Africa and Nigeria are the dominant countries.
In the specific African context, pertinent blockchain use-cases are (1) digital payments (2) public procurement (3) decentralized electricity distribution (4) digital identification & education credentials (5) digital land administration (6) agricultural and mining supply chain tracing and (7) trade facilitation (Smart Africa, 2020). We provide an overview of these African use-cases below. In subsequent chapters, we discuss cross-border payments with cryptocurrencies, supply chain tracing and trade facilitation in greater detail.
Public procurement and governance
In the mostly corrupt African public governance environment, the real-time, transparent and immutable features of blockchain technology make it ideally suited to fill gaps in currently centralised human-dependent governance architectures that make it possible for unscrupulous public servants to easily game procurement and governance systems. Blockchain-based project management tools that allow real-time tracking of workflows and expenditure would also ease a major constraint for many of Africa’s international donors and development partners.
Decentralized electricity distribution
More than half of Africa’s population does not have access to electricity. In many cases, this is due to difficulties in connecting remote rural areas to central electricity grids. Blockchain technology makes the scaling up of micro-grid power solutions on-grid and off-grid viable. It also makes feasible cost-effective micro-grid peer-to-peer power trading. The blockchain architecture makes it easier and cheaper to monitor and execute the smallest transactions as many times as needed (Smart Africa, 2020). A decentralized P2P electricity marketplace is feasible consequently. Both electricity producers and consumers are able to interact with each other bi-directionally without the need for a central coordinator.
Read Also: Impact of Blockchain in Nigeria
Digital identification and education credentials
In an increasingly globalised knowledge-based remote-working age, there is a significant need for cost-effective and reliable verification mechanisms for education credentials. Blockchain-based credentials are permanent and verifiable by all and sundry for all time. African countries, where verification of credentials by global firms can be cumbersome and fraud-prone, would benefit greatly from this innovation.
A blockchain-based credentials system would reduce incidents of forgery. Since a permanent and accessible digital version of credentials resides on the blockchain, worry about lost certificates would also reduce. The potential economic benefits from the consequent increased trust and reduced corruption are huge. African governments are taking notice. For instance, the Ethiopian ministry of education has entered a deal with Atala PRISM, a blockchain identity solution by Input Output, the firm behind the Cardano blockchain, to develop a countrywide student and teacher identification system.
Digital land administration
Similarly, a blockchain-based land registry system solves the frequent fraud problem around land transactions in many African countries. It is still very hard to verify the authenticity of land titles in most African jurisdictions. Even when land titles and related documents seem genuine, you could not be sure they are authentic.
Unsurprisingly, there are numerous examples of the same land being fraudulently sold to multiple buyers at the same time. Blockchain technology is ideally suited to fixing the problem. Land titles registered on a blockchain can be verified by all. And in the event of a sale, all the members of the blockchain network would be privy to the transaction.
A potential buyer would also be able to verify the authenticity of land documents and whether indeed the land or property in question is actually in the market via a blockchain-backed user-interface on a website or mobile phone app. Little wonder, Ghana is working with IBM on a blockchain-based solution for land administration.
An edited version of this article was first published by Nanyang Business School’s NTU-SBF Centre for African Studies, Singapore. References, figures and tables are in the original article. See link viz.https://www.ntu.edu.sg/cas/news-events/news/details/can-blockchain-and-cryptocurrencies-facilitate-african-trade
