Blockchain Opportunities Arising In Africa
Until recently, Africa posed a high risk for global investors. This was the case for a number of reasons, mainly because of its history of conflict and strife. However, over the past two decades the African continent has experienced vast improvements in infrastructure, democracy and governance, infant mortality rates, and life expectancy. As a result, Africa has become more attractive to world investors.
These improving conditions have encouraged large multinational companies, like IBM, Wal-Mart Inc., General Electric, Procter & Gamble, and PricewaterhouseCoopers, to make significant investments in African economies. In a recent speech, Dr. Jens Weidmann, president of the Deutsche Bundesbank and chairman of the board of directors of the Bank for International Settlements, expressed an interest in setting up a “Compact with Africa” effort to boost investment in the continent. It is no surprise that there would be such great interest in Africa, as it has an estimated population of roughly 1.2 billion people who have a need for goods and services. And to meet this growing need, entrepreneurs are looking to emerging technologies, like blockchain tech, and its derivatives, like virtual currencies.
4G Capital is a capacity-building micro-lending company based in Kenya run by Wayne Hennessy-Barrett, a former British military soldier. Hennessy-Barrett explained to ETHNews the company’s purpose is to “unlock the potential for good” by providing business training and short term, unsecured loans to market traders in the informal jobs sector of sub-Saharan Africa. Although the informal jobs sector has a negative connotation in developed countries due to its affiliation with the black market and “under the table” jobs, it can be beneficial in poorer regions of the world because most of the jobs offered require little or no specific skills. According to recent research about 74 percent of women and 61 percent of men in sub-Saharan Africa are actively employed in the informal jobs sector. Hennessy-Barrett explained that Kenya, and the sub-Saharan region, is ripe for growth:
“We’ve been very lucky. Kenya is a fantastic place to do business, and the absolute fintech gateway to the huge sub-Saharan African market. You only have to look at the big players in this arena to see [that] this [is] not only a big market in its own right - $6.5 billion annually for our segment alone - but also the place to build platforms that can roll into other exciting adjacent countries, where we can see increasing adoption of mobile money and gateway technologies.”
4G Capital utilizes artificial intelligence, mobile devices, and a ‘go-to’ platform that African traders can utilize to access instant working capital for business growth. In the near future, the company has plans of integrating executable distributed code contracts (EDCC) and the Ethereum blockchain into the 4G Capital ecosystem. Hennessy-Barrett tells ETHNews:
“[EDCC] can provide a way of safely automating our repeat business, and their verification protocols will allow us to provide a suite of evolving products, which are tailored to customer’s changing needs. They are an important part of our strategy to provide customers with the digital toolsets they need to unlock their full potential.”
In the near future, 4G Capital looks to become a robust market entry platform for the African market that hopes to connect big players such as social media platforms, financial institutions, and tech companies.
“We’re building the number one platform for global investors to achieve sustainable strong returns by delivering a genuine shared-value set of credit products,” said Hennessy-Barrett. “We’re doing this by being the first choice catalyst for responsible small business growth in the markets where we operate.”
According to multi-national financing consultant Deloitte, “Over the past decade large multinational Information Technology (IT) companies have begun predicting Africa to be ‘the next big market’ due to the emergence of many rapidly growing economies.” Furthermore, many African cities are in need of urban renewal and investments. Currently, Rwanda is partnering with Swiss-based cybersecurity firm WISeKey International Holding, Ltd., to establish a blockchain/internet of things (IoT) center of excellence, which will be located in the capital city of Kigali where it will implement a “trusted blockchain as a service” platform to propel growth and innovation.
The effort is one of the first steps of the Smart Africa initiative, which seeks to initiate innovation, advocacy, and resource mobilization within the African continent. Currently, there are 17 member states, including Rwanda, seeking to accelerate socio-economic development throughout their areas.
“We strongly believe that the blockchain/IoT centre of excellence will enable dramatic increases in business volume and efficiencies,” said Carlos Moreira, founder and CEO of WISeKey. “Establishing Rwanda as a blockchain/IoT service hub will provide benefits across many industries and encourage technological developments that can serve the continent.”
According to Rwanda’s Minister of Youth & ICT, Philbert Nsengimana, the Smart Africa initiative is “in line” with Rwanda’s President Paul Kagame’s vision for leveraging information and communication technologies for growth, while at the same time ensuring prosperity for citizens. Nsengimana continued:
"To succeed in making African homes, offices, schools and cities smart, we have to harness opportunities in exponential technologies. These technologies include artificial intelligence, robotics, drones, big data, IoT, blockchain, and 3D printing."
WISeKey intends to team with local companies to create plans, proof of concepts, policies, and educational references that demonstrate what blockchain can do, regardless of the type of blockchain (public, consortium, and private). To facilitate this, WISeKey will be utilizing the WISeID blockchain as a means to validate the digital identity of third parties.
Prior to the 21st Century, the West African country of Ghana lacked a stable land registry. As a result, real estate investments were hindered, undocumented disputes were not uncommon, and many Ghanaians were targets of real estate scams. In order to mitigate these problems, the government instituted the Land Administration Project (LAP). The first phase of LAP (from 2003 to 2010) saw institutional reforms and implementation of various initiatives. The second phase, launched in 2011, aimed to build on the gains of the first phase and to be more efficient and transparent.
Enter Bitland, a non-profit organization located in Kumasi, Ghana, which looks to be a potential solution to help LAP reach its goals for the second phase by issuing blockchain land certificates. Bitland’s system operates as a digital registry database that uses the blockchain for real estate and/or land title registration. This allows for securely recorded transactions that include GPS coordinates, photos, and written descriptions. All properties would be recorded on a blockchain that would facilitate an undisputable record mitigating land disputes and the violence that it causes.
As of 2016, 24 communities have expressed interest in the Bitland project. Currently the pilot project is operating in Kumasi, Ghana. However, the team is looking to expand throughout the continent where land disputes have become an issue.
The African continent has been at the forefront of the digital revolution in many avenues. In 2007, Vodafone, Safaricom and Vodacom launched M-Pesa, a mobile phone-based money transfer, financing, and microfinancing service that transformed the Kenyan economy within a decade. Additionally, in 2016, the African country of Senegal created eCFA, a cryptocurrency that’s based on the CFA Franc. If and when Senegal’s eCFA is officially introduced, many other countries such as Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, and Togo will be able to utilize the currency for regular transactions. Other efforts are being made by a number of other blockchain startups looking to innovate within the African continent, such as solar energy conservation, crude oil sales, and remittance. The efforts by 4G Capital, WISeKey, and Bitland are just further recent developments that will provide a better way of life for the African population and create opportunities for growth within the continent through the use of blockchain technology.