How blockchain will shape Africa

Posted on August 6, 2017 12:02 am

Africa’s growing realization that blockchain technology has the potential to completely transform the structure of financial services has created significant interest, and I foresee exciting times ahead for Africa’s potential.As such, Africa need a very clear statement of intent not just around innovation and fintechs, but around the purposes of blockchain and how African countries can take a position. Also, there’s need to enable forums for collaboration with the regulators, incumbents, innovators and technologists. In addition, demystify the language of blockchain is important. Once the jargon is removed its value can extend beyond financial services to the rest of the economy, so Africa as a whole, can discover how blockchain will benefit the nation. But how about African cities? You can think of blockchain as the second generation of the internet, a transformation from an internet of information to an internet of value. Blockchain allows suppliers and consumers even competitors to share a decentralised digital ledger across a network of computers without the need for a central authority.The assets that can be described on the blockchain can be financial, legal, physical or electronic. No single party has the power to tamper with the records, sophisticated algorithms keep everyone honest by ensuring data integrity and authentication of transactions.However the impacts of blockchain go well beyond financial services and transactions. Its real value is in establishing trust-based interactions and accelerating the transfer of governance from centralised institutions to distributed networks of peer to peer collaboration. Blockchain gives service providers a means to collaborate and derive a greater share of the value for themselves. Smart agents on a blockchain could do just about everything provided by a service aggregator. Trust is not established by third parties, but rather through an encrypted consensus enabled by smart coding.

Many trends on the horizon offer opportunities that could transform African cities. From self driving vehicles and sharing economy through to cloud computing and blockchain technologies, each of these trends is quite significant on its own. But the convergence of their disruptive forces is what will create real value and drive innovations. For example sharing economy combining with block chain can potentially disrupt established companies like Uber. The success of these companies is largely due to their ability to make use of existing assets people owned, that had been paid for, but from which new value could be derived.Effectively, these companies set up digital platforms that harnessed excess capacity and relied on other people to deliver the services.The same applies to other so called sharing economy companies that merely act as service aggregators and collect a cut off the top. In the process, they gather valuable data for further commercial gain.The question is however on whether such business model be challenged and enhanced for the benefit of those who are delivering the service and creating the real value. Whether technology can be used to bypass the third party and allow direct peer-to-peer collaboration within a distributed governance structure remains to be seen.The blockchain technology and ecosystem around it are evolving rapidly. For example how can African countries establish a system of transparent governance?As with other disruptive technologies, there will be winners and losers when it comes to blockchain. If the technology is successfully managed for scalable growth, it could very well disrupt established norms and transform African societies. Large layers of data generated by consumers in Africa, which are controlled by hubs, can become public. In a world driven by blockchain, consumers can monetise their own data to derive greater value. By knowing when and how to take advantage of this technology, African countries have an opportunity to transform the digital platforms for future African cities. The blockchain will likely become the city’s operating system, invisible yet ubiquitous, improving citizens’ access to services, goods and economic opportunities. My view is that the power of blockchain transformation will become more compelling when African countries start to unleash the possibilities.

Contador Harrison