Worldwide: Blockchain In Africa

Last Updated: 5 December 2017
Article by Peter Kasanda and Lee Bacon

A number of countries in Africa have seen rapid technological development in recent years, as exemplified by mobile internet deployment across Uganda and Tanzania. This is largely due to a lack of existing infrastructure and regulation allowing for new technologies to leapfrog traditional solutions and for policy frameworks to be implemented in conjunction with new products. This results in stable macroeconomic environments which now sees countries, such as Kenya, as a favourable market for tech investors.

Blockchain and other decentralised systems are likely to be the next technology to capitalise on this 'test and learn' approach as they are well suited to manage data, financial assets and B2B transactions without the need for intermediaries. As a core principle, Blockchain improves the quality, reliability and accessibility of data and for this reason, they have the potential to alleviate various issues which can arise when conducting business.

Whilst recognising that there will be regional and national level nuances to Blockchain's implementation, this report highlights how the technology is expected to affect business across the continent. By no means exhaustive, the examples below represent areas in which Blockchain is likely to have a significant impact in the short to medium term.

Currency

Due to their reliance on international commodity markets, African currencies can lack stability. The result is that the US Dollar is often used as an informal currency, particularly by businesses. This presents its own issues as foreign currency reserves are often limited - as an example Zimbabwean banks cap daily cash withdrawals at USD 20.

By using cryptocurrencies, businesses can benefit from a stable store of value and hedge against inflation whilst avoiding reserve issues. Furthermore, cryptocurrencies aren't geographically restricted which has the potential to facilitate cross-border trade.

BitPesa is currently pioneering this process by hosting B2B payments and offering a real-time settlement at wholesale FX rates to frontier and emerging markets through mobile money networks.

Land

At present, land tenure in many jurisdictions lacks clarity and security - this leads to the issue of 'dead capital' as lenders are typically unwilling to securitise land. This prevents effective utilisation of one of Africa's most significant assets and hinders entrepreneurs who are otherwise unable to raise capital. Unclear land rights also pose difficulties to international investors (particularly in the projects sector) as the security of tenure is critical to ensuring a project's success. Many countries have taken steps to alleviate this issue; however, most records still remain paper-based.

Blockchain has the potential to resolve this issue and is currently being trialled in Ghana where the government is working in collaboration with Bitland; a startup which allows land to be surveyed and title deeds to be recorded on the Bitland Blockchain - creating a permanent and auditable land record.

Commerce management

Effective supply chains are critical to development and are of particular importance to many of the continents land-locked states such as Uganda which relies on imports by road from the Kenyan port of Mombasa. Although in operation, many supply chains perform suboptimally which increases the cost and decreases the efficiency of conducting business.

Blockchain can assist with alleviating this issue through a number of mechanisms such as resource management and performance-based incentivisation. Currently, commerce management operates in a siloed fashion with limited information sharing, leaving resources unused or underutilised. As Blockchain is implemented and full supply chain data becomes available, it will be possible to assess a supply chain's capacity in real time and automatically allocate items to available space in containers, warehouses and vehicles. This has the potential to substantially reduce bottle-necking that occurs at many terminals.

Furthermore, as individual products will have an increased data history, it will be possible to analyse the efficiency of their transit. Local supply chain partners can then be remunerated on this basis, encouraging distribution efficiency.

The legitimacy of this approach can be seen with Walmart's Blockchain trials in association with IBM where various smart contracts have been implemented to provide an overview of a product's supply chain.

Trust Mechanism/ Bureaucracy

Due to their codified nature and automatic execution, Blockchain contracts have the potential to provide greater transparency over contractual compliance - thereby acting as a trust mechanism for contractual relationships and alleviating a significant business risk.

In addition, the distributed nature of the data across multiple nodes ensures that information cannot be held by single organisations/ institutions; nor can data be altered or its accuracy challenged. This will assist with the information imbalance which exists when dealing with many public bodies.

Additionally, smart contracts can have the capacity to track every dollar spent. This will be of particular benefit to lending institutions and will ultimately allow entities which are more risk averse to invest in the African market. BitFury (an American based company) is currently assisting with this process through its involvement with African Bitcoin payment providers such as BitPesa, mentioned above.

As demonstrated above, Blockchain has enormous potential to revolutionise business in Africa and its implementation is compelling. Although in its early stages, we are seeing an exponential growth in the technology's foothold in the continent and initial trials are proving successful. Furthermore, governments appear to be actively engaging in Blockchain's implementation which is crucial for technologies to be successfully deployed in the country.

Notwithstanding the above, we suggest that comprehensive legal advice is sought in conjunction with Blockchain deployment to ensure that companies fully reserve their legal position in this relatively untested market.

Clyde Code in conjunction with our Tanzanian technology practice is positioned to answer any queries you may have in respect of this report.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Peter Kasanda
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions