Through careful nurturing and technical support, Africa’s tech start-up ecosystem can be a major driver of blockchain-based innovation.
By Ben Roberts, Liquid Telecom’s group chief technology and innovation officer
African communities have always come-up with inventive solutions to local problems. Take Somalia as an example. The country is said to have one of the largest diaspora populations in the world. It has few commercial banks and relations with international creditors remain fro¬zen due to debts incurred in the late 1980s.
So its population uses Hawala; an infor¬mal value transfer system based on the per¬formance and honour of a large network of money brokers. For example, it would mean a Somali based in the US would give money to a local branch agent, where it is sent to a cen¬tral country clearing house, then onto a clear¬ing house based in another country (typically somewhere in the Middle East). From there it goes to a Somali agent, before the funds are finally collected by an individual in Somalia.
Much like blockchain, the Hawala system is built on trust – but that’s where any similarities end. In fact, cryptocurrencies – many of which are blockchain-powered – may eventually be¬come a replacement for Hawala and other exist¬ing forms of international remittances. Cryptocur¬rencies can enable people to exchange currency online without any middleman – even banks.
International remittance is one of many compelling use cases for blockchain. The technology’s ability to digitise trust makes it a unique fit for many African countries, par¬ticularly those where processes and supply chains remain poorly designed and susceptible to corruption.
At Liquid Telecom, we’re excited about the potential for blockchain technology across the region. Along with other emerging tech¬nologies, we recognise this as another major new digital opportunity for businesses that utilises our network infrastructure and servic¬es. The rise of blockchain innovation will rely on the skills and talent of the region’s soft¬ware developers, who themselves rely on a high-speed internet connection and access to cloud-based tools.
Our fibre footprint – which will soon stretch all the way from Cape Town, South Africa, to Cairo, Egypt – is providing the foundations for digital innovation, while our partnership with Microsoft is enabling access to the cloud-based services and tools needed to create digital solutions for local problems.
Last year, with support from Microsoft, we set-up our Go Cloud initiative, which is helping to provide the region’s start-up communities with technical support, training and access to software. Using Azure Cloud, start-ups can cut development time and experiment easily with modular, preconfigured networks and infra¬structure, enabling them to iterate and validate blockchain scenarios quickly by using built-in connections to Azure.
We’re starting to see the first crop of African start-ups experimenting with blockchain and cryptocurrencies. Take Rwandan start-up Up¬lus, which is utilising blockchain to secure all transactions on its digital crowdfunding plat¬form. The technology also allows the platform to take contributions from any country and covert it to the local currency.
A lot of existing applications in Africa tend to fall short when it comes to user experience, and blockchain could certainly help address some of these issues – be it by creating a new trusted way to make payments or verify user identification. During this early stage of block¬chain experimentation and proof of concept, it will be crucial for start-ups and businesses to develop solutions that are relevant for Afri¬can communities. Without that, the technology won’t gather momentum.
Regulation can nurture or constrict the tech¬nology and will have a role to play in being a ‘make or break’ for blockchain. Living in Ken¬ya, I’m proud to see how proactive the gov¬ernment has been in seizing the blockchain opportunity. The creation by the president of a taskforce earlier this year dedicated to blockchain – led by the former permanent secretary for Ministry of Information and Com¬munications, Dr. Bitange Ndemo, shows how committed the country is to being a leader in emerging technologies.
As more African countries follow Kenya’s lead, blockchain should hopefully find itself reso¬nating more powerfully with local businesses and consumers.