An expert group meeting on blockchain technologies recently took place in Addis Ababa, Ethiopia, with participants having learnt more about the technology and possible benefits for the African continent.
Speaking at the end of meeting, Kasirim Nwuke, chief of the new technologies and innovation section at the UN Economic Commission for Africa (ECA), said that blockchain is an emerging technology with a breakthrough potential. According to Nwuke, harnessing this technology will require huge investments and careful evaluation by member States and firms is needed, not only to determine the suitability of the technology to help mitigate identified needs, but also to determine return on investment.
At the event, there was much focus on bitcoin, the cryptocurrency, which first rose to prominence in advanced industrial nations like the United States, and remains most widely used within such countries.
From Zimbabwe and South Africa, participants learnt that bitcoin has value even in the context of poor developing African countries. And this, in spite of serious still-to-be-overcome technical and systems security issues. From Kenya it was learnt that bitcoin and blockchain technology can play an important role in building social and solidarity finance, in promoting financial inclusion and bottom-of-the-pyramid business efforts.
Delegates also heard a number of narratives about why bitcoin may be empowering for people in less developed countries. Reasons for this include bitcoin as a means to facilitate low-cost remittances for those seeking to transfer small amounts of money internationally.
Bitcoin is a means for an otherwise excluded individual to have a decentralised global bank account, accessible simply by downloading an open source wallet from the internet, rather than having to set up with a formal financial institution. The technology that underpins bitcoin subsequently provides the basis for a richer set of financial services remittances and small-scale international trade. Bitcoin has the potential to be used as an intermediary currency between other, more dominant, currencies, and thus may be useful for remittances.
Nwuke acknowledged that the technological environment for blockchain adoption in Africa remains challenging. He said that implementing blockchain requires a change in the record systems of transacting parties to evolve a common data structure.
Control, security and privacy remain serious concerns, he said, adding that cybersecurity concerns have to be addressed before blockchain can be fully embraced. Participants also acknowledged that there are some areas of blockchain implementation that are highly contingent upon supporting legislation and or regulation. These include mobile bitcoin, property records, legal contracts, and dis-intermediation of financial institutions.
