Blockchain technology can hold the key to building an inclusive global digital economy. Blockchain has the ability to significantly improve the financial services in the developing world and eliminate inefficiencies and high transaction costs. At the same time, blockchain can play a critical role helping to restore public faith in governments. By enabling blockchain adoption in Africa we can lay the foundations for a prosperous and truly inclusive economy.
Nowadays there are still 2.5 billion of people that lack access to formal financial services. The opportunities for entrepreneurs in developing markets to scale their business nationally and internationally are therefore limited. Moreover, moving funds in Africa can be very costly, slow and complicated. Yet, blockchain technology and virtual currencies such as Bitcoin can enable almost instantaneous access to financial services and can become a strong alternative to traditional banking institutions.
However, there are still some challenges that need to be overcome to achieve mainstream blockchain adoption in Africa.
Blockchain applications offer solutions that require significant changes or even complete replacement of existing systems. In order to make this change, not only financial institutions but the entire ecosystem needs to get prepared for the transition. Doing business in developing countries is a cumbersome process and involves multiple stakeholders. Imagine a case where you are an entrepreneur buying coffee beans from a small coffee farmer in Africa to export them to Europe. The stakeholders involved in your business would be countless: from coffee farmer, NGOs, suppliers, tax collectors, government, regulators, certification authorities, coffee farmer associations, licensers, loan providers, wholesalers to end customers. How do we make all these stakeholders to use and trust blockchain technology? This question still needs to be answered.
The widespread blockchain adoption in Africa will also be determined by formal regulations. Governments will need to enforce regulations to enable entrepreneurs to operate on a global scale. An agreement, which might take quite some time, on how blockchain transactions are designed, verified, implemented and enforced will be required.
There is no doubt about that financial transactions on blockchain are more efficient and much more cost effective than traditional bank transactions. However, today you must have 2 things to use Bitcoin or any other blockchain currency: a computer or smartphone and a good internet connection. In Africa, only 31,2% of population has access to internet connection. The numbers of active internet users are growing in the continent, but the framework for internet access will have to be established.
Blockchain already exists in the niche markets in Africa. However, a few hurdles will need to be cleared before the global blockchain adoption can be unfold and bring about inclusive prosperity.
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