Breakthroughs in advanced technologies; the proliferation of blockchain across industries; and the pressing issues of sustainability and Intellectual Property (IP) are fast becoming the most valuable commodities of the information age. These topics and more, were front and center of discussion at the recent Global Startup Awards Africa Summit, held on 14 and15 June in Cape Town. Attended by African innovators, thought-leaders, and decision-makers, the event aimed to facilitate the most comprehensive network of key industry experts that will leapfrog/accelerate African innovation, in line with the UN’s Sustainability Development Goals (SDGs).
One of the most popular panel discussions held at the summit was the opportunities blockchain technology provides. Local experts unpacked the concept and illustrated its success on the African continent.
These experts included Ian Putter, Head of Blockchain Centre of Excellence at Standard Bank Group and Founder of the Blockchain Research Institute (BRI) Africa, Adam Romyn, Co-founder and Chief Technology Officer at Momint and Anda Ngcaba, Chief of Operations at Algorand-UCT Financial Innovation Hub.
AFRICAN INNOVATION STIFLED BY LACK OF UNDERSTANDING
Blockchain is helping transform business across the world by enabling two or more people, businesses, or computers that may or may not know each other to exchange something of value in a digital environment — whether it be monetary, informational, or exchange of digital assets — without any intermediaries.
According to a Deloitte UK report1, the principal challenge associated with blockchain is a lack of awareness of the technology, especially in sectors other than banking, and a widespread lack of understanding of how it works. This is hampering investment and the exploration of ideas – specifically in Africa’s startup landscape.
Putter set the scene when he opened the discussion with, “Anything that is worth following takes time. We know that blockchain is the new evolution of the internet and thus education and research are needed to be our first focus in an effort for Africa to gain an understanding of the technology, as many people have the knowledge, but not understanding.”
This viewpoint was unanimously agreed upon by the panelists.
Ngcaba commented that “Education is very important. The worst thing is to speak to someone about blockchain who knows nothing about it and dismisses everything you are saying while trying to tie blockchain with cryptocurrencies when the two exist separately yet coexist as well.”
Due to blockchain being a fairly complicated concept to grasp, Fast Company South Africa’s Editor-in-Chief and moderator of the panel discussion, Wesley Diphoko noted that real-life use cases are needed to showcase the impact of what blockchain technology can do for the African continent.
Use cases go far beyond the acclaimed decentralised finance (DeFi) we already know of to use cases involving tracking and tracing supply chain movements and organisational governance.
Blockchain presents several distinct opportunities for startups. In particular, reducing information inequality and transaction costs can help new and small businesses overcome long-standing challenges related to scaling, transparency, and lack of business history, facilitating access to the African Continental Free Trade Area agreement (AfCFTA).
SMEs and new firms can also benefit from greater efficiency and quality of products and services, enhanced supply chain management, and blockchain-driven innovation in business models.
One of the underlying challenges faced with the advances of technology is that of regulations. There’s been a strong argument for blockchain applications to work within existing regulatory structures, not outside of them; but this means that regulators in all industries must understand the technology and its impact on the businesses and consumers in their sector.
While working on a project tokenising financial instruments using blockchain technology, Standard Bank discovered that the policies and regulations around the use of blockchain when dealing with finances need to be rewritten. “This is something that people will have to accept because security will always be important”, says Putter.
South Africa and several other African countries are fortunate enough to have regulators who are engaging with multiple partners including banks and crypto asset service providers as they do not want to stifle innovation, but rather engage and create something that is regulated, traceable, and can bring trust to people.
Putter adds that “Anything we do, we need to work with the regulators. This engagement model where we work with the regulators across Africa is going to enable people to understand the technology and to understand the regulatory standpoint. So, what we are actively doing is engaging with regulators and implementing use cases with regulators to show them the transparency and the benefits that blockchain technology will bring.”
One of the primary reasons blockchain technology and the development of Web3.0 are so valuable is because they have a shared infrastructure. This means that you don’t need to build your own but can leverage what is already available.
Romyn, sheds more, saying “You can build a small smart contract with a small front end, and still have a very powerful business. In Web2.0, you would have to build an entire backend which hosted your payment rails and the rest of the complexity, whereas in Web3.0 it has been built for you.”
As with the infant stages of every new technology, there will be downfalls, but you can bring the best of the old and the best of the new worlds together to speed up the implementation of these applications.
Romyn added that the most exciting thing that non-fungible tokens (NFTs) have presented to the world is what smart contracts can really do, such as execute agreements without the need of intermediaries where all parties are immediately notified of the outcome or programming a piece of digital artwork that ensures the artist receives royalties every time the artwork is traded. The opportunities are vast, and we are only getting started.
Another exciting application highlighted by Ngcaba is the development of Decentralised Autonomous Organisations (DAOs); where the growing youth population in Africa can contribute to different DAOs building applications simultaneously as many DeFi protocols are run by DAOs that let people vote on how the protocols should be run, similarly to a public company.
The panellists all agreed that collaboration is key.
The Blockchain Research Institute (BRI) Africa has been created by Standard Bank to connect governments and ecosystem players while leveraging their footprint in Africa to bring people and businesses together, and to create an ecosystem where people understand the regulatory environments.
It remains that Africa consists of many fragmented communities and ecosystems which hinders the momentum of growth in many industries. So, while the masses are being educated, ecosystems need to join forces to share resources and drive Africa’s growth from within.
“Across Africa we need collaboration. The opportunity of blockchain, if you can recognise the potential, is to collaborate at all levels of society. This is not something that is just going to be implemented and run across big companies. The thing that you want is consensus, where many people can take ownership of their lives and ownership of things that belong to them, such as clean drinking water, dignity, and the ability to participate on platforms. What we are working on in Africa is to enable communities to connect.” concluded Putter.
As blockchain technology represents a shift away from the traditional ways of doing things, it places trust and authority in a decentralised network rather than in a powerful central institution. For many, the lack of control can be unsettling. But for many, an imaginative approach is needed to understand the opportunities and how businesses can eventually benefit.
