How blockchain adoption can accelerate financial inclusion in Africa

Blockchain technology has been a buzzword in the financial industry for several years, with promises of revolutionizing traditional payment systems and enhancing financial inclusion. In Africa, where 63 per cent of the population remains unbanked, the potential for blockchain-based solutions to accelerate financial inclusion is enormous. Benjamin Arunda, the Chairman of African Blockchain Council, sheds light on the current state of blockchain adoption in Africa and its potential impact on governance, retail, and regulatory frameworks. One of the key areas where blockchain technology could make a significant impact is governance. Arunda highlights that while there have been efforts to explore the use of blockchain in governance, progress has been slow due to political will and resistance from government bodies. In late 2019, the government of Kenya formed a task force to explore the potential applications of blockchain in improving governance, including areas such as elections and the distribution of resources like land title deeds and affordable housing. The transparency and trust issues in these processes could be addressed by leveraging blockchain technology to ensure accountability and fairness. In the retail sector, blockchain has the potential to streamline transactions and reduce costs by eliminating intermediaries. Arunda explains that decentralized nature of blockchain can remove unnecessary middlemen in trade, making transactions more efficient and cost-effective. This could have a transformative impact on e-commerce and trade in Africa by simplifying processes and reducing barriers for both consumers and providers. However, the growing interest in blockchain technology has prompted governments in Africa to introduce regulatory frameworks to oversee cryptocurrency companies. South Africa and Kenya are among the countries that have recently taken steps to license blockchain technology companies and impose digital asset taxes. Arunda acknowledges the need for regulation in the industry to ensure accountability and compliance but emphasizes the importance of maintaining a balance between regulation and innovation. While regulation may provide a sense of security and legitimacy to the industry, the anonymity of cryptocurrencies could still enable unlicensed transactions to continue. Regarding the longevity of blockchain enterprises, Arunda points out the lack of standards and clear policies as a key challenge. Many blockchain companies operate without established guidelines, leading to inconsistencies and vulnerabilities in the industry. To ensure the sustainability of blockchain enterprises in Africa, Arunda calls for the development of robust standards and collaborative efforts between stakeholders and governments to establish a regulatory framework that fosters innovation while upholding integrity and transparency. In conclusion, the adoption of blockchain technology in Africa holds immense potential to drive financial inclusion, enhance governance, and revolutionize traditional industries. As African countries navigate the evolving landscape of blockchain adoption, finding the right balance between innovation and regulation will be crucial to unlocking the full benefits of this transformative technology.