Blockchain Technology as a tool for Africa’s Socio-economic advancement
“The skin has become inadequate in interfacing with reality. Technology has become the body’s new membrane of existence” (Nam June Paik). Technology has brought a significant influence and impact on the world since its presence in the 17th century. It has brought tremendous change into the world. Africa is no exception. But how well has technology impacted Africa? Over the years, Africa has underutilized technology, making its impact less seen. Although technology continues to advance swiftly in western societies, developing nations, especially those in Africa, are falling behind, which widens the divide between the world’s haves and have-not.
Findings reveal that globalization is more than just a way of accessing new markets; it also increases productivity through technological transfers. Furthermore, improved macroeconomic policies, sustained reform, human capital, more robust governance, and a better investment climate are required to accelerate technological catch-up and put African countries on long-term growth. Africans are falling short when it comes to these aspects. Technology cannot speed up when these factors are still not implemented.
Technological advancement is triggered by education and literacy. To operate a system, you need to know the system. Although literacy rates in Africa have risen significantly in recent years, empirical evidence suggests that 40 percent of teenagers above 15 years and a half (50%) of the population of women above 25 years are illiterate.
The continent’s education and knowledge levels have been further handicapped by the current unfavorable macroeconomic environment, which has significantly impacted education and expertise levels over the previous two decades.
Africans lagging in technology is also a result of outdated government policies. Governments fuel technological innovation, industrial progress, and higher living standards, but in Africa, governments aren’t paying much attention to any of this.
Governments have enacted policies that are detrimental to progress. African governments have invested far less than the rest of the world in the investment sector. African government’s over the years have invested little in technological research and innovations.
Several studies suggested that governments spend about 2.6 percent of annual GPD on technological education, research, and innovations as compared to other developed countries like the USA and UK which spend 9.3 percent and 7.7 percent respectively. The reason Africa is lagging behind the rest of the world.
Africa is faced with poor infrastructure, which has been one of the causes of Africa’s lagging in technology. The connectivity is significantly less in Africa as compared to the other world. Accessibility to electricity is one dividing factor in Africa. In most African countries, just slightly more than half of the homes have access to electricity.
In contrast, in certain countries, such as Tanzania, Uganda, Rwanda, and Ethiopia, power is available to less than 20% of households. This all makes a significant impact, and because of the lack of power, the African people cannot experience the most up-to-date technologies available to the rest of the globe.
Amid all these factors which make Ghana lag behind, Africans are rising and causing a change in the technological aspect of Ghana by introducing blockchain technology into the system. Blockchain technology, which began as a mechanism to support Bitcoins (the most popular and contentious cryptocurrency in the world), has quickly established itself as a disruptive technology capable of revolutionizing existing businesses and creating new ones to boost the economy of Africa.
Blockchain technology describes a new approach to data management. It refers to a type of distributed ledger architecture in which transactions are stored in a list of blocks that are cryptographically linked. Blockchains are intended to be physically distributed. The records on a blockchain are spread over many computers that form a network rather than being on a single server, such as that of a bank or government agency.
This means that original copies of the same data are kept in different places. Even if a portion of the network fails, the ledger remains available to all other network participants. Unless all nodes in the network fail, the ledger’s integrity, availability, and operability are preserved. This is a high level of resilience. Consider the possibility of verification of educational claims remaining easily accessible even if a university’s server is destroyed in a natural disaster.
To create the trust in the ledger’s status that blockchain is generally commended for, the system may rely on incentivization methods that encourage network participants to act favorably. Participants may be compensated (economically) for positively contributing to the system (i.e., by processing and validating transactions) as part of a blockchain’s consensus mechanism. The Bitcoin blockchain is an example of this reward system, in which successful validation of new transactions is rewarded with bitcoin pay-outs.
Blockchains have some limitations as well. Added individual new blocks to the chain, expands the size limitations of the chain creating lags that affect the speed of processing transactions. Another challenge has also been the redundancy of previously linked blocks on the chain.
Africa can benefit from the deployment of blockchain technology to facilitate cross-border transactions, which will help lower the high cost of remittance payments, enable access to financial services, secure privacy, create jobs, improve the business environment, and stimulate healthy competition. To name a few benefits of blockchain technology, cross-border payments will rely less on correspondent networks, data will be standardized, and credit risks will be better managed.
Blockchain technology can eliminate friction and disagreement, as well as the costs associated with property registration. Smartphones can be used to perform all or most of the processing. Given this, the fact that several initiatives have been launched is positive. Bitland, a real-estate registration company based in the United States, announced the launch of a blockchain-based land registry system in Ghana, where 78 percent of the land is unregistered.
In Ghanaian courts, there is a significant backlog of land-dispute cases. Bitland securely records transactions, including GPS positions, written descriptions, and satellite pictures. This and comparable systems are expected to protect property rights while reducing corruption. As of mid-2016, 24 Ghanaian communities had shown interest in the project. Bitland intends to expand into Nigeria in conjunction with the Nigerian government.
Developing countries in Africa tend to enhance socio-economic growth and development by adopting blockchain technology to curb fraud and corruption. Financial transactions can also be processed more quickly with much less time ensuring transparency and efficiency. Read More…
David Doe Fiergbor is a Certified Business Analyst, Chartered Financial and Investment Analyst and a Chartered Project Management Professional with keen research interests in insurance, financial inclusion, business finance, health, and safety systems.
Christian Narh Fiergbor is a freshman studying Business Administration at Ashesi University, a Project Manager, and an upcoming Data Analyst with a strong passion for accounting, finance, and economics aspiring to become a Chartered Accountant.