Looking at the burgeoning blockchain scene through the lens of ecosystem players on the African continent.
Copyright 2019 IDG Communications, Inc.
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Blockchain burst into public consciousness a decade ago as the transaction ledger for bitcoin, and has since evolved to become the foundation for a range of business-model disrupting applications. AfricaCom in Cape Town earlier this month served as a showcase for how enterprises and public administrations on the continent have deployed blockchain in variety of areas including finance, trade, and secure records storage and management.
Blockchain distributed ledger technology comprises a growing list of records, timestamped and linked using cryptography, allowing value to be transferred securely and about as speedily as the internet transfers data. There are now a range of private and public blockchain platforms used to securely store data and host applications including smart contracts — automatically executing transaction applications.
During AfricaCom, news broke that the Eastern and Southern African Trade and Development Bank (TDB) had closed its first live, trade-finance transaction, using smart contracts in a US$22 million sugar deal.
“With this transaction, we have the potential to revolutionise how we finance cross-border trade at the bank,” said Michael Awori, chief operating officer at TDB, the financial arm of the Common Market for Eastern and Southern Africa (COMESA). “Not only will it impact our bottom line, but it will enable us to reduce processing time, be more responsive to our clients, and de-risk transactions,” he added.
Smart contracts ease trade
In the sugar deal, a letter of credit confirmation and a discounting transaction were executed digitally in a private blockchain, reducing the duration for deal completion by four days when compared to a conventional paper-based process. The process also minimised all parties’ risks by eradicating potential errors and inconsistencies in the exchange or amending of documents, Awori said.
“We have plans to carry out ten billion dollars worth of African trade transactions with the Asia Pacific region, including Japan, by June 2020,” said Samir Neji, CEO of dltledgers, an enterprise blockchain company that was involved in the deal.
Popular interest in blockchain in Africa tends to focus on financial-related applications including crytocurreinces like bitcoin. Google Trends shows that Nigeria, South Africa and Ghana are among the top countries in the world for bitcoin-related search terms. The interest is understandable, given the large African “unbanked” population. According to Gartner’s Top Strategic Predictions for 2020 and Beyond, 50% of people with a smartphone but without a bank account will use a mobile-accessible cryptocurrency account by 2025.
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