BLOCKCHAIN DISRUPTORS FOCUSES ON AFRICA

From funding attrocities in Sierraleone and outbreak of civil war in Central Africa Republic, few of Africa’s valuable resources are seem to be closely tied to violence and war as the diamond. Unveiled in a flurry of publicity and goodwill in 2003, the Kimberley Process was designed to bring an end to the excesses of the bloodstained trade ,bringing key actors together to hammer out an international certification process for the rare stones. With NGOs and over 80 countries signed up, the high-profile venture appeared to offer a fresh start for the shamed industry, promising “to ensure that diamond purchases were not financing violence by rebel movements and their allies seeking to undermine legitimate governments.” Just 15 years later, that optimism has disappeared. In December, Canadian NGO Impact – previously nominated for a Nobel Peace Prize for its work on conflict diamonds – became the latest international observer to abandon the Kimberley Process, arguing that buyers had been given “false confidence” that their diamonds were conflict free. While observers appear to have lost all confidence that the industry will clean up its act, a revolutionary new technology could offer a path forward.

In January, De Beers, the multinational diamond producer substantially active in Southern Africa, announced that it was developing the industry’s first blockchain initiative spanning the diamond value chain, offering “a single, tamper-proof and permanent digital record for every diamond registered on the platform.” A pilot project is working towards the ultimate goal of “ensuring that all registered diamonds are conflict-free and natural” while boosting sector efficiencies. For the uninitiated, the idea of using blockchain – a digital technology best known as the basis for volatile cryptocurrencies like Bitcoin – to bolster confidence and security in the diamond market appears bizarre. Yet despite its association with wild speculation and the rollercoaster price movements of cryptocurrencies, the technology is increasingly talked up as a transparent solution to African governance and economic problems, from crooked elections to faulty land registers and inefficient transaction systems.

 Defined by Marco Iansiti and Karim Lakhani in the Harvard Business Review as “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way,” blockchain allows contracts to be embedded in code and “stored in transparent, shared databases, where they are protected from deletion, tampering, and revision.” For African governments and businesses struggling under the weight of outdated administration techniques, overbearing bureaucracies, and competing asset ownership claims, the attractions of blockchain are obvious. “The question is how could you boost the level of trust in developing countries, how do you arrest that cycle? One way is by having a blockchain type system which basically takes away the need to enforce trust because the system forces it upon you,” says Garrick Hileman, a blockchain expert who teaches at the University of Cambridge. “In our global blockchain benchmarking study we found over 130 unique use cases for the technology ranging across a wide variety of industrial sectors, healthcare, insurance, gaming, media, energy, transportation and communications.” Despite the excitement, few are under any illusions about the challenges of rolling out complex technology underpinned by citizen networks across frontier markets.

As with all transformative technologies in Africa, technical, political and regulatory hurdles remain steep. “Right now it’s very new and the potential is enormous. However you’re still dealing with a nascent technological and regulatory framework, and a very nascent asset class with cryptocurrencies,” says Farzam Ehsani, blockchain lead at Rand Merchant Bank and chairman of the South African Financial Blockchain Consortium. “Given this infancy we should expect to see a lot of changes and a lot of resistance. We live in a world where there are many vested interests. There will be people with a lot to gain and a lot to lose.”

BUILDING BLOCKS OF SUCCESS

While much African blockchain activity remains at a highly speculative stage – the talk of academic researchers, thinktanks and dreamers with little more than a laptop and an internet connection – early movers are already getting to grips with the new technology and carving out innovative enterprises. Based in Nairobi and with a presence in several other African countries, BitPesa bills itself as an “online payment platform that leverages Blockchain settlement to significantly lower the cost and increase the speed of business payments to, from and within sub-Saharan Africa

VOTING FOR CHANGE

With new ways of executing financial transactions chiping away due to the undue influence of incumbents, blockchain could actually add a future use that will be idealistic and tend to challenge tye existing political and economic order in Africa. In Kenya's 2017 elections, a flawed electronic voting system and the disputed role of the country’s Independent Electoral and Boundaries Commission led to a dramatic Supreme Court annulment of the vote and the order of a rerun. Under a blockchain electoral voting system, voters could theoretically check that their ballot had been correctly cast and registered with the IEBC. Could such open-sourced, peer-reviewed technology threaten the long-established pattern of fraudulent elections on the continent? “Imagine a world where you the voter with a unique alphanumeric ID could actually go check a public electoral ledger to see your vote in the column of the candidate you voted for,” says Hileman, “The authentic elections that could come out of such a process could have a massive knock-on effect. How countries would feel about having that decentralised system is a fair question but the infrastructure already exists to run such an election. The challenge is obviously that corrupt regimes in power aren’t necessarily going to want to embrace these technologies.”