Beyond all the hype, blockchain technology has multiple use cases that could bring positive changes to various sectors on the African continent. Some critics dismiss blockchain technology or reduce its application to only cryptocurrencies. However, the application of blockchain tech has evolved over the years with more attempts to create real-world impacts. In this article, we highlight some of the most popular blockchain use cases in Africa.
Africa is a major market that could be bigger with an easier payment system for intra-African trade and trade with global partners. Despite multiple attempts to create stronger financial ties, it is still relatively difficult to use move money from one African country to the other using local financial systems. What’s more, despite being a major part of African states’ gross domestic product (GDP), remittances still need an upgrade. Most traditional options take too long and are more expensive to use.
Cryptocurrencies are revolutionizing the payment systems across the continent. Cryptocurrency is offering a solution to the problem of financial exclusion by establishing a financial ecosystem that is accessible to everyone. With a device and internet connection, anyone can create a crypto wallet to send and receive money. Furthermore, using cryptocurrencies is a more cost-effective means of remittance.
Bitcoin (BTC) and USDT, along with other stablecoins, have gained popularity as a payment method in Africa. Being the first and most well-known cryptocurrency, Bitcoin has several fiat-on ramps that enable rapid conversion from fiat currency to BTC. Stablecoins, on the other hand, are popular because they maintain their value and are not affected by the volatility of cryptocurrencies.
Beyond cryptocurrencies, blockchain technology has led to the development of central bank digital currencies (CBDCs). In Africa, CBDCs are being developed and tested in several countries, including Ghana, Nigeria, and Tanzania. The Central Bank of Nigeria has already rolled out the eNaira and has given it the capability to be used for global trade.
Decentralized Finance (DeFi)
Beyond payments, the African financial system has other problems, like the availability of loans at good rates and good savings options. Beyond this, local currencies are constantly falling in value against their global counterparts, making it unattractive to build wealth.
The decentralized finance (DeFi) ecosystem is another important aspect of blockchain technology in the real world. DeFi gives users access to global financial products and activities in a decentralized manner – not managed by a state or central entity.
Lending and borrowing are big DeFi use cases in Africa. Traditional firms typically have several loan requirements and offer lower returns to lenders. African DeFi platforms like Finna Protocol are changing the way we lend money and how it is borrowed. This is a major tool for financial inclusion and growth on the African continent as more people now have access to competitive lending and borrowing platforms that could fill the capital gap on the continent.
Savings, insurance, and derivative markets have all been upgraded thanks to the growth of the DeFi sector.
Tokenization of real-world assets (RWA)
Another major use case of blockchain technology is the tokenization of real-world assets (RWA). This involves converting real-world assets into digital assets stored on the blockchain. Real-world assets that can be digitized include real estate, commodities, and more. This increases liquidity for the assets, increases transparency, and makes them more accessible. Multiple people can own high-value assets through fractional ownership backed by blockchain technology.
Tokenization is a great use case for the African continent, which is rich in resources, with some jurisdictions known for land disputes and cases. Multiple projects are looking at ways to tokenize various assets in Africa. For instance, Binkabitokenizes farm produce to make them easily tradable. The Sango project in the Central African Republic recently announced that it will expand the project’s scope to tokenize natural resources and lands in the country.
Elections across the continent have been a hotbed for conflicts due to allegations of vote rigging and lack of transparency by stakeholders involved in organizing elections. These conflicts have blown up into prolonged disputes or have provided the grounds for attempts to destabilize governance in various countries. One of the solutions tabled to solve some of the issues related to elections in Africa is the use of blockchain technology.
The idea was tested in Sierra Leone in 2018. Leonardo Gammar of Agora developed an election system that recorded votes on the blockchain. The platform was used to cut costs and reduce discrepancies in the voting process.
Digitization of Art and Culture
Africa has a rich culture with multiple ethnic groups with various lifestyles expressed through arts. Thanks to nonfungible tokens (NFTs), the African art scene is experiencing a renaissance. These digital tokens are being utilized by artists from various African countries, including Nigeria, Ethiopia, Ghana, South Africa, and Kenya, to showcase their culture, widen their audience, and gain global recognition. By embracing NFTs, African artists can blend their rich heritage, vibrant colors, and diverse narratives with cutting-edge technology. This allows them to bring their art into the digital realm uniquely and innovatively.
Rich Allela, an award-winning photographer and filmmaker based in Kenya, was among the first African artists to launchan NFT collection. Other artists, such as Osinachi, are also making a name for themselves in the NFT scene.
A few marketplaces have emerged in Africa, with two notable ones being WeAreMaster and AFEN. AFEN, for instance, raised $1 million in a token sale in 2021, and it has collaborated with several African artists to showcase their digital art on its NFT (nonfungible token) marketplace.
As the technology landscape in Africa grows, blockchain technology will have more use cases. A good place to discover what everyone else is building is the Africa Tech Summit 2024 in Nairobi, Kenya.