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Blockchain is a type of distributed ledger for maintaining a permanent and tamper-proof record of transactional data. A Blockchain works as a decentralized database managed by computers belonging to a peer-to-peer (P2P) network. Industry experts share with Intelligent CIO Africa how companies are adopting Blockchain technology to drive finance and commerce across the continent.
In the past, Blockchains were commonly associated with digital currencies like Bitcoin or alternate versions of Bitcoin like Bitcoin Cash. Now, Blockchain applications are being explored in many industries as a safe and cost-effective way to create and manage a distributed database and maintain records for digital transactions of all kinds.
Mervyn George, Innovation Strategy Lead, SAP Africa, said Blockchain’s shared, distributed and decentralized capabilities are finding their way into the mainstream with great potential.
George said ambitious entrepreneurs and innovators are investing long hours and mind-boggling sums of money to rework everything from automating finance and restoring public trust in health care to feeding more than 10 billion people by 2050 and providing disaster relief to the inhabitants of remote villages.
“Blockchain is a distributed ledger, which involves recording transactions in blocks that are linked and encrypted and then verified and stored on a network, making the ledger resistant to change,” he said. “The interesting part is that this combination of processing, connectivity and encryption capabilities has applications not only in the financial world, but in any transactional environment, including a decentralized personal data management system that grants users ownership and control of their own. data”.
He stressed that this is important because identification provides a basis for human rights. “About 1.1 billion people around the world cannot officially prove their identity and we simply don’t know how many of the more than 200 million migrants, 21.3 million refugees or 10 million stateless people in the world have some form of identification. . Many of these unidentified people are African, ”he said.
Hamilton Ratshefola, Country General Manager, IBM, said Blockchain technology is changing the normal course of businesses in every industry. “There are many interesting examples – from food safety, to smart contracts, to healthcare, to education, to cross-border payments, to luxury goods – where we have seen this technology work and make industries smarter, more efficient. resulting in confidence building, “he said.
Ratshefola pointed out that across the continent the adoption of Blockchain is on the rise and the industry is seeing it both from large companies and, increasingly, from individual entrepreneurs.
He said many business leaders are attracted to Blockchain, due to the benefits of the business model. “CEOs are recognizing that Blockchain is beneficial for their companies and more than half of midsize companies and are considering implementing Blockchain solutions,” he said.
Bernard Bussy, Andile’s Software Engineer, said Blockchain is an enabling technology that leads to other innovations that create the use cases that companies want. “At Andile we currently use Blockchain technologies to build larger platforms. Platform users don’t necessarily see Blockchain in action – it operates behind the scenes while reaping the benefits. There are numerous start-ups and businesses globally and in South Africa working on Blockchain, “he said.
Busy said the best known is probably the ongoing Blockchain development at major banks like Singapore Central Bank and JP Morgan. “As for his status in Africa, it is not easy to answer. But if we use cryptocurrencies, the most popular current use case for Blockchain, most African countries have not passed legislation to regulate and lead the sector. South Africa, Senegal, Sierra Leone and Tunisia are the few pioneers in this sense, ”he noted. “The South African Reserve Bank has also been very progressive when it comes to Blockchain, cryptocurrency conversations and has launched a number of initiatives to that effect.”
According to George, smart contracts residing in the Blockchain ledger are one way that trust in transactions with businesses in Africa can be restored. “For decades, foreign investment in Africa has been jeopardized by corruption, fraud and misappropriation of funds. The advent of the Blockchain – and the adoption of the technology across Africa – will have a significant impact in sustaining Africa’s entrepreneurial spirit by providing transparency and accountability for all financial and service transactions, “he said.
According to Ratshefola, the financial services and telecommunications sectors in Africa were the first to adopt the technology, especially in the areas of cross-border traceability and insurance. “Globally we have more than 500 client engagements globally in Blockchain, spanning industries such as education, food security, identity, insurance, luxury goods, supply chain management and trade finance. “, he has declared. “Dozens of live Blockchain networks are currently running on the IBM Blockchain platform, including IBM Food Trust and TradeLens to name just a couple.”
He said that across the African continent the industry is seeing how Blockchain increases economic efficiency, security, transparency and simplicity, leading to less administration, duplication and friction in Africa. “And the applications are endless, since virtually anything of value can be tracked and traded without a central point of control, making it a big win for companies across the continent as it entices everyone to participate and benefits everyone,” he said.
Ratshefola said in Agriculture, IBM Research and agtech start-up Hello Tractor have developed an AI and Blockchain-based platform for African farmers. This cloud-based service aims to support Hello Tractor’s business of connecting smallholder farmers to equipment and data analytics for better crop production.
“In Kenya, Twiga Foods conducted a Blockchain pilot project to better process and expand the reach of microloans to small fruit and vegetable kiosk owners. Credit scores serve as a proxy for trust and loans are issued via smartphones, making them significantly more accessible, safer and more efficient than before, “he said. “In Mining, Ford Motor Company, Huayou Cobalt, LG Chem and RCS Global have joined forces with IBM to ensure responsible sourcing of industrially mined cobalt, using Blockchain technology to track and validate ethically sourced minerals. CHO, a Tunisian olive oil producer, uses IBM Blockchain to create a provenance record that tracks their Terra Delyssa extra virgin olive oil from dealer to tree. “
“What we need to remember when implementing Blockchain is that it is still a relatively new technology and fundamentally described as a transaction ledger that cannot be damaged. However, it should not replace the other security checks and balances that have yet to be done in a process framework, ”added George.
He explained that Blockchain should be implemented in a way that is in line with a company’s security policies. “Likewise, smart contracts should also not be implemented in isolation. There must be facilitation and collaboration between programmers and the legal side of a company to ensure that contracts comply with the legislation of the territories in which they will be applied, “he said.
IBM’s Ratshefola explained that the promise of Blockchain is that it enables new means for the exchange of business value in a decentralized way, from facilitating the transfer of resources, to rewiring data retention processes, to supporting data sharing and prevention. of data tampering. “But as with all new technologies, it is important for companies to first be clear about the desired outcomes and determine the Blockchain approach from that,” he said.
“The type of Blockchain approach that is optimal for a business depends on the industry and business goals. Businesses must decide on the right mix that will work for the problem they are trying to solve and adopt the right type of Blockchain (public or private).”
According to Bussy, the most common mistake with all technologies, not just Blockchain, is to start without a goal in mind. He added that technology for the sake of doing it quickly is not going anywhere and this is doubly true of Blockchain.
“It is also a complex technology that requires a variety of skill sets, so there are risks and costs associated with developing Blockchain. Typical places where you meet Blockchain are currently part of a new product, such as the fintech Mesh platform,” he said. affirmed. “Commerce, as part of an industry-wide effort, such as diamond tracking, or as part of long-term innovations emerging from what banks and retailers like Walmarts are doing.”
Looking ahead, George said current factors that will drive Blockchain implementation across the continent include the growth and development of the technical skill pool, along with the expansion of infrastructure to support increased bandwidth availability. and lower data costs.
“These elements will be vital in creating the essential processing nodes required by Blockchain networks to make investment in technology feasible. The number of use cases is also growing steadily, and as they demonstrate the technological benefits and ROI, we can expect to find a broader implementation, “he said.
In IBM Ratshefola said that Blockchain is doing for new business models what the Web has done for e-commerce and product sharing services. “Wherever you have complex business problems, from tracking shipping details to streamlining payments, Blockchain is a good solution,” he said. “It has the ability to completely transform the way businesses operate. Blockchain is an independent and neutral technology that is here and already being used in many ways, far beyond empowering new digital currencies – and effectively helping businesses implement smarter processes and function more effectively by changing the way they view and conduct. reliable transactions “.
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