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Blockchain startups building the infrastructure for Africa’s development - Disrupt Africa (
Though blockchain technology has usually been thought of has simply providing the rails for bitcoin and other cryptocurrencies, a host of startups are using it in more subtle, but extremely powerful, ways.From Kenya’s BitPesa, now AZA, to Ghana’s Bit Sika, the initial wave of blockchain startups in Africa built solutions on the premise that it was the remittances space where blockchain and crypto could best be applied.

That is not necessarily wrong, and many such companies continue to launch, grow and raise funding, and bitcoin exchanges are springing up across the continent, but the application of blockchain in Africa is slowly maturing. Various startups are using it as a means of promoting transparency and increasing trust in various spaces.

The potential power of blockchain in AfricaSo far, we’ve seen African blockchain solutions used within elections, to make trade finance transactions, and to track the origins of cobalt. Startups across the continent are developing even more innovative and important use cases, and blockchain’s impact in various spaces could yet be immense.

George Maina is co-founder of Kenyan agri-tech startup Shamba Records, which has built a blockchain-based platform that uses artificial intelligence (AI) and big data to collect farmers’ harvest records, process payments and issue credit. He says blockchain is so important in Africa because the continent is still trying to emerge from the colonial era as a more independent and developed continent.

“This means we’re still playing catch up to the west and the east. When we embrace blockchain, it can leapfrog us ahead, since we shall have created strong systems that ensure the set policies are adhered to,” Maina said. “It will help us fight corruption by ensuring transparency and traceability of national resources.

In addition, blockchain will assist in solving the challenges of counterfeit or substandard goods that affect our health, production capacity and in the long run our economies.

For me blockchain is an enabler to a better Africa.”Yele Bademosi, co-founder of early-stage VC firm Microtraction and a director at the blockchain-focused Binance Labs, agrees with this, saying blockchain has the potential to drive transformative change on the continent, especially in financial services and capital markets.

“Digitisation without decentralisation, in the wrong hands, can lead to an imbalance and abuse of power, especially within nation states where there’s a lack of good governance and institutions are weak,” he said. “Blockchain creates the right type of counterbalance and empowers individuals to take control of their economic activities without the need of a middle man or centralised authority.

”The solutionsSo what solutions are being developed? There are a host of them across the continent. In Kenya, there is Shamba Records, as well as RideSafe, which is using smart contracts to ensure quality service and high insurance penetration in the moto-taxi industry.

Another Nairobi-based company, the recently-funded UTU Technologies, is building a trust infrastructure for the digital economy on the blockchain.
In Nigeria, HouseAfrica has developed Africa’s first blockchain-based land and property registry, reducing the time it takes banks, lawyers and other stakeholders to query and register land titles.

Agri-tech startup Hello Tractor, which arranges leasing of farming equipment, uses the technology to reduce transaction costs between tractor owners and farmers. 
Hello Tractor’s founder Jehiel Oliver says there is an extremely wide scope for application of blockchain, which he says is bringing about a “revolution”.

“From finance to fashion and even to agriculture, the innovation has proven to be versatile, bringing enhanced performance to these industries through increased transparency, efficiency, security and easier traceability,” he said.

“Blockchain really is the next wave of the technology revolution, holding the potential to solve some major real-world problems and spur the growth of new businesses and business models.

”It could, in fact, be as transformational as the arrival of the internet itself.“Just like the internet came and shaped the world, so also would blockchain technology significantly change the world and the way people carry out business in the future,” said Oliver.

Governments and startups support ecosystemsWhere is the help, then, for the startups and entrepreneurs building these transformational solutions on the blockchain. Assistance from policymakers has been limited thus far, with Kenya’s blockchain taskforce probably the most enlightened and tangible development thus far.

RideSafe founder Asiimwe Benson Mugisha says most African governments have not yet fully understood the potential that blockchain has. “Many still see it as a threat due to its ability to move money without government control,” he said.

Jason Eisen, chief executive officer (CEO) of UTU, said there had been movements in the right direction from some governments. 

“Governments are looking at key touch points between citizens and the government from IDs, land titling, and elections, to service delivery, securities issuances, quality standards enforcement, and IP protection as areas to harness the radical transparency, smart contracting, and data management capabilities of distributed ledger technologies,” he said.

There are international models for African governments to follow here. China is creating new legislation to deal with blockchain and how it enables new businesses, and has rolled out a Central Bank Digital Currency.

Singapore is following a similar approach. While policymakers delay, the private sector is stepping in to assist entrepreneurs, with the launch of blockchain-focused incubators like Kenya’s BitHub and South Africa’s Blockstarters.
Kreaan Singh, the co-founder of Blockstarters, says in spite of blockchain’s huge potential power, hubs like his were necessary as building and implementing solutions using the tech can be a challenge.

“We have to realise that implementation will be extremely difficult, as those in power will fight tooth and nail to prevent the introduction of transparency in a system from which they personally benefit,” he said. 

“Money is arguably the only proven use case of blockchains so far. We know for sure that blockchains are capable of timestamping events or provenance of digital assets, so we are likely to see them being used for applications in law and digital identity.

This will, however, rely on a user experience that is seamless for the average person. We may also start to see African businesses becoming much more prominent in the global economy, given the accessibility and transparent nature of smart contract applications.”And what of investors, who have blown and cold at the space so far?

Llew Claasen, co-founder of VC firm Newtown Partners, which has invested in a number of blockchain and crypto startups, says in many cases the technology is still relatively immature and difficult to deploy at scale.

Yet it is getting better quickly.  
“I think that the age of decentralised blockchain-based co-operatives as the evolution of two-sided marketplace business models are more than 10 years away, but there are strong incentives to invest early because these crypto-economic networks will tend to create strong network effects and have strong first-mover advantages that will be difficult to overcome once they achieve scale,” he said.

When and how they achieve scale is the big question for now, but what is not in doubt is the huge potential for blockchain in Africa and the serious amounts of innovation we are seeing from companies in the sector.