Standard Bank researchers believe that Africa's future will be digital and that the development of blockchain startups on the continent will lead to the global adoption of blockchain and the transformation of existing businesses.
African countries are becoming more open to new technologies like blockchain. That’s why Crypto Valley Venture Capital (CV VC), a Swiss organization, and Standard Bank, a South African financial services group, have sought to gather
all the available information about African blockchain projects launched in recent years.
Shortly before the publication of the report, CV VC announced the creation of a fund to support early-stage African blockchain startups. The organization plans to support 100 blockchain startups in South Africa, Nigeria, Kenya, and elsewhere on the continent. The organization has already supported a dozen teams, including a distributed land registration project and a blockchain-powered mobile payment system.
The African Blockchain Report demonstrates that Africa has suitable conditions
for blockchain applications, a huge space for tech unicorns to emerge, and millions of people who need technological services. Despite their openness to new technologies, most locals still lack access to basic financial tools.
In the first quarter of 2022 alone, the growth rate of blockchain startup funding exceeded the growth rate of venture capital investment in Africa as a whole and was 11 times higher than the previous year’s rate. Fintech startups offering simple and transparent payments received the most funding. Nigeria was the most successful country in Africa in terms of raising funds for crypto projects. As a reminder, FCE Group is developing a project to digitize agriculture in a Nigerian state.
Standard Bank researchers believe Africa
Investments in crypto projects in Africa are growing by leaps and bounds
Blockchain could change the lives of Africans in several areas
A financial and tracking structure supported by blockchain could significantly improve the present state of affairs in African countries. Tracking would help improve food security, for example, and financial tools would allow farmers to borrow to buy crops or lease land. This could be important in the context of, for example, government loans, which are hard for farmers to get because of the complex paperwork. It’s even harder for farmers to establish legal financial reporting. Blockchain can be used to expose abuse and corruption, making it easier to get credit for production and eliminating fraud in public finance.
In addition, blockchain tools would fix the value of goods and avoid a crisis due to the devaluation of local currencies by responding more quickly to changes in the fiscal, social, and legal environment. There are a number of sectors where blockchain can fill a technological gap. In addition to agriculture, energy, mining, health, human resources, education, personal identification, property registries, and logistics also require the traceability, certification, and transparency that blockchain can provide. In this regard, African countries can leapfrog the paper-based system that developed countries have supported for decades and move directly into a digital future.
The roadblocks to this promising future include a lack of communication between blockchain projects, a lack of standards, and legal hurdles. Only six countries in Africa legally allow the use of cryptocurrencies, 17 have uncertain cryptocurrency legislation, 27 have an implicit ban, and four have banned cryptocurrencies.
And the volume of funding is still insufficient. According to the African Blockchain Report, investments in blockchain projects on the continent represent less than 0.5% of global investment, although they increased by 1,668% year-on-year in the first quarter of this year. The main application of blockchain at the moment is to eliminate inefficient processes and bureaucratic red tape. Blockchain has already spawned a few unicorns in Africa, and these are just the first saplings in the garden that Africa could become in the near future thanks to new technologies. Increasing funding for startups will inevitably lead to standardization and maturation of the industry on the continent, as well as a revision and detailed elaboration of crypto legislation.
MediaArticlesAfrica's Digital Future: the Africa Blockchain Report 2021