As investment and resources pour into Africa to develop its economies, a big focus remains on creating comprehensive tech infrastructure, from which new industries can grow and develop. In this climate, blockchain technology has a unique opportunity to change the narrative and become an institutional part of the African economy. With a booming population that skews younger, and ismore tech literate than older populations, Africa has a favourable demographic situation that predisposes it to tech mainstream adoption. All of the ingredients exist right now for an African blockchain revolution, one that can bring hundreds of billions in economic development, and change the lives of billions.
The impending economic transformation in Africa has striking similarities to the transformation that occurred in Asian economies during the 1980s. Within a 20-year time frame, Korean cars and Japanese robotics transformed not just the regional economy, but the entire global manufacturing supply chain. During these years, many local countries underwent market reforms that allowed for businesses to develop. This coupled with a younger population primed for a change, Asian economies took off. With this existing blueprint model of growth, Africa can follow a similar model with blockchain, and become the centre of blockchain globally.
Changing political climate
The blockchain revolution will not just present economic growth opportunities, but it also has the potential to radically transform the social and political framework of African societies. In 2019, there are now over 30 growing democracies, and a near fever on the continent of ambition and hope. Just this past week, three authoritarian regimes have transitioned due to public demand for change. This environment is ripe for overturning legacy systems that have dominated thus far and establish newer systems which are more efficient.
Blockchain technologies also have the potential to help solve transparency issues with currency and governments, which many countries in Africa currently deal with. The institutional corruption, and general inefficiencies, of paper currency in Africa has led to mistrust in governments, which can be solved through utilising smart contracts and digital identity payments. Leapfrogging to a blockchain-based solution from an absent technology infrastructure can not only generate a new environment for creating wealth, but it can also change attitudes toward cooperation and community.
As trust increases in institutions, the threat of political breakdown and violence decreases. The continent is seeing a transformation on the global stage too. What is radically different in the geopolitical arena today in Africa has been the retreat of cold-war political actors like the United States and the Soviet Union, and the emergence of China. When US involvement occurred during the 20th century, it was usually through military and political support, and through direct aid. The constant proxy wars fought with the Soviet Union and their allies led to numerous regional conflicts that spawned civil war after civil war across Africa. This meddling interfered immensely with the destiny of Africa, as it forced neighbouring countries to fear and suspect each other. The model favoured by China is quite different, which takes a muted approach to international relations. Theirs is rooted in building infrastructure and planned economic development programs, which contrasts sharply with the type of involvement the US preferred.
And it’s working. The developments China has built on the continent are increasing trade and communication on the continent, and allowing for these less developed countries to increase their economic activity. The electrification projects, the highways, and water projects that China has helped finance in Africa are giving many countries the ability to unleash their economic potential. This enables the environment for creativity and business to flourish in.
The current situation
In 2018, Africa’s population surpassed 1.2 billion, making it the second most populated continent after Asia. In addition to these population levels, Africa also has six of the ten fastest growing economies in the world. At this population level, Africa has a GDP of $2 trillion. It’s estimated that given the changing global focus and the right economic opportunities in Africa, that by 2050, GDP will have risen to $29 trillion.
The population of Africa may be over 1.2 billion, but the number of mobile phone subscriptions hovers around 750 million phone subscribers, totaling 62 per cent of the population. While there is clearly a high volume of consumers using tech for daily life in Africa, not all mobile phone users are accessing the internet. In March 2019, the internet penetration across Africa is hovering just below 500 million people. This number includes both mobile phone users and traditional desktop users. This leaves many people who have yet to join the digital economy, meaning there is much room for growth.
Another reason Africa sits on a goldmine for blockchain adoption is because of the low penetration of mobile money markets. Banking across the continent suffers from a confidence crisis, due to high interest rates and unsecure systems. These consumers are the ones who would benefit most from blockchain-based payments solutions, as they could store value in a more transparent and secure manner.
Headlines might not show this, but there is a lot happening in Africa right now. But where Africa is now compared to where it was just 20 years ago is astounding. Political transformations are underway on the continent, and economic growth is booming. While conflicts still persist, from a well-rounded perspective, there is less war, and more peace in Africa than at any point in recent memory. Population growth is leading the economic transformation, and the young in Africa move the continent more quickly into the digital era. The conditions are just right in Africa for blockchain technology to be assimilated into all sectors of the economy and unleash the most reformative event in modern African history.
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