Impressive use-cases of blockchain technology have come to the fore after the conclusion of the 2020 Blockchain Africa Conference in South Africa.
The event went ahead as planned in early March despite the global coronavirus pandemic that has made headlines around the world. The viral outbreak led to keynote speaker Charles Hoskinson, founder of Cardano, cancelling his trip to South Africa due to travel restrictions.
The event also suffered a drop-off in attendance due to fears around the virus, but there were still over 230 delegates present on day one while day two numbers dropped slightly.
Renowned cryptocurrency investor and analyst Tone Vays managed to fulfil his commitment to the conference with an insightful presentation on the value proposition of Bitcoin. His talk was praised by event organizers for bringing back a focus on cryptocurrencies, which has become a neglected talking point at the African event in recent years.
The majority of speakers at the conference weighed in on a wide variety of subjects within the blockchain ecosystem with specific focuses on trade finance, self-sovereign identity and regulation.
Binance launching rand support, donates $1million to blockchain dev
One of the announcements made at the conference was Binance’s launch of a fiat gateway for South African users to make rand (ZAR) deposits on the global platform.
Binance CEO Changpeng Zhao made the announcement in a pre-recorded message to the conference. The support would include initial trading pairs with Bitcoin (BTC), Binance Coin (BNB), Ether (ETH), Tether (USDT) and Binance USD (BUSD).
The company currently has trading support in 35 African countries. Zhao believes the continent has massive potential for cryptocurrency adoption:
“Africa illustrates one of the largest demands and instrumental use cases for cryptocurrency, notably for financial access. According to the World Bank, approximately 66% of Sub-Saharan Africans are listed as unbanked. So instead of trying to bank the unbanked, let’s try and Bitcoin the un-Bitcoined.”
Trading support for the South African rand is expected to go live within the next few weeks. In addition to that announcement, the Binance Charity Foundation has also put forward a $1 million donation to support the growth and development of blockchain education in South Africa.
The organization will be looking to partner with local companies in order to deliver effective educational programs to drive the development of the sector in South Africa.
Binance South Africa country manager Tanya Knowles told Cointelegraph that the Foundation check that organizations that receive funding are making a tangible difference in the blockchain ecosystem:
“We’ve got one or two NGOs that we are already having discussions with and the criteria is really the traceability of those contributions to beneficiaries to reach end users. We’re also trying to make sure that there is an educational element in that.”
Blockchain can drive trade finance in Africa
Trade finance and supply chains were another major talking point at the conference that already have working use-cases being powered by blockchain technology.
Tech industry heavyweight Microsoft was represented at the event by its South African Data and AI specialist Thavash Govender. The company already has it’s own blockchain-enabled enterprise solution Azure and is working hand-in-hand with Ethereum among other projects.
Govender believes that blockchain technology is specifically suitable for overhauling trade finance by improving traceability, transparency, auditability, efficiency and security of a wide variety of working parts, data and real life goods.
At the same time, Govender said that blockchain technology should only be considered in certain scenarios. This would include instances where projects need to process trust boundaries where multiple parties are using the same data. This prevents intermediaries from controlling or tampering with the data and will address tedious manual verification processes.
Nevertheless, Govender believes that Africa could become a leading force in integrating blockchain technology to improve trade finance and supply chains. He referenced the construction of cellphone towers in East Africa that allowed the development of the MPesa mobile payments systems in Kenya:
“Africa became a leader in mobile payments and it's still something that the rest of the world struggles with. Will we see the same necessity in fostering innovation by blockchain? Absolutely.”
Carlos Teixeira, global industry principal of Finastra, began his address at the conference by stating that “trade finance is deeply enabled by blockchain technology.”
Teixeira highlighted the fact that the trade finance sector has a massive number of moving parts, making use of an example of a pilot project that tracked a shipment from Kenya to Belgium. The shipment involved over 30 completely independent institutions, from the buyer and sellers to customs officers, logistics partners and financiers:
“Companies and banks are forming consortiums using new technology to overhaul current systems. We are looking at leveraging wider networks to give companies and banks information to make the right decisions.”
SA Reserve Bank acknowledges crypto is here to stay
The South African Reserve Bank — or SARB — also delivered a fairly positive update on its stance towards cryptocurrencies in the country.
Anrich Daseman, senior fintech specialist at the Reserve Bank, told delegates that the institution had acknowledged that cryptocurrencies were “here to stay,” proven by the fact that a task force had been set up to develop regulatory frameworks for the sector.
Daseman also confirmed that the SARB would be issuing a draft policy paper on the regulation of cryptocurrencies in the country that would be released for public input in March.
The SARB has classified cryptocurrencies on how they are used and how they derive value. Daseman said that cryptocurrencies can be used as a method of payment, investment as well as other utilities, but the SARB does not recognize virtual currencies as legal tender.
The Reserve Bank has taken a keen interest in the space due to a number of reasons. Firstly, the institution is tasked with regulating monetary policy and in theory, when demand for cryptocurrencies increases then the demand for fiat money will decrease.
There is also the consideration of cryptocurrencies becoming a parallel payment system and the SARB needs to protect its national payment system. Financial stability is also a consideration, considering that crypto market capitalization growth could expose conventional financial systems to the inherent risks of cryptocurrencies volatility.
Exchange control regulations also need to be considered in the cryptocurrency space in regard to the movement of capital. Market integrity is another area that is a focus, in an effort to create a fair and transparent space that also considers Anti-Money Laundering and Counter Terror Financing concerns.
Daseman said that there is still a perception that the very nature of cryptocurrencies works hand in hand with illicit activities:
“Many feel that we shouldn’t have exchange controls for the space but the reality is that they are there in conventional markets for a reason and we need to look at it.”
SA government sees blockchain driving economic growth
Members of branches of the South African government also made some positive statements about the potential of blockchain technology and cryptocurrencies to uplift South Africa and the wider continent.
As Cointelegraph reported at the conclusion of the conference, Mpho Dagada, Commissioner on the Fourth Industrial Revolution for the South African Presidency, made a bold statement that touted blockchain technology’s potential to help reduce unemployment and bolster the country’s Gross Domestic Product.
Related: South Africa Looks to Blockchain to Reduce Unemployment
Dagada said that the technology could plug into existing artificial intelligence systems in the mining sector:
“When we look at where the world is going, it’s important to leverage our strengths and align with that. If the world is moving towards more blockchain systems that are transparent and people want that, we know there is strength in Africa’s minerals and why not plug that in on top of the sector? We might find that we’ll solve the problems we have, like corruption or bringing access to markets. These problems could be solved by us bringing in these solutions and allowing them to plug and play.”
South Africa’s Office of Digital Advantage is also pushing to invest and support blockchain-based projects according to Akhona Damane, who heads up the department.
Damane highlighted the fact that the ICT sector in South Africa had already outgrown the country’s agricultural industry in terms of GDP. That has led to a drive to increase investment in the sector and explore new technologies like blockchain:
“We reali`ed we can go into the blockchain space and drive development that goes a lot further than cryptocurrencies. While there are limited tech skills in the country, the local blockchain ecosystem is growing, driven by startups. The space now wants government involvement.”
A major takeaway has been the formation of the South African National Blockchain Alliance, which will be officially launched next month. The working group will look to develop opportunities for the blockchain industry.
Self-Sovereign Identity was a particularly important talking point at the conference that addresses a major problem across the continent.
Victor Mapunda, founder and CEO of FlexFinTx, presented data that estimates that around 400 million Africans do not possess proper identification documents.
As a result many Africans are unbanked and have little to no access to insurance services. Mapunda said that institutional problems are a main reason for the status quo. Slow processing services and a lack of information sharing between governments, financial and healthcare institutions has exacerbated the problem.
On the bright side, Mapunda said that the situation has led to the development and proliferation of mobile money systems in Africa that do not need to meet Know Your Customer requirements.
The investigation into potential solutions has led to blockchain technology representing a not yet seen ability to tackle these problems.
Mapunda told Cointelegraph that African governments have a lot to benefit from having mass, nationwide identity solutions. He said that a primary problem for African governments are massive tax gaps. Mapunda used his native country of Zimbabwe as an example, highlighting massive unemployment rates which means most people exist within the informal economic sector:
“Most of their earnings and business transactions go completely under the radar of the government and they lose billions of dollars as a result. By having a system or platform where everyone is participating in a semi-formalized system on a digital scale they’ll be able to know what’s going on in their own communities.”
The uptake of these digitized solutions should benefit government, private companies and citizens alike according to Mapunda:
“Digital identity platforms typically move people from that informal sector to a digital, formalized scale where both government and the private sector are able to start offering better products and services to those people.”
A promising African future
There was an air of optimism at the 2020 Blockchain Africa conference driven by insightful presentations from various industry leaders.
There seems to be a strong sentiment that blockchain technology could provide the backbone for new solutions to uniquely African problems. Furthermore, a number of speakers went as far as saying that the continent could become a driver of development and adoption in the future.
The proliferation of mobile payment services was often referred to as a prime example of a space that Africa has completely adopted and dominated.
Related: Blockchain Africa Forges Ahead Despite Coronavirus Concerns