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Free Minds & Free Markets

Blockchain Is Changing Lives in Africa

Startups from Cape Town to Nairobi think the budding technology is the future of the continent.

Elsa's father was a businessman. He was always looking for a good deal, and as the owner of a brick factory in the Ethiopian capital of Addis Ababa, he had money to invest. So in 2005, when he learned about a 2,000-square-meter piece of land for sale in a part of town where he expected property values to boom, he bought it. The deal was formal: Elsa's father paid 100,000 birr ($3,641) in cash, signed the contracts in front of witnesses, and got a receipt.

But there was one thing missing: a deed. So when Elsa's father unexpectedly died just after the deal closed, her family was thrown into crisis.

"As soon as [the previous owner] found out my father died, she changed her tune," says Elsa, who asked that her surname not be published while the court case is ongoing. "We've spent the last 10 years going in and out of court."

The long duration of the trials only raised the stakes, since it turned out Elsa's father was right: The property's value did skyrocket. The protracted legal battle has already cost the family more than 50,000 birr ($1,820) in legal fees, and even though courts have ruled in their favor several times already, the series of appeals seems endless. In the meantime, Elsa can't capitalize on her dad's investment: She can't build on the property, sell a portion of it, or even put up a fence.

"If there were a land registration, none of this would have happened. We wouldn't have spent 10 years in court," she says. "But I don't want to give up, because it's my father's land."

Elsa's is not an isolated case. Across the continent, in Ethiopia, Kenya, Ghana, and elsewhere, courts are clogged with land disputes and other crises that could be easily resolved with little more than better platforms for record keeping. But if Africa is a hotbed of questions about how best to store valuable information, it is also rapidly becoming the testing ground for a new answer to this old problem.

Best and Brightest

In July, some of the brightest minds in technology, finance, and law from around the world gathered for ACTAI & Bitfury's fourth annual Blockchain Summit. Rather than meet in a traditional hub like New York, Zurich, or Silicon Valley, they convened in the Atlas Mountains of Morocco to explore a question: How might blockchain technology transform life in Africa?

For some guests, the Morocco summit was a return trip to the continent. Only a few months earlier, the 2018 Blockchain Africa Conference had attracted people from around the world to Johannesburg.

The back-to-back confabs reflect a larger trend: In 2018, Africa emerged as one of the most hospitable climates for blockchain innovation in the world.

Simply put, a blockchain is an incorruptible digital ledger. Originally developed to enable financial transactions and cryptocurrencies such as bitcoin, blockchain technology is now being applied in a huge range of situations. Virtually any valuable information can be stored on a blockchain: transactions, contracts, even your identity. These records are public and easily verifiable, and since the blockchain hosts data on millions of computers simultaneously rather than on any one central platform, it's virtually immune to hackers. The platform is particularly attractive in African nations, where still-developing infrastructure, weak governance, and the lingering effects of destructive colonialism have given citizens little reason to trust their local governments and other institutions.

In the United States and Europe, we don't worry about how to prove we exist. But in sub-Saharan Africa, according to UNICEF, two out of every three infants are not registered with the government at birth, and three out of four kids don't have birth certificates. At that rate, the number of unregistered children in the region will reach nearly 115 million by 2030. This has devastating effects, since people who haven't been registered can't access social services such as health care and education or, later in life, formally own property. But in countries where there is little or no standard system of identity documentation—and where the systems that do exist are subject to corruption and fraud—how can individuals prove and protect their identities in a decentralized and reliable way?

African landowners face a similar challenge. According to World Economic Forum estimates, as much as 90 percent of the continent's land is "completely" undocumented. Tacit understandings of who controls what are often passed through generations without a written trail.

Absent reliable land titles, ownership is very difficult to uphold in court. Disputes are common and often accompanied by physical violence. Resolving them means going through a lengthy and expensive legal process. And the inability to prove ownership hurts more than just individual farmers. According to a 2013 World Bank report, the confusion and resulting conflict is holding the whole continent's development back.

"Despite abundant land and mineral wealth, Africa remains poor," wrote Makhtar Diop, a World Bank vice president. "Improving land governance is vital for achieving rapid economic growth and translating it into significantly less poverty and more opportunity for Africans."

Property and Identity

Blockchain might be the solution. Narigamba Mwinsuubo, the founder and CEO of Bitland, a blockchain-based land registry startup, hopes to help lift Ghanaian farmers out of poverty by making it easier for them to document their ownership. As technology develops rapidly and platforms quickly become obsolete, Mwinsuubo says blockchain's high degree of flexibility appealed to him. Land title documents and other sets of data can be validated by the blockchain, even if the application that originally stored the information there is no longer working.

Mwinsuubo hopes a reliable land registry will launch a national economic boom. "It's a platform to secure properties [but also] open business opportunities in terms of real estate and agribusiness," he says. "People don't have access to loans because they do not have titles, and a lack of trust from banks won't permit that because documents are falsified easily in Ghana. But with our service, they could use their properties for collateral."

Kenyan property holders face similar problems. When criminals collude with corrupt officials to create fraudulent titles for land they want to acquire illegally, legitimate landowners have little power to fight back. Nairobi-based real estate firm Land Layby Group says a land registry that records titles on a blockchain could eliminate this problem. Such a decentralized system "will resurrect dead capital, facilitate economic development, and encourage sustainable investment," founder Peter Tole said in a statement. "It will enhance land ownership rights and formalize land information that has been held in the minds of a chosen few in many communities throughout the continent."

In the United States and Europe, we don't worry about how to prove we exist. But in sub-Saharan Africa, three out of four kids don't have birth certificates.

Blockchain's list of potential applications is endless. Project Amply, a Cape Town–based startup, hopes to replace existing paper-based child registration systems with self-sovereign digital identities based on a blockchain. In Botswana, individual farmers and farming cooperatives can track inventory, livestock, and employee payments on a blockchain-based platform called Plaas. The startup SunExchange is addressing the huge regional demand for renewable energy with a blockchain platform that lets people buy or rent out solar panels on a peer-to-peer, decentralized market.

"When you live in Europe, you don't necessarily distrust your institutions and your politicians and your banks," said Marcel Dietsch, the CEO and co-founder of Covee, a Zurich-based blockchain platform for knowledge workers. "But if you live in a country with weak governance and a low-trust environment, the potential of that technology is even bigger. It's about replacing those centralized trust agents, like a bank or the government, with a technology-driven system that works."

Dietsch thinks blockchain-based "smart contracts" could even transform Africa's migration phenomenon. According to a Pew Research Center analysis of United Nations data, the number of emigrants from sub-Saharan Africa grew by 50 percent over the last decade, much higher than the 17 percent global average for the same period. In 2017, an estimated 25 million sub-Saharan African migrants lived outside their countries of birth—in large part inspired by employment prospects abroad. But blockchain work contracts could change all that by making it easier for knowledge workers to connect with employers around the world. Also known as self-executing contracts, these blockchain-based agreements make it much easier for companies to hire freelancers, regardless of where they are, without using local lawyers. Unlike physical labor, Dietsch says, knowledge work is easy to decentralize, since it only requires expertise and an internet connection. Once the fundamental infrastructure is in place, blockchain-based contracts would allow a company in Zurich to hire a programmer or consultant in Lagos just as easily as one in Geneva.

"People with valued skills can participate in international economies without actually having to move, which might ease the migration pressure," said Dietsch. "This is the wonderful thing about technology: It is borderless and decentralized."

Money and Votes

Blockchain's utility for financial applications has been well-established, and unsurprisingly, African blockchain companies often focus on payment systems and remittances. Inflation and corruption have fomented mistrust in central banks and fiat currency, so many African consumers see blockchain-based cryptocurrencies as a promising alternative: After a military coup d'état last year in Zimbabwe, for example, the local price of bitcoin sky-rocketed to $13,499, nearly double its rate on international markets at the time. African countries also had some of the highest numbers of Google searches in the world for "blockchain" and "bitcoin" in 2017.

Blockchain "is one of the first technologies where Africa can compete globally, because there is such a big demand here for seamless, resistance-free services," says Carel de Jager, a consultant with South Africa–based training and consulting firm Blockchain Academy (no relation to the American company of the same name). "It's driven by frustration most of all—frustration resulting from dysfunctional economies, very high inflation, and financial services that don't function like they should. Blockchain is leapfrogging other technologies because we don't have any other choice."

After years of skepticism, even central banks are coming around to the value of the platform. De Jager says Blockchain Academy has done technology training for financial institutions around Africa, including ones in eSwatini (formerly Swaziland), Lesotho, Namibia, South Africa, and Nigeria. Central banks in Ghana and Kenya both have task teams looking into ways to implement blockchain-enabled payment processing systems, and Uganda Bankers' Association Chairman Patrick Mweheire has announced that Ugandan banks will begin to adopt blockchain technology when possible to lower operational costs and risks.

In Kenya, the change of heart was particularly dramatic. For years, Central Bank of Kenya (CBK) Gov. Patrick Njoroge was vocally opposed to the idea of cryptocurrencies. "CBK reiterates that Bitcoin and similar products are not legal tender nor are they regulated in Kenya," warned a 2015 CBK public notice called "Caution to the Public on Virtual Currencies Such as Bitcoin." "The public should therefore desist from transacting in Bitcoin and similar products."

This year, however, Njoroge changed his tune. "A number of banks are currently working on products hinged on blockchain technology and we think they offer a lot of promise," he said.

One of the most exciting—and controversial—applications for blockchain technology is its potential to register election results. This year, Swiss blockchain startup Agora received permission from Sierra Leone's National Electoral Commission (NEC) to act as an "international observer" at 280 of the country's roughly 11,200 polling stations in its March elections. Agora CEO Leonardo Gammar's interest in election reform on the continent is transgenerational: His mother was an African Union ambassador to the U.N. and his father was a Tunisian military attaché.

If blockchain technology could ensure transparency in cryptocurrency transactions, Gammar reasoned, perhaps it could also ensure transparency in election results. It's a valuable goal in countries such as Sierra Leone, where allegations of electoral fraud are common and voter suspicions sometimes manifest in violence.

"I sincerely believe well-run elections can save lives," Gammar wrote on Agora's website. "In this context, more transparent and secure electoral procedures can directly impact citizens' well-being by contributing to a more peaceful political life." He added that blockchain-verified elections will also save African taxpayers money, since electronic votes are cheaper than print-based ones.

For the 2018 election, Sierra Leone NEC officials manually recorded people's paper votes using their own in-house database, which does not use blockchain. At the same time, Agora observers recorded the votes on their blockchain platform. The results were very similar: For example, the All People's Congress officially won 54.74 percent of votes in one region, compared to 54.71 percent of votes in Agora's test sample.

International media breathlessly reported the results as a milestone. ("The world's first blockchain-supported elections just happened in Sierra Leone," Quartz declared.) But Sierra Leone's election officials bristled at the implication that Agora's test, which covered only 2 percent of polling stations, had an impact. In a tweet, NEC chair Mohamed Conteh emphasized that it had not used blockchain technology in "any part of the electoral process."

Still, the promising outcome of Agora's experiment hints at what might be possible for blockchain-backed elections moving forward. "We believe blockchain is the only technology in existence today that can achieve fully transparent elections," Agora said in a statement. "Using blockchain, all steps and data of the election process can be recorded on a publicly verifiable ledger while maintaining the anonymity of voters. The implications of fully-verifiable elections could be world-changing and impact the global balance of power."

Onward and Upward

As Africa's blockchain hubs gain momentum, a hurdle continues to be infrastructure—internet access and electricity consumption—in addition to public awareness of the platform. But Africa also has a significant advantage over other continents: With few legacy systems in place (and few legacy stakeholders to interfere), African innovators have an opportunity to leapfrog over outdated technologies and jump straight to whatever will come next.

That already happened with phones: African consumers largely skipped cumbersome landlines and accelerated to mobile phones at a rate more than double the global average.

"For the first time, we can innovate permissionlessly—all we need is a smart phone and an internet connection," says Blockchain Academy's de Jager. "There are no barriers to entry. This is where Africa will really show its potential."

Photo Credit: Joanna Andreasson. Source image: serkorkin/iStock

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  • Uncle Adolf's Gas and Grill||

    Hasn't the world wasted enough time and money on Africa? And what have the returns ever been but trouble? Fuck Africa.

  • OpenBordersLiberal-tarian||

    That's racist.

  • sharmota4zeb||

    I thought it was racist to refuse to fuck people on account of their skin color. ( Loving v. Virginia 1967)

  • AlmightyJB||

    Slaves, gold, diamonds, oil, cocoa, timber, rubber, palm oil, zoo animals, pirate stories, the human race, twerking. Ingrate.

  • Dan S.||

    If you don't want to be involved in Africa, don't be. The people in Africa certainly have a right to try to implement systems that will lift themselves up.

  • mad_kalak||

    Better to make money off of Africa helping them help themselves like this, rather than waste it with nonprofits and development loans that will never be paid back.

  • JesseAz||

    The problem woth Africa is a mix of weak and corrupt (but strong authoritarian) governments. Block chain is only as good as the force that backs up contracts. If nobody can enforce a contract ethically, what good is block chain? This tech isn't going to save Africa. Only political change can.

  • AlmightyJB||

    Very true. Without respect and protection of property rights, what good is a deed. Ask the farmers in South Africa.

  • mad_kalak||

    Tech is not going to save Africa, neither is political change. In fact, nothing is, ever, except for the some super advancement of the Flynn Effect. Some things, however, might make life in Africa more bearable for some Africans, and blockchain is one thing.

  • vek||

    Yup. I see we have here somebody who understands the real problem Africa has.

    On the plus side, as Asia becomes fully industrialized, Africa will be the "last frontier" for dirt cheap labor... So if any Africa nations can get their property rights situation sorted out enough where European and Asian investors feel comfortable putting factories there, they might get a little somethin' somethin' going on which will pull those nations out of abject poverty.

  • Jerryskids||

    You know what else would solve the problem of property disputes? Socialism, the abolition of private property and the joint ownership of everything by everybody. Has anybody ever tried that? I mean real socialism, of course, the kind that works and not that phony socialism that doesn't work. (That's how you can tell the difference between real and phony socialism, if it doesn't work than it's not real socialism.) Africa is a great place to try it since there's already so much equal distribution of poverty that it's like they're already halfway there!

  • Overt||

    Oh man, I got into a deep discussion with a "Libertarian Socialist" over on r/Libertarian. Man, it is almost comical how twisted the logic is. "Your land claim is illegitimate because its root is in violence, so we are going to violently take it away."

    One point I made with this guy is that the act of claiming land doesn't start with violence- it is a way to avoid violence. Even predators that mark their territory do this- they are saying "Hey I am using this, let's not get in a fight, you go somewhere else." Violence only comes when for whatever reason, someone doesn't wish to honor the claim.

  • vek||

    You mean like how in South Africa, almost the ENTIRE fucking country was not populated by anybody... Because it was an uninhabitable shithole until white people irrigated it? Then all of a sudden people who had never set foot in such land were claiming it was their traditional land, because reasons?

    That kind of thing? By all rights 90% of South Africa should be owned by Dutch and English honkies, but we can see that as they have slid into super minority status (from around 20% of population to around 10%) that shit ain't gonna happen. They're just going to steal the land they made worth anything, and then probably fuck it up and make it worthless again like in Zimbabwe.

    Fuckin' idiots. Whatever, let them have fun with their mass starvation.

  • Stephen Lathrop||

    These records are public and easily verifiable, and since the blockchain hosts data on millions of computers simultaneously rather than on any one central platform, it's virtually immune to hackers.

    That is true only for unachievable values of "simultaneously." Hackers have corrupted blockchains by front-running them, in the same way high speed trading corrupts financial markets.

    A further disadvantage is the utter lack of any comprehensible explanation of what blockchain technology is. This week's New Yorker contains a lengthy article on blockchains and bit currency. It is an utter waste of time to read—except for a reader testing a suspicion that the author doesn't understand the subject. Non-acolytes will finish the piece wanting their time back. With published pieces about blockchain technology, that is the usual result. Bystanders can be excused for wondering why that is, and for supposing also that if advocates can't explain it, they probably don't understand it themselves.

    Nice graphic to illustrate the OP though.

  • AlmightyJB||

    Deeds and other sorts of property ownership are a nice application and certainly IBM is vested in the technology. It is mostly still just hype though. The idea that it's going to replace everyone's relational databases soon is a joke. Many large companies are still using Cobal.

  • mad_kalak||

    Do you understand how your car works, or do you just put gas in it and take it to a mechanic when it breaks down, even if he couldn't actually build the car himself? Do you understand your computer's software/firmware/hardware such that you could write/repair/manufacture it yourself? Or how about the radar that keeps you safe when you fly? Furthermore, does anyone ever fully comprehend the complex web of non-centralized systems of self-interested individuals who bring all the technology to bear such that the grocery store is always full whenever you go to it?

    Just add blockchain to the list of modern technology fully understood by a few knowledgeable experts, passingly understood by savvy laymen, and not understood at all by the masses.

  • sharmota4zeb||

    I've got a bridge in Brooklyn to sell you. Here, let me print you out the deed.

  • Jessi||

    Nonsense, you have to sign a message proving you have the key which owns the deed, then to sell it you'd have to sig one transferring it.

  • JesseAz||

    Front running happens in the count mining and sometimes in front of large transfers. Front running wouldn't do much for contracts or deeds.

  • Jessi||

    Reporters are terrible and usually have an agenda. Doesn't mean there's nothing worth knowing about the subjects they cover. "Front running" doesn't make sense as a vulnerability.

  • Remember to keep it all polit||

    Nice theory, and I hope they can make it work in practice. But I smell corruption in the initial data entry and in adding fraudulent data.

    Consider the ong drawn out Ethiopia case. Elsa's side of the story seems pretty good, but it is only her (and her father's) side of the story. She has won several times, but each has been appealed. When would some court decide the case is done and put a fork in it with a blockchain entry? The blockchain registry's permanence and air of authority would raise the stakes immensely, and make it all the more worthwhile to bribe a court to end the case in their favor, and then it will be that much harder to reverse.

    Same corruption potential exists with existing presumably solid land titles. All you need to do is bribe some official to enter a phony record, and now its permanence and cloak of legitimacy would make it much harder to correct.

    The problem is not lack of proper deeds nearly so much as it is corruption, and I think that stems from colonial hangovers. The artificial borders and legal structures have little native legitimacy precisely because they were imposed from outside. Governments seem to be slowly improving their stability, economies seem to be gradually improving, but it's a chicken and egg process, and hard to speed up. Corruption relies on untrustworthy redress, trustworthy redress relies on a robust economy, and a robust economy relies on lack of corruption. Blockchain is not a magic elixir.

  • mad_kalak||

    The corruption doesn't so much come from colonial hangovers, in that the colonial masters didn't have this problem then, and don't have the problems in their home countries to anywhere near Africa's extent. The corruption comes from tribal culture and a lack of a public service ethic. Governments are more like stationary bandits in Africa than roving bands.

  • Remember to keep it all polit||

    What I meant is that the borders and government imposed by outsiders lack the same legitimacy as the native authority structures. One of the complaints of the 1776 was the lack of local authority, of taxes imposed from across an ocean and people sent across the ocean to outsider courts. And this was with people who were very closely related. Think of how much more alien the governments, borders, and courts were to the native Indians. Think of how little the African natives had to do with what was "given" to them, and how recently colonialism finally "gave" independence to those artificial constructs. Tribes shoved together and split apart without regard for what they wanted, tax schemes which had no relationship to native markets, no allowance for nomads or herders.

    It's all alien. The Middle East has the same problem, but the abundance of petro dollars has made it easier for artificially formed governments to assert authority and power. Look at how little legitimacy the Chinese-made Tibetan and Mongolian governments have, and how little legitimacy the South Vietnamese government had: same problem.

  • sharmota4zeb||

    Tribes shoved together and split apart without regard for what they wanted, tax schemes which had no relationship to native markets, no allowance for nomads or herders.

    Speaking of the off-Broadway drug den in Paterson ... ;)

  • sharmota4zeb||

    the colonial masters didn't have this problem then, and don't have the problems in their home countries

    Explain that to the autistic guy in Chicago who got killed by a bullet from a cop's gun while trying to escape the government run home he lived in where the psychiatrist makes all decisions about who is right in any dispute.

  • mad_kalak||

    This is far, far afield of the original issue; a separate topic entirely.

  • vek||

    "The artificial borders and legal structures have little native legitimacy precisely because they were imposed from outside.:

    True... But the fact that they can't seem to comprehend the vastly superior nature of the systems they were given by their colonial masters is certainly a sign of dysfunction. I mean, we basically imposed the same shit on Japan after WWII, and they took it AND RAN.

    The fact is, Africa is a disaster now, has always been a disaster, and will likely always be a disaster. The only time shit was half way functional down there was when they were ruled by foreigners. I hope they get their shit together someday, but I have a myriad of reasons to think they never will.

    I suspect things will improve in Africa from where they are now, thanks to hand me down technologies from the Eurosphere and Asia, but they will almost certainly always trail faaar behind any other part of the world.

  • Walk_on_Walter||

    Anybody else read the words "it's virtually immune to hackers" and hear "challenge accepted" ringing out across the internet?

  • Jessi||

    No. Bitcoin hasn't been hacked. But people have been. I think you and the author are misunderstanding what hacking is.

  • sharmota4zeb||

    Elsa's is not an isolated case. Across the continent, in Ethiopia, Kenya, Ghana, and elsewhere, courts are clogged with land disputes and other crises that could be easily resolved with little more than better platforms for record keeping.

    You know who else lacked an effective system for keeping track of land ownership?

  • JesseAz||

    Most dogs?

  • lap83||

    Heh, my neighbor has a puppy and a hole in his fence. The puppy comes over and barks at me for being in "her" yard whenever I go outside. It's fortunate for her that she's cute.

  • vek||

    Poland circa 1939?

    ZING!

  • Truthteller1||

    This would be a disaster for Africa. What could possibly go wrong?

  • StupendousMan||

    Blockchain technologies is another example of the decentralization trend in technological innovation. This trend is creating direct competition with state services, civil courts, criminal legal systems (ostracism rather than punishment), regulation/standards, etc.

    Special interests from real estate to title companies, to insurance will be affected as well.

    Property deeds/ownership defined/guaranteed by blockchain will allow people to use their property as collateral, to buy and sell property to people around the globe. It will radically change the opportunities for people in very poor areas.

  • JeremyR||

    But isn't the root of the problem that there's no record to begin with?

    It seems like creating ownership records/deeds in the first place is the problem, not with how they are stored.

  • vek||

    As mentioned above, this technology in terms of land ownership, and most other truly useful things, will only be as useful as government law makes it. Like it or not, if the guvmint in XYZ Country doesn't consider some blockchain database as being a legitimate record, it will mean less than nothing.

    They need to get their official records collections/deed records/etc in order... They might use blockchain to implement that, but some 3rd party database will do nothing for them.

    As far as crypto currency goes, they might be able to use that to avoid the horrible policies of their national banks... But they could just as easily use other extant online payment platforms that deal in USD, Euros, Yen, etc to avoid inflationary issues.

    The blockchain is our savior thing misses that blockchain must be ACCEPTED as legitimate legally by the government in whatever instance it is being used in in order for it to be of any real use. Crypto Currencies perhaps being damn near the only exception to that rule. But at the end of the day, it's just a way to bit torrent-ize a database that could just as easily be stored in a central location.

  • vek||

    As for Africa... As I said above, it's a mess. It will likely be a mess forever, or at least a loooong time from now. They need to get their governments in order, and have rule of law, and property rights. Until that happens, nothing especially impressive will come from Africa. Even WHEN that happens, it may not be very impressive. I'd bet my ass that in 50 years they won't be any better off than a country like Vietnam is today, excepting perhaps that hand me down prosperity via technology falling into their laps from USA/Europe/Asia. But they'll still be way behind everybody else. I'd put money on it!