Blockchain as a driving force for financial inclusion in Africa

Necessity is the mother of invention – and given Africa’s rapid commercial growth and globalization over the past decade, it seems that the need for more inclusive financial services has become well established. The emergence and acceleration of financial technology (often referred to as fintech), has attracted billions in financing, dominated commercial narratives and become investors’ girlfriend globally – and with good reason. The financial sector generates more than $ 20 trillion annually and is booming, and with an addressable market that spans most of the world, growth is guaranteed to continue.

There is no market where the growth of (and demand for) more inclusive and accessible financial services is more widespread than in Africa. With the explosion of small and medium-sized enterprises and entrepreneurship in several African countries, innovation in fintech, and especially blockchain technology, is being driven rather than driving the improvement of financial infrastructure. To meet the unique challenge of providing the vast majority of the African population who are still without a bank with more accessible tools for financial management and inclusion, Standard Bank and others have researched and developed transformative fintech and blockchain products.

Increasing use of blockchain in Africa

Among the uses for fintech in Africa are peer-to-peer (P2P) payments, widely used to enable informal and small businesses in the beating heart of many African economies, as well as ease the logistics and costs of money transfers. Furthermore, the continued globalization of African markets has resulted in a need for more efficient and lower cost limit payments to facilitate African businesses trading abroad. Countries such as South Africa, Kenya, Nigeria and Ghana have seen rapid adoption of cryptocurrencies as a means of gaining access to more efficient payment rails provided by blockchain networks, and providing returns on assets with assets such as Bitcoin or stable value-added coins. of US dollars.

Cryptocurrency vs. Blockchain: Where are the opportunities?

However, I believe that the real potential for exponential leaps in financial inclusion lies in the blockchain infrastructure that underpins cryptocurrencies, rather than in the currencies themselves. One of the most powerful aspects of blockchain is the ability to create ‘programmable money’, which can help eliminate fraud and human error in transactions, and promote transparency in financial records. This aspect of the blockchain can enable the establishment of corruption-resistant and robust welfare systems, and ensure that social welfare efforts reach the intended recipients and meet priorities such as ensuring that those who need it are helped and treated with dignity. For example, blockchains that enable smart contracts (a computer program that requires conditions to be met before a transaction is performed) can be used to confirm a person’s eligibility to receive a grant, and then pay the recipient directly into a digital wallet on the smartphone. .

Blockchains can also provide mechanisms for fair and transparent microfinance and increased purchasing power, to support the creation and growth of small businesses serving local communities. Transparent social coordination tools offered by blockchain-based organizational units such as DAOs (decentralized autonomous organizations) can give small business collectives the opportunity to gain competitive advantage as a bargaining power to match larger companies.

Standard Banks’ continued commitment and role in operating Blockchain Tech in Africa

The shift in African markets is taking place as a grassroots and collaborative transformation. Building financial competence, education and awareness at the societal level and giving them tools to strengthen themselves is a priority for us. At the forefront of research and development of blockchain and distributed ledger technology in the African context, Standard Bank is committed to exploring efficient digital payment rails and financial services that enable African trade to flourish. This includes ongoing collaborations with large blockchain companies such as Algorand and Hedera. Improving the inclusion of subordinates is a core value of Standard Bank, and blockchain technology will undoubtedly provide an opportunity for a major impact on African markets in the coming years.