The blockchain industry is often viewed in the light of cryptocurrencies, which are known to be highly volatile and at times a front for fraudsters, clouding all other solutions the technology could offer and limiting their potential benefits for the continent.
A new study by blockchain investment firm Emurgo found that while the African populace are increasingly embracing the technology, governments continue to steer clear of anything to do with it due to its association with the unconventional digital assets.
According to the report titled “State of Web3.0 in Africa,” start-ups using the blockchain technology to provide different solutions in Africa last year attracted funding of up $91 million, more than a tenfold increase from the $5.2 million received in 2021.
Read: Africa crypto market marches to own beatHowever, many of them still struggled to grow and scale their operations due to the difficulties navigating the uncertain regulatory environment on the continent, which means that many of them are unsure when and how their operations could be considered illegal."The start-ups also lack government patronage to give credence to and propel their innovations, and the low awareness of the technology among customers and stakeholders worsened their situation," the report said.
Smart solutionsAhmed Amer, Emurgo Africa’s chief executive, argues that while governments on the continent are wary of blockchain, the technology can develop use cases that can work to improve countries’ economic growth in the long run.
Read: Lessons on digital currencies from mobile money“Regulators need to know that this is actually a safe space and that there’s actually a lot of potential that can come out and help the economies if blockchain technology is used and all its use cases are used as well,” Amer told The EastAfrican.“There’s a big misconception about what blockchain really is and I think it’s important that people know what blockchain as a technology really is and that it doesn’t start and end with crypto.”Based on the report, the untapped and underutilised potential areas of application of the blockchain technology include SME financing, supply chain, smart contracts for informal labour markets, governance, digitising trade infrastructure, title deed registration, verification of education credentials and mobility.
In governance, for example, the technology can be used to enhance “transparency of legal and judicial processes, thereby improving the accountability of public officials,” the report said.
Shogo Ishida, Emurgo’s co-CEO for Middle East and Africa, said that to fully utilise the potential of blockchain to create real solutions for the continent, there needs to be in place proper regulations governing the sector as well as an enabling environment.
Read: Global synergy needed to control crypto assetsRegulation run-around“It does not have to be something new because traditional regulations still apply even to blockchain. For example, they need to look at how the technology affects privacy and how it can be marketed. But the regulations also shouldn’t be so tough that will stop the innovation,” Shogo said.
According to Joseph Githaiga, head of legal at advisory firm PwC, the lack of regulations in the sector is because regulators are yet to fully understand the technology and what it really represents and until that happens.“The regulators are still trying to catch up with the way technologies are evolving and how they impact the sectors that are typically regulated,” he said.
Kenya Capital Markets Authority’s (CMA) former chairperson, Nicholas Nesbitt, argues that in addition to the lack of knowledge about the technology, different regulators still bicker over who has the jurisdiction to regulate them.“Each regulator wants to push the technology over to somebody else. What that comes down to is that there is no clarity on who should regulate the industry... is it the Central Bank or the CMA?” said Nesbitt. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).