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Summary

Blockchain, a digital distributed ledger system for recording and tracking transactions, is slowly becoming a reality in East Africa. Several countries in the region, including Ethiopia, Kenya, Rwanda, and Uganda, have shown great interest in the technology to improve service delivery and grow their economies. The technology is already being piloted in critical sectors such as health, agriculture, land, and transport.

Blockchain: a game-changer for the region's digital economy

Blockchain and artificial intelligence (AI) technologies have gained acceptance across the East Africa region, and are largely seen as the next disruption in the digital space, particularly in the financial sector. In addition, governments in the region are betting on the technology to improve efficiency in governance, reduce corruption, and create more employment activities.

Rwanda leads other countries in the region in the adoption of the technology, following the establishment of the Blockchain and Internet of Things (IOT) Centre of Excellence in partnership with Swiss cybersecurity firm WISeKey in early 2017. The partnership is aimed at making Rwanda capable of handling and processing digitized secure financial transactions as well as digital authentication and signatures. The project has since brought in other global technology firms, such as Microsoft, to help in the digitization of the country's land registry using WISeKey's WiseID suite of mobile applications and Microsoft Azure cloud solutions.

Kenya has also expressed an interest in the technology, and has formed a taskforce to oversee the implementation of the blockchain to improve public service delivery in land administration and titling, agriculture, financial services, transport, and cybersecurity. Through the initiative, the government is willing to work with local and international technology companies to develop and launch blockchain solutions. Currently, Kenya is developing a database dubbed the "Single Source of Truth" (SSOT), which will be the primary reference for all land transactions in the country.

Uganda is adopting the same strategy as Kenya, through the formation of a taskforce that will advise the government on the adoption of the technology. The key areas of application will be mainly in land administration and service-delivery tracking in health and other critical areas. However, there are security concerns among the regulatory authorities, especially about the use of the unregulated cryptocurrency, which may subject users to fraud.

Ethiopia has also expressed its willingness, and plans to introduce the blockchain technology in the agricultural and financial sectors. In May 2018, the government signed an agreement with IOHK, a UK-based cryptocurrency and blockchain service provider, to trial Cardano blockchain technology in coffee marketing as well as train young professionals in the country. Ethiopia is among the largest coffee exporters in the world, and hopes to use the technology to increase coffee revenues by tracking all the marketing processes. Another startup, Bext360, is using blockchain technology to transform the coffee supply chain in emerging markets including Rwanda by helping coffee buyers automate their dealings with farmers to improve transparency and the verification process. For farmers, the technology will speed up the payment process while making investment capital available.

Blockchain has also been used in the retail industry to increase efficiency and track the supply chain process of several retail products. In May 2017, US-based coffee firm Starbucks Corporation commissioned a two-year pilot project that seeks to incorporate blockchain technology into its coffee supply chain by working with coffee producers in Costa Rica, Columbia, and Rwanda.

Appendix

Further reading

Blockchain and IoT, IOT002-000001 (March 2018)

"Blockchain has more to offer CSPs than inventory management," SPT001-000019 (May 2018)

Author

Danson Njue, Research Analyst, Middle East and Africa

danson.njue@ovum.com

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