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How a new technology is transforming Africa’s economy: Blockchain

Anyone who wants to buy land in Africa is often faced with a huge problem: sometimes the seller is not entered in the land register as the owner. A new technology should solve this problem – and many more.
When Michael Kiberu Nagenda wanted to buy a piece of land in Uganda, he made an experience that is part of the reality of life in many developing countries: the seller of the land was not the owner at all. At least not according to the land registry entry.

“The land offices are the only source for the registration of land sales,” says Kiberu Nagenda, head of the Blockchain consulting firm Bit2Big, as he tells the story of the accidental land purchase. In Africa, he says, bribery of officials is a big problem. Controversial ownership issues are often resolved there underhand with donations to the responsible officials. Thus, a buyer can never be sure whether the seller is really the owner or whether the land has been sold several times. Also the exact area and location can only be determined from the land register, which is often still available in analogue paper form.
In Kiberu Nagenda’s case, it turned out that the previous owner had waived an entry in the land register for reasons of cost. At present, the entrepreneur has no proof of whether the previous owner or even his predecessor may have sold the property again.

Several countries with similar problems now rely on a technical platform that digitizes land register entries in a transparent and legally compliant manner for all authorities: the block chain.

According to Kiberu Nagenda, for example, there are some projects in Uganda, Ghana or Nigeria that want to make land registration secure with block chain technology. The initiative often comes from start-ups. However, they are dependent on state aid: “If the government doesn’t play along, nothing will happen,” says Kiberu Nagenda. At the beginning of the year, for example, the land registry at Disktrikt Wakiso in Uganda was converted to the digital Lands Information System.

Dirk Siegel, who heads the Blockchain Institute at the consulting firm Deloitte, also says that the Blockchain applications do not work without consensus. “Projects that only look at the technology and don’t consider the ecosystem of the people involved will fail.”

Huge opportunity for developing countries
So far, there are few concrete fields of application for block chain technology. However, at some point it is likely to become as commonplace as e-mail. Block chain is often equated with Bitcoin. But the digital currency is just one example of what can be done with the technology.

The block chain is a kind of digital register. It stores the complete data of a transaction, which can be viewed by everyone in real time and cannot be changed. With crypto currencies such as Bitcoin, for example, payments can be traced at any time. The block chain technology also forms the basis for the crypto currency Libra planned by Facebook.

Many developing countries see a huge opportunity in the block chain. “Africa does not want to miss the fourth revolutionary wave,” says Kiberu Nagenda, alluding to the first three waves: the development of computers, the Internet and social networks.
“Blockchain technology offers great potential for Africa,” says Siegel. For issues such as land registration, digitalization is the first necessary step. This must be carried out in a block-chain-compatible manner. Then land registers could be set up on the basis of block chain – similar to telephony, where Africa has jumped directly into the mobile age and left out the fixed network.

The issue of currency plays a major role in block chain technology. Facebook, in particular, has caused a great stir with its Libra push last year. According to the original plans, Libra was supposed to create a stable, reliable currency, especially in developing countries, to ensure financial transactions even in crises. “The first examples of Blockchain in Africa were money transfers from migrant workers to their families at home using Bitcoin,” says Deloitte expert Siegel.

Fear of digital parallel currency
However, many states see the danger that a parallel currency would undermine their monetary sovereignty and thus their power base. “African countries that are developing their own digital currencies want to retain sovereignty over their currencies,” says Kiberu Nagenda. The Central Bank of Rwanda, for example, wants to launch its own crypto currency.

Governments in Africa are facing the same problems as companies elsewhere in the world: “There are hardly any technicians who can develop block chain tokens,” says Kiberu Nagenda. Many projects would therefore train their own developers to program tokens, a kind of digital contract based on an existing block chain. Kiberu Nagenda’s company Bit2Big, for example, offers conferences and courses to spread the technology. This in turn creates much needed jobs in the technology sector.

Highest willingness to found a company worldwide
Siegel also sees great opportunities for the labour market in many African countries through IT technology in general. Cross-border cooperation in particular has potential. “In the block-chain sector, there is also the fact that there is a very strong open source culture,” says Siegel. It is noticeable that there is no monopolisation there, as is the case in e-commerce, for example. “The opportunities are much more dispersed.”

In general, there is a comparatively great willingness to be entrepreneurial in Africa: According to an OECD study, 22 percent of the African working-age population would start their own business – the highest rate worldwide.

According to Kiberu Nagenda, several block chain projects are already underway in Uganda in particular: One initiative of the Drug Authority, for example, is aimed at making drugs safer. Drugs would be labelled and could thus be tracked via the block chain. This would make it easier to withdraw counterfeit drugs from circulation.

Also in Uganda, according to Kiberu Nagenda, the Hara project gives small farmers access to credit. Data on the size of the land being cultivated and the production process are stored in the block chain. Based on this data, farmers can apply for micro-credits from financial institutions.

“In Nigeria, IBM is carrying out projects in which freight documents are transferred to the block chain,” says Kiberu Nagenda, citing another example of use. This is intended to make the contents of containers transparent for all parties involved and speed up the handling of goods.

However, Deloitte expert Siegel concludes that many block chain projects are still at the prototype stage. Land registration in Ghana, for example, is still a long way from achieving comprehensive coverage. Nevertheless, the technology could solve a number of problems in Africa that have already been legally or technically mastered in the Western world.

One goal unites all these projects: To create legal certainty and transparency for all process participants. In this way, buyers and sellers can conclude transactions on a basis of trust. This drives the trade in goods and thus economic development. And for Africa there is another opportunity: the opportunity to become a technological pioneer.

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