Remittances have always played a central role in the global economic ecosystem. What began with a simple barter system has, through the ages, evolved into the modern-day sophisticated money transfer structure.
Total remittances to Africa increased slightly from 2011 to 2012. In general, officially recorded remittance flows to Africa are estimated to have increased from $9.1 billion in 1990 to nearly $40 billion in 2010 and approximately $60 billion in 2012 (divided roughly equally between North Africa and Sub-Saharan Africa), benefitting approximately 120 million residents. The true size of remittances, including unrecorded flows, is believed to be significantly higher and African countries could benefit from a coordinated effort to improve the measurement of remittance flows. Yet, Sub-Saharan Africa still receives only 7.7 percent of total remittances received by developing countries and just 45 percent of that received by India. Nigeria was the only country within Africa among the top 10 remittance-receiving countries with an estimated $10 billion in 2010. These figures have since been updated and migrant remittance flows to Nigeria have now surpassed $20 billion in 2011. Outside Sub-Saharan Africa, Egypt and Morocco fall among the top 20 with $14.3 billion and 7.2 billion respectively in 2011.
Transportability is one of the primary characteristics that qualify a good medium of exchange. Chinese paper voucher known as “flying money” in the VII century, meant to safeguard travellers against robbery, may be considered as the first money transfer system in history, followed by the written instruction of exchange bills used to transfer money to crusaders, with Templars and Hospitallers functioning as bankers.
Is Blockchain used?
In Africa, despite the development of the mobile cellular with more than 1 billion SIM cards and 140 mobile money services in 39 countries, or over half of the 277 total services globally, as of December 2016, there are very few concrete cases of the use of or adoption of blockchain technology. Solutions are developed within the constraints of a poor understanding and knowledge of the technology, especially in sectors other than banking. Also, central banks do not have regulation in place for innovative technologies of this kind. However, Bitcoin, nevertheless, is gaining ground in countries such as Ghana, Kenya, South Africa, Tunisia and Uganda, where it is used generally for money transfers.
Banks in South Africa, including the Reserve Bank, are beginning to accept the innovation of digital currencies and blockchain technology despite the differing opinions of regulators on said matters.. Studies reveal that blockchain technology can provide opportunities to disrupt businesses in the financial sector and offer new growth for startups across the continent.
Blockchain in Africa 2020 and Beyond
Fast forward to now, the blockchain has been embraced at the level of civil society and is being addressed in political debates. Even beyond the blockchain, the progressive decentralisation of decision-making and the crowding out of expensive middlemen are already two tangible achievements made possible by the quick spreading of technology, from M-Pesa to Uber. Surely, technology alone cannot bear the weight of the ongoing digital transformation, especially across emerging markets.
One of the unique offerings of blockchain is that it allows information to be distributed, but not copied, meaning that each piece of information can only have one owner at a time. Introduced purely as a peer-to-peer version of electronic cash, Blockchain technology has evolved into one of today’s groundbreaking emerging technologies, thanks to its innovative elements which includes;
These characteristics can be implemented into any industry – from Pharmaceutical, Financial, Logistics to Educational institutions.
With the potential to create multiple use cases, one can’t help but wonder what the future of blockchain entails for Africa. The continent is embracing technological change at a quicker rate, meaning that with blockchain, Africa potentially has a good shot at successfully leapfrogging its way into the future, without making huge mistakes.
So to what extent has blockchain and cryptocurrency been embraced in Africa?
The results are mixed. Whilst the private sector is blazing ahead in many countries, governments have been apprehensive and reserved, and in some instances unreceptive. Countries such as Zimbabwe and Namibia have reportedly begun with a hard stance, whilst Mauritius is a regional frontrunner. The regulatory sandbox created in Mauritius, for instance, demonstrates a progressive take on the general economic benefits that could follow a friendly, and even incentivised, approach to cryptocurrencies, This creates another dimension for the potential for African countries to develop regulations around blockchain and cryptocurrency, to incentivise foreign direct investment.