CAPE TOWN - The Avenues Conference Centre at the Waterfront in Cape Town on Tuesday and Wednesday 19 – 20 June played host to the MEST Africa Summit. H
Post the Fintech for Financial Inclusion panel on day 1 showed that blockchain was a solution looking for a problem, the audience eagerly awaited the Africa and Blockchain panel of Day 2.
2017 saw a surge in investments into cryptocurrencies, as Bitcoin went mainstream. After a sudden and thus completely unexpected crash, the general populace became sceptical of crypto as an investment strategy.
However, the use cases of the blockchain continue to show promise in everything from proving your identity, to land registry and a means of raising capital.
The session was moderated by Larry Madowo, the Business Editor for BBC Africa and panellists included Gareth Lai, Partner of Lumen; Tricia Martinez, CEO of WALA; Adrien Hope Bailie, Chief Standard Officer of Ripple; Jason Griessel, Head of Business Development for BlockMesh; Adam Gouveia, CFO of BidPesa; and John Campbell, a Partner at Redsand Partners.
The discussion centred around the difficulties surrounding Africa adopting blockchain as means of transaction and the role financial institutions and FinTech play in this ecosystem.
“94% of all transactions in Africa are still happening in cash, due to the fees financial institutions charge,” is how Tricia Martinez kicked off the panel, “Zero fees is how we’re going to solve financial inclusion. That’s what our company does. People are generally focusing so much on access but an incredibly large portion of financial inclusion problems lie in transaction fees.”
“There is, in Africa, emerging a large population that we now term the underbanked. These are consumers that by choice don’t use banks even though they have access to and means to use them. These consumers are simply fed up with the inefficiencies of the financial industry and they’re essentially avoiding fees. In order to start changing this behaviour we need to provide zero fees.”
John Campbell agreed with her and insisted that this is where blockchain can play an integral role.
“We need to consider what the internet has done for information. Blockchain will do this for payments. The future is transactional,” Campbell reported.
Blockchain can be the key to connecting the African continent to not only the various ecosystems within it, but also the world beyond. It’s through tech and blockchain that we will start to see drastic advancement in the way Africa does business with the world.
“In the context of Africa and the blockchain, we got going with tech because we saw the need to connect, especially people in rural parts of Africa,” commented Jason Griessel, “As we all know there is this concept of the global village. We need to share ideas and without being able to do this we are in trouble. We need to start improving tech. We need tech and blockchain to seamlessly connect Africa and the world.”
On why blockchain is still relatively uncharted territory in Africa, Martinez says: “The issue in Africa is that there are a lot of scams like tokens and pyramid schemes taking advantage of uneducated consumers. Banks have thus chosen to advise their consumers against blockchain due to these scams in order to protect the consumer. The SA Reserve Bank has taken an even more progressive approach. Their stance on the matter is that since blockchain is tech that is changing every day there is no use in regulating it just yet. The other banks are reacting out of fear and ignoring the opportunity.”
Even though SARS’s initial hands-off approach has rippled through other financial institutions this is not disastrous as tech is evolving every day and so is the blockchain.
“If something is not endorsed by SARS it hurts other financial institutions,” added Griessel, “Be that as it may, the types of things that we are focusing on now bypasses financial institutions. That’s the change we’re starting to see.”
Gareth Lai agreed, “Blockchain is borderless. By using tech if everyone holds an Ethereum address you can directly send money anywhere with no fees. It empowers people and financial inclusion.”
The panel discussion concluded with a hot debate on whether or not blockchain will replace traditional banks.
“I believe cryptocurrency is what will drive the financial revolution in Africa, but I don’t think banks will be part of that. I think banks will become obsolete,” was Martinez’s opinon.
Campbell agrees to a certain extent: “A lot of what banks do will become obsolete. We’ve seen the same in telecoms regulation. In my view Telkom is a shadow of its former self. To try and keep up with tech and stop it is impossible. The good thing about blockchain is that there are no borders, people will move where it is.”
“One of biggest challenges in Africa is access. Blockchain is a decentralised system which means everyone is spread out and constantly communicating but if you become disconnected from that system you can’t use it. Biggest hurdle in Africa is solving for reliable, anti-fragile and resilient communication infrastructure and on top of that we can build blockchain. On top of that banks might become obsolete because blockchain will then be providing people with a better product,” commented Adrien Hope-Bailie.
“Blockchain puts the power in the hands of consumers,” concluded Martinez.
-BUSINESS REPORT ONLINE