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How Blockchain could save Africa in times of Covid

Photo of: Nathan VDH
by Nathan VDH

A large number of countries, of different sizes, have sounded the alarm: the health crisis we are experiencing is having disastrous consequences on the economy and the threat of a second wave poses the risk of a new and even more violent global slowdown in the world economy.

And if a large majority of the globe is now affected by COVID-19, Africa is going through the crisis differently, the continent still seems to be able to escape the announced health disaster. However, the risk seems to lie mainly on the economic issue for this continent which brings together the poorest countries and where households produce the least wealth. This wealth, once created, is distributed unequally or wasted.

Indeed, while the continent is rich in raw materials, it is heavily dependent on foreign aid but above all on foreign trade, and wealth is often centralized by the upper classes.

Faced with the current global crisis, half of the jobs in Africa are threatened by the impact of COVID-19 and the economic situation is very critical in the face of a declining volume of purchases and a slowdown in demand, mainly from Western countries, creating an unprecedented situation in Africa.

Added to this new challenge are the endemic problems of the continent, marked by particularly high levels of corruption and where, according to the World Bank, with 7.4% of aid diverted to tax havens, the leakage rate is the highest in the world. Thus, the sums intended to boost the economies of the countries are recovered by the elitist class, which takes advantage of them with total impunity.

The misappropriation of funds is ubiquitous and the corruption perception index published by Transparency International confirms that it is the main cause that hinders the development of African economies.

All these issues are gradually forming a bomb on the African economy that will mainly affect consumption in the first instance. But what means should be put in place to revive the economy while avoiding the endemic problems of corruption and embezzlement?

This issue of transparency and traceability that marks the continent is the very reason for the existence of the Blockchain. The interest of this new technology lies above all in the possibility of delegating the storage of information to computers – transparent and reliable – in order to optimize financial operations by further democratizing the economy in Africa.

Developing the Blockchain in Africa is not a risky choice, on the contrary: the African continent has already been a land of “digital revolution” for several years now, the reflections around the Blockchain are already numerous but the implementation of industrial solutions is still waiting.

The promises of this new technology are numerous, and the main one is the organization of exchanges within a financial framework that is regulated and not monitored solely by the political class. The blockchain and cryptocurrencies could become a source of growth for Africa and will promote the development of intra-African trade while at the same time securing the loyalty of aid destined for the continent, which will have a less ambiguous end thanks to the traceability made possible by these new means.