Africa keeps on encountering fast financial development since the turn of the thousand years and is relied upon to continue this upward pattern within a reasonable time-frame. Such has been the ascent it has shed the moniker of the “Dark Continent” and rather has woven another story named “Africa Rising”.
Africa’s development has been driven by extension of foundations, industrialization, rising earnings, mechanical progression, and improved administration among others. These combined with unexploited assets, an energetic instructed populace, extending request, and developing intra-Africa exchange have made the landmass appealing to speculators. This is confirm by the numerous nations and associations looking to take advantage of this potential with every one of China, Russia, India, USA and Germany, holding Africa-speculation summits
Africa has slacked the remainder of the world in financial development and improvement for a long time however it has gained some ground in the previous 3 decades flagging a potential move of fortunes. Be that as it may, the impacts of these progressions are not sweeping with the advantages felt spatially across countries, monetary areas, and socioeconomics.
Market advancement, privatization, and general monetary adjustment have been broadly embraced, yet their effects are yet to be felt particularly at the small scale level. For example, there is generous liquidity and capitalization of banks in Africa, yet for the vast majority in Africa there is restricted access to monetary administrations, particularly credit.
Glancing from outside-in, it is conceivable to presume that the flourishing financial industry is an impression of the monetary welfare of the individuals in Africa. However nothing could be further from reality.
Looking at the circumstance from an insider’s domain gives an increasingly precise delineation of the financial condition of most Africans. The alleged advantages of more profound, more extensive, and less expensive money presently can’t seem to be felt in the area. This has smothered monetary advancement at individual, network, and national levels as financing stays a save of the tip top, remote, and huge organizations.
There is underinvestment in numerous ventures, while little and medium-size endeavors lastingly battle to draw in the truly necessary capital infusions while working in profoundly serious segments. The circumstance is more terrible for specific vested parties including ladies, youth, and casual area organizations that ordinarily work on the fringe of the economy.
Genesis of the problems
The financing problem in many African countries is largely, systematic with official policies, objectives, and messages failing to address the underlying issues. Moreover, the reluctance to safeguard the financial sector continues to inhibit local businesses’ ability to get funding. This has been a major stumbling block, particularly for private equity.
Issues such as political risk management, burdensome restrictions on operations and weak governance stand in the way of investment inflow. Such funding is being rerouted to competing nations and regions with friendlier business environments.
The tale of finance for businesses in Africa is one of cautious hope rather than imminent possibility.
New possibilities with blockchain technology
Unsurprisingly, new inventions, products, and technologies have become the panacea for Africa’s financing issues. Innovative approaches such as mobile money have helped improve financial inclusion by bringing in many unbanked people to the national economy. Informal lending, mobile loans, and table banking have also emerged as novel approaches to securing business funding especially in the informal sector.
Now, yet another new invention, blockchain technology, has come to the fore and brings with it some new grand possibilities.
Blockchain decentralizes finance enabling the creation of new products and services not permissible in the conventional financial sector. It drastically changes how people save, lend, borrow, and invest in the digital space.
For instance, the permissionless, decentralized, and transparent nature of the blockchain enables businesses to raise funds from anyone across the globe. It also helps them to bypass red tape and regulatory oversight, which has been a major impediment in fundraising.
This is important for entrepreneurs, SMEs, and special interest groups, as they are rarely the beneficiaries of foreign investment. Since they mostly operate in the informal sector, these businesses and entrepreneurs go unnoticed by potential investors. Blockchain technology helps them overcome these challenges and get funding outside of traditional investment avenues.
Blockchain technology and Africa’s economic development
For so long, Africa has been looking for that one elixir that can cure all its ailments and spur the economic growth and development of its nations. Blockchain technology is emerging as that, much-sought-after, elixir that will help Africa resolve its longstanding impediments to economic progress.
As aforementioned, it will facilitate the flow of investments in Africa through crowdfunding initiatives across multiple sectors. This will aid growth of local industries and provide a host of economic, social, and political benefits such as employment, access to amenities, and better infrastructure. These investments will help African nations to compete on the global marketplace.
Blockchain technology also provides novel approaches towards governance, risk management, equity, transparency, and business operations among others. Streamlining these issues will improve respective African nations’ attractiveness as investment destinations. This will serve as the much-needed catalyst to drive the next phase of Africa’s economic development journey.
The blockchain technology is an integral component of the fourth industrial revolution and will play a critical role in a digital world. The fourth industrial revolution has been hailed as a disruptive force that will fundamentally change every facet of human life. Its explosiveness, magnitude, and potential breakthroughs are expected to usher in a new era rather than act as a continuation of the third.
Unlike previous industrial revolutions, this one is ubiquitous and open for adoption as we continue to evidence its drastic changes. It harbors great risk but also bears the potential for high returns. This is a time of great promise and nations can only ignore these inventions at their peril.
For Africa, it feels like blockchain technology and the fourth industrial revolution is leveling the playing field for the first time in ages. This provides a platform upon which African nations can accelerate their push for economic development and catch up with developed nations.
This is the one head start that Africa cannot afford to lose. Either catch the wave and ride it or be left behind forever in the future.