As more African countries look to introduce digital currencies (for example Nigeria’s e-Naira), experts argue that the use of blockchain technology will add more transparency in the use of these currencies.
Patrick Prinz from Bitcoin Association, a body focused on the Bitcoin protocol, explains that the decentralisation of information makes data more secure compared to what occurs within the current siloed system, where one breach can expose millions of data points.
Prinz adds that transparency on how currencies are traded makes the whole system more trustworthy.
He said the introduction of e-Naira is a step in the right direction, but is essentially based on the same closed centralised way of managing funds.
But the use of blockchain might not happen as soon as some hope says Reginald Tumusiime, CEO of CapitalSavvy, a tech-centric advisory firm based in Kampala, Uganda.
CapitalSavvy is a participant in the Central Bank of Uganda’s digital sandbox and is advising the Bank on its intention to launch a digital currency.
“It is really early days,” says Tumusiime. “Our discussion is to educate them on how to put the UGX on blockchain and how to rollout a Central Bank Digital Currency successfully.”
He believes that the use of blockchain on such a large scale will take time. His company is in the process of applying for a license that will permit the business to serve as a payment company that will exclusively run on the Bitcoin network, ensuring cheaper remittances and less downtime.
As to why large financial institutions do not want to adopt blockchain technology, Prinz says: “Deciding to make a fundamental change is one that requires a lot of guts,” adding that CEOs focus on growing the main business rather than replacing core banking systems to accommodate technologies such as blockchain.
“All of these large banks are looking at the technology. Some are more vocal than others, but very few have actually done something,” he says.
Prinz believes rather than look at established entities to spearhead the adoption of blockchain in financial management, new startups and companies are more agile to change the narrative across Africa.