Special feature (Part two): Blockchain – From blood diamonds to digital identity
Standard Bank’s Ian Putter reveals that blockchain could be key to inclusive trade and business growth in Africa.
Although the most well-known use case of the technology is cryptocurrency, almost anything of value can be traded or tracked on the blockchain, such as property, payments, copyrights, currency, collectables, supply chains, or computer code. Every detail about a transaction on the distributed ledger can be seen by the network’s members, and this technology is already being piloted across the continent. Diamond giant De Beers has used a blockchain to track its registered diamonds to determine if they’re conflict free and authentic, the Democratic Republic of Congo is using the technology to monitor cobalt mining for child labour, and local pulp and paper company Sappi is using a blockchain in a partnership with an Indian fabric producer to verify sustainability practices.
“With the blockchain, any asset can be digitised by ‘tokenising’ it,” says Ian Putter, head of Standard Bank's Blockchain Centre of Excellence. “Accounting entries will still exist, but you’ll use a shared ledger – it will make old processes redundant, mundane tasks will be eliminated, and no single person or centralised entity will be a gatekeeper.”
On the continent, South Africa, Kenya, and Nigeria are leading the way with blockchain pilots and implementations, and key sectors that are embracing this technology include banking, the supply chain, and healthcare. Governments have begun piloting it, too. In April this year, Ethiopia signed the largest blockchain deal in history to create a national database of student and teacher IDs using a decentralised digital identity solution, which will manage the digital identities of millions of Ethiopians to track their educational and career progress.
Blockchains could also be key to inclusive trade and business growth in Africa: a blockchain-powered, shared African digital currency would eliminate the long-standing problem of not being able to convert the region’s different fiat currencies. Coupled with the African Continental Free Trade Area (AfCFTA), the blockchain could facilitate barrier-free trade between African countries and accelerate pan-African economic growth.
You can read the full Special Feature in the third edition of the 2021 CFO Magazine.