Blockchain technology is killing the forest of fees that has made remittances such a lucrative business for banks and transfer agents.
like this desk As the World Bank shows, sending a relatively small amount of R1,340 from South Africa to Kenya costs an average of 12%. Using blockchain technology, companies like paxfulFlutterwave, AppZone Switch, and Chipper Cash are breaking the gateway to that party, allowing remittances for as little as 1%, and even that low cost is falling rapidly as more competition enters the market.
“For years we have heard about how blockchain technology will revolutionize business, but now we are seeing the evidence,” says Sonya Kuhnel, director of Bitcoin Events.
“The big use case for blockchain in Africa is remittances, and in some countries these inflows represent 4% to 5% of GDP. So having 12% of that absorbed in costs is huge. This is a prime example of the kind of disruption that blockchain technology is bringing to Africa.”
The Blockchain Africa Conference 2022, a virtual conference taking place on March 17-18, features some amazing African blockchain entrepreneurs such as Uche Elendu, founder and CEO of AppZone Switch, which is a blockchain-based platform designed for intra-African payments in fiat and digital currency, such as stablecoins.
Elendu points out that one of the biggest barriers to intra-African trade is the ability to make payments across borders, other than in fiat US dollars. AppZone Switch has solved this by creating a platform that enables real-time settlement of fiat currency transactions as well as digital currencies. The goal is to make intra-African payment settlement instant and secure.
To aid this trend, the Pan-African Payments Ecosystem (PAPE) was created as a private, permissioned blockchain network that includes a consortium of banks and fintech players.
“There is no doubt that a large number of cross-border payments and remittances will be processed and settled on blockchain in the coming years, and this is a very real threat to banks that do not engage with this new technology. Kuhnel says.
Cardano founder Charles Hoskinson will once again be the keynote speaker at the Blockchain Africa Conference, expected to outline plans for the rationalization and expansion of the blockchain network that launched in 2017 as an alternative to Ethereum.
Hoskinson is credited with selling blockchain technology to the Ethiopian government, introducing decentralized digital identity (DID) for five million students in 3,500 schools as a way to store educational records. DIDs can be adapted to dozens of other use cases and could ultimately become a place where personal information, from identification documents to Know Your Customer (KYC) details, can be stored in one place. central deposit and can be accessed with the permission of the owner. No more gathering a packet of personal data every time you want to apply for financing, for example.
Kuhnel highlights some of the business cases for blockchain that are already being implemented in Africa.
- Absa, PwC and BankservAfrica are partnering with Cardano Africa on a digital ID project that has mass application in Africa, enabling identity verification, which in turn will help bring financial services to the unbanked;
- Central Bank Digital Currencies (CBDCs): South Africa recently announced a trial of CBDCs for cross-border payments that could motivate other financial institutions around the world to adopt the technology. In another example, Nigeria plans to introduce a CBDC called e-Naira in 2022.
- Supply chain and trade finance. Blockchain companies like DataLedger and BeefLedger are developing technology to drive supply chain efficiency by reducing information asymmetries between transacting parties.
- The government of Egypt, through its customs authority, introduced an integrated information platform called the National Single Window for Foreign Trade Facilitation in 2021. This will greatly improve trade response times and provide better quality information to the government.
- Trade and Development Bank (TDB): $400 million worth of fertilizer trade finance transactions have been delivered from Morocco to Ethiopia, all using blockchain technology. The initiative aims to reduce the trade finance gap in Africa and boost trade between African countries.
- Games and Web3: Jambo and Nestcoin in Nigeria and Usiku Games in Kenya allow online gamers to generate income by earning non-fungible tokens (NFTs) at no cost to them.
- Bringing Internet Access to Everyone in Zanzibar: Mesh Internet network operator World Mobile has partnered with the Zanzibar E-Government Agency to launch free metered Wi-Fi Internet access in public government institutions.
These are just some of the use cases that will be profiled at the Blockchain Africa Conference, says Kuhnel.
You can sign up for the event here.
Presented by Bitcoin Events.
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