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Journal of African Business Issue 4

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Welcome to Journal of African Business, your guide to business and investment on the continent. The fourth edition of Journal of African Business is the second issue of this magazine to be published as a quarterly. The first two journals were published as annual publications in 2020 and 2021. The Journal of African Business covers a wide range of subjects within the broader economic sectors: energy; mining and exploration; trade; finance; technology and tourism. In addition to this, special features on topical matters are included, along with country profiles.


BLOCKCHAIN IS A DRIVER OF FINANCIAL INCLUSION IN AFRICA Africa’s biggest banker, Standard Bank, is researching and developing transformative fintech and blockchain products. NNecessity is the mother of invention – and given Africa’s rapid Credit: Markus Spiske on Unsplash Blockchain can enable the creation of corruptionresistant and robust welfare systems commercial growth and globalisation over the past decade, it seems that the necessity for more inclusive financial services has been firmly established. The emergence and acceleration of financial technology (commonly referred to as fintech) has attracted billions in funding, dominated commercial narratives and become the darling of investors globally, and for good reason. Generating more than -trillion annually, the financial services sector is thriving, and with an addressable market that spans most of the globe, the growth is sure to continue. There is no market in which the growth of (and demand for) more inclusive and accessible financial services is more prevalent than in Africa. With the explosion of SMEs and entrepreneurship in several African countries, innovation in fintech, and particularly in blockchain technology, is being propelled forward to drive the improvement of financial infrastructure. To address the unique challenge of providing the large portion of the African population that remains unbanked with more accessible tools for financial management and inclusion, Standard Bank and others have been researching and developing transformative fintech and blockchain products. 24 GROWING ADOPTION OF BLOCKCHAIN IN AFRICA Among the uses of fintech in Africa are peer-to-peer (P2P) payments, widely used to enable the informal and small business ventures at the beating heart of many African economies, as well as the easing of logistics and reducing the cost of remittances. Further, the continued globalisation of African markets has resulted in a need for more efficient and lower cost cross-border payments to facilitate African businesses conducting trade abroad. Countries like South Africa, Kenya, Nigeria and Ghana have seen a rapid uptake of cryptocurrencies as a means to access more efficient payment rails provided by blockchain networks and yield returns on income with assets like Bitcoin or stable coins pegged to the value of the US dollar. CRYPTOCURRENCY VS BLOCKCHAIN: WHERE DO THE OPPORTUNITIES LIE? The real potential for exponential leaps in financial inclusion lies in the blockchain infrastructure that underpins cryptocurrencies, rather than in the currencies themselves. One of the most powerful aspects of blockchain is the ability to create programmable money, that can assist to eliminate fraud and human error in transactions

FINTECH Blockchains can also provide mechanisms for fair and transparent microfinance and increased purchasing power, to support the creation and growth of small enterprises that serve communities. and foster transparency in financial records. This aspect of the blockchain can enable the creation of corruption-resistant and robust welfare systems, ensuring that social welfare efforts reach their intended beneficiaries and meet priorities like ensuring that those in need are assisted and treated with dignity. For instance, blockchains that enable smart contracts (a computer programme that requires conditions to be met before executing a transaction) may be used to verify an individual’s eligibility to receive a grant and then pay the recipient directly into a digital wallet on their smartphone. Blockchains can also provide mechanisms for fair and transparent microfinance and increased purchasing power, to support the creation and growth of small enterprises that serve communities. Transparent social coordination tools afforded by blockchain-based organisational entities like DAOs (decentralised autonomous organisations) can empower small business collectives to gain access to competitive advantages like negotiating power to match larger businesses. STANDARD BANK’S COMMITMENT The shift in African markets is taking place as a grassroots and collaborative transformation. Building financial literacy, education and awareness at the level of communities and providing them tools to help empower themselves is a priority for Standard Bank. Standard Bank remains at the forefront of research and development of blockchain and distributed ledger technology in the African context, committed to the exploration of efficient digital payment rails and financial services that enable African commerce to flourish. This includes ongoing collaboration with major blockchain companies like Algorand and Hedera. Improving the inclusion of the underserved is a core value of Standard Bank, and blockchain technology will no doubt provide an avenue for great impact on African markets in the coming years. Blockchain has the potential to make welfare systems corruptionresistant and more efficient. Credit: Krizjohn Rosales/Pexels Credit: Ales Nesetril on Unsplash 25

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