East African governments are preparing to harness blockchain technology — a digital distributed ledger system for recording transactions — to improve service delivery and grow their economies, even as financial regulators counsel caution over fears of fraud.
Uganda is the latest — after Kenya and Rwanda — to show interest in the technology.
Last week, the country hosted a regional conference in its capital with President Yoweri Museveni announcing that his government will soon begin discussions on developing regulations for the technology.
“We’re going to discuss this among ourselves. The policy will come from the results of the brainstorming from other sessions in Cabinet,” President Museveni said at the opening of the Africa Blockchain Conference Kampala.
According to President Museveni, blockchain technology will help deal with challenges in land registration, service delivery tracking in health and other critical areas.
However, this was a sharp contrast to the Central Bank Governor, who expressed scepticism especially of the cryptocurrency component of the technology, saying that unregulated, cryptocurrency is more or less a Ponzi scheme.
Uganda’s Minister of Information Communication and Technology, Frank Tumwebaze told the conference that a taskforce will be created to study and advise the government on how best the technology can be deployed in Uganda.
“Blockchain technology like any other innovation will successfully take root in Uganda. If you push technology away, others will adopt it,” said Mr Tumwebaze.
Barely a month ago, Kenya’s President Uhuru Kenyatta said his government will soon experiment on whether the technology can help in different sectors.
Kenya has already constituted an 11-member taskforce to see how the emerging technologies can boost public service delivery, mainly in financial inclusion, election process, cybersecurity and land titling.
Already, the Kenyan government is working on a blockchain database known as the Single Source of Truth (SSOT) which will become the primary reference for all land transactions, as it looks to weed out fake title deeds from the land registry, in its first potential mass application of the technology.
Rwanda far ahead
Speaking in Kampala, the chairman of the Kenya Blockchain Taskforce, Prof Bitange Ndemo said that the technology will bring about efficiency in government, reduce corruption and increase employment opportunities in African countries as well as tax collection particularly VAT.
“We want the economy to work using technologies like blockchain. By creating guidelines for the responsible and practical use of a digital asset framework throughout the African continent, we can promote enterprise development and trade,” he said.
Rwanda is far ahead of its peers in the East African Community as it established the Blockchain and IoT Centre of Excellence in partnership with Swiss cybersecurity WISekey in early 2017, a project aimed at leading the country in becoming more digitised to enable secure transactions, digital authentication and legally- binding signatures.
In October 2017, the project brought on board technology giant Microsoft to help digitise the Rwanda land registry, using WISeKey’s WiseID suite of mobile applications and Microsoft’s cloud computing service Azure to digitally store and protect necessary data to enable authenticity of identification.
The hosting of the blockchain conference in Uganda, barely two months after Kenya hosted the World Blockchain Summit indicates the growing popularity of blockchain and other related technologies in the region.
Mineral-rich Democratic Republic of Congo is also planning to begin tracking cobalt from artisanal mines through to products used in smartphones and electric cars using blockchain, in order to identify the cobalt mined by children, potentially helping to decrease in child labour.
Blockchain is already being used in the diamond industry where gems are given a digital fingerprint which is then tracked as gems are sold, giving a forgery-proof record of the source stones.
Experts say blockchain technology can work for almost every type of transaction involving value, including money, goods and property. Its potential uses are almost limitless: From collecting taxes to enabling migrants to send money back to family in countries where banking is difficult.
But some say that it will do to banking what the Internet did to media: It can be used to give access to financial services to billions of people around the world, including those in the Third World countries who do not have access to traditional banking. A case in point is the Bitcoin, which allows anyone to send money across borders almost instantly and with relatively low fees.
The chairman of Uganda Bankers Association Patrick Mweheire conceded that the banking industry is facing more disruption from the blockchain than any other sector, “especially in payments and money transfers.”
Mr Mweheire explained that although the blockchain ledger is public, the data is verified and encrypted using advanced cryptography.
“This way, the data is less prone to being hacked. With blockchain technology transactions can be documented in a permanent decentralised record, and monitored securely and transparently,” he said.
With the disruptions, Mr Mweheire said banks need to adopt blockchain technology in areas such as payments, transactions and credit risk.
The Governor Bank of Uganda, Prof Emmanuel Tumusiime Mutebile termed blockchain a “revolutionary technology with the potential to change the way we manage data and do business.”
This view is shared by chairman of Africa Blockchain conference, Kwame Rugunda, who termed it “disruptive; the kind that have refined our human and social progress.”