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Why African businesses are buying into Blockchain

Why African businesses are buying into Blockchain

South African businesses are "particularly excited" about Blockchain because they believe it makes interactions more transparent, secure, efficient and cost-effective – and this view is shared in the rest of Africa.

This is according to Craig Nel, Mobile & Cognitive Experience (MCX) Leader at Oracle Middle East, Africa and Turkey.

Nel led a discussion in Johannesburg recently focused on Blockchain services for different industries and the potential the technology has to transform these industries.

He says businesses in Africa share the sentiment expressed by their South African counterparts. "I am of the opinion that they do. The 'issues of trust' that companies in Africa face are not dissimilar to those in South Africa. Markets operate on the same fundamental principles across Africa, including South Africa, with differences predominantly based on the maturity of the markets and technology deployments."

Trust, it would seem, is a key issue and the prediction by market analysts is that businesses are investing in Blockchain based on the promise of streamlined transactions, the ability to track goods through supply chains, and reduce costs – and most notably the ability to transact on a trusted platform. These advantages are expected to fuel demand and increase the level of investment.

Oracle has quoted the IDC Worldwide Semi-Annual Blockchain Spending Guide, July 2018 and said this guide forecasts total Blockchain spending for MEA in 2022 at US$581 million with a compound annual growth rate of 71.7%.

As Nel says, "Companies that experience big losses related to corruption and fraud are looking to Blockchain to address these challenges, allowing organisations that might not fully trust each other to agree on a single, distributed source of truth."

But does Blockchain serve as "a single, distributed source of truth"?

"Yes," says Nel. "In a Blockchain system, the ledger is replicated in a large number of identical databases, each hosted and maintained by an interested party. When changes are entered in one copy, all the other copies are simultaneously updated. So as transactions occur, records of the value and assets exchanged are permanently entered in all ledgers. There is no need for third-party intermediaries to verify or transfer ownership. If a stock transaction took place on a Blockchain-based system, it would be settled within seconds, securely and verifiably."

The public sector, finance and distribution & services will be the top three sectors in terms of spend, according to the IDC guide.

Oracle adds several verticals to the list, including transportation, energy, retail and e-commerce, among others.

Nel believes the benefits of the technology to any business and industry justify the investment.

"Blockchain can establish a marketplace where contracts are embedded in digital code and stored in transparent, shared databases, where they are protected from revision, tampering, and deletion. Every agreement, every process, every task, and every payment would have a digital record and signature that could be identified, validated, stored, and shared. Intermediaries like lawyers, brokers, and bankers might apply their skills differently to enable the technology. Individuals, organisations, machines, and algorithms could transact and interact with one another with little or no friction. This is the immense potential of Blockchain."

Oracle has already detailed a use case of its Blockchain Cloud Service, made available to the market in July 2018, in Nigeria.

The Nigeria Customs Service is using the solution.

Aber T Benjamin, Assistant Comptroller General Modernisation, Nigeria Customs Service, said, "We used Oracle's blockchain to build a trusted platform for the automation of Customs Excise Trade business processes and procedures. This technology is not just about improving one organisation, but will help build global trust for Nigerian businesses, irrefutable data on goods manufactured in the country, thereby creating a favourable environment for investment."

Nel adds that there is a perception that Blockchain is expensive and difficult to implement, but this does not have to be the case and it need not be implemented as 'a big bang' approach.

"Businesses should look for those use-cases that will add the most value in the shortest amount of time."

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