A taskforce set up by Kenya's government to look into emerging technologies has recommended the development of a digital asset framework to enable citizens to raise funds through blockchain-based crowdfunding mechanism, Initial Coin Offerings (ICOs).

In its report, the Distributed Ledger and Artificial Intelligence Task Force said that Kenya needs to pilot ICO's "promising concept" and "issue an infrastructure coin or one that deals with the problem of unemployment."

The taskforce was created to develop a roadmap for emerging technologies that will define 4IR and it shares the World Economic Forum's (WEF) view that blockchain and AI "provide an unprecedented level of integrity, security and reliability to the information it manages, reducing the risks associated with having a single point of failure."

The taskforce wants the Kenyan government to leverage available resources to create local cryptocurrencies through this "viable concept" and avoid debt .

"The Kenyan government should develop a digital asset framework to enable citizens to raise funds through Initial Coin Offers (ICOs) as a strategy to help local investors put their resources in cryptocurrencies underpinned by the utility of local resources," it stated, adding: "These will help transform many viable Small and Medium Enterprises (SMEs) and start-ups to scale to other countries. Governments too could raise infrastructure resources to locally issued ICOs and minimise foreign debt."

Transparent transactions

Kenya is working on the premise that corruption will be defeated through the application of emerging technologies like blockchain as it eliminates the need for intermediaries, cuts red tape and reduces the risk of arbitrary discretion.

It also makes it possible to track and trace transactions as the immutable trail of transactions can be used by law enforcement and government auditors, the report added.

"It's very interesting that Kenya is already thinking this far ahead," said Suyash Sumaroo, whose Mauritius-based Horizon Africa is working on a project to enable private and public organisations to set up blockchain-based systems that allow more regulatory control over fund-raising mechanisms including ICOs and STOs (Security Token Offerings).

"Having such a framework would prove beneficial for Kenya. A step further would have been for the Kenyan government to actually set up precise technical requirements backed by real smart contracts on a blockchain. This would allow for more control and transparency."

Dr Peter Dole, whose Kenyan-owned business Land LayBy Group runs a live land blockchain listing, said there is an element of centralisation with regards to the taskforce's report and transparency is a big issue.

"Blockchain technology cannot coexist with lack of transparency. For blockchain technology to offer a long-lasting and trusted solution, there ought to be decentralisation right from the word go with fluent disclosures of interests in whatever is recommended."