An Unchecked Spiral to Financial Doom?

I recently logged into my Binance account and headed for the P2P section. My goal was to check the current trading rates of the Naira (NGN) against the US Dollar token (USDT), a goal that has left me unpleasantly stunned. Living in Nigeria, the economic crunch has become unbearable, with many Nigerians seeking alternative solutions to the hardship in the land. These solutions vary in range, from extremely efficient to morally corrupt. Some people opt to gain remote foreign employment, even if it means earning $250 a month, which would currently be a generous amount when converted to the Naira, our local currency. Others are leaving the country in search of the cliched “greener pastures”, without factoring in the economic situation of their intended destinations; “anywhere but here’ is the main thought that eggs them on. Then you have those who see no means to end their suffering but to steal and rob other citizens who also experience the pinch of an out-of-control economy. Crimes related to theft have surged in the last year. I have no statistics for you (given that the National Bureau of Statistics last captured such data in 2017) except for that of an eyewitness. I have seen more cases of robbery and theft in the last year than I’ve ever witnessed prior. The last set of the opposite extreme is genuinely the saddest to me. Left with no source of hope, with hunger and poverty their only future, these turn to death for solace. When death is preferred over the struggle to survive, then you know that the state of the economy truly offers no hope at all.

Now, away from criminals and those lost to despair, I need you to comprehend the dire nature of the situation, yet I believe you already understand. The case in Nigeria is not in isolation. Countries all over our motherland are experiencing the throat-burning sensations of poor economic performances, falling currencies and hyper-inflated rises in the cost of living. According to the latest data released by TradingEconomics for August 2023, Nigeria is currently going through a 25.8% inflation, the 9th highest in Africa; however, it pales in comparison to the inflation raging in the nation of Zimbabwe, with a 77.2% inflation ravaging their nation’s economy. What got me very upset was the fact that our economies are still “emerging’. They have not fully developed but they are already hit by serious problems. As I mentioned at the start, the current trading rate of USDT/NGN, which is indicative of the forex rate between the Naira and the US Dollar, has hit the milestone value of N1000 per $1. This left me questioning the trajectory and progress of our economy. Will the Naira get any better? Will our economy continue to shrink? Is there nothing we can do to help the recovery process of our economy? How long do we suffer before our economy begins to thrive?

The Blockchain-led Renaissance of the Emerging Economies

I’ve thought about these questions a lot, and I believe so many Africans have done so as well. I keep thinking about blockchain technology and the benefits an emerging market will enjoy if it incorporates elements of digital cryptography. Call me nuts, but I won’t be deterred, blockchain technology has a

significant role to play in the development of African economies. We can transfer wealth and value back to the people, and most importantly, we can give them HOPE. Hope of a better tomorrow, hope of a more sustainable future; hope for a future where our children will be proud of us for striving towards positive progress. I have researched the potential benefits of the incorporation and 6 stood out for me. These advantages are significant because they each solve a problem our economies have to deal with. With advancements being made by the rest of the world toward more efficient and progressive economies, African nations must seize the initiative and not lag. So how can blockchain technology decentralize prosperity in Africa? Let’s deep dive into it.

1. Enhanced financial inclusion: Blockchain enables secure and transparent peer-to-peer transactions without the need for traditional banking intermediaries. This can empower individuals and businesses in emerging economies, especially those without access to traditional banking services, to participate in the global economy. Many Africans are unbanked or underbanked. Blockchain-based financial services can provide access to banking and other financial services to those who are excluded from traditional banking systems. DeFi is rooted in the notion of democratizing finance by replacing central institutions (like banks) with peer-to-peer relationships that do not require intermediaries. This will remove the annoying red tape many Africans are affected by when transacting with traditional financial institutions. Financial services such as savings, loans, interest yields, insurance and more will be more readily accessible to the people. No more long queues or tedious paperwork to get through. This will promote quicker banking and more Africans, especially those who have refrained from it due to the bureaucracy, will be able to participate in financial markets. This will lead to greater revenue generation, increased workforce and better business scaling.

2. Reduced Fraud and Corruption: The immutable nature of blockchain makes it extremely difficult for malicious actors to tamper with or manipulate data. This can help reduce instances of fraud and corruption in financial transactions and public services, which are often prevalent issues in emerging economies. It’s a prevalent issue in almost all African countries. Public officials loot the national coffers for their gain and render our economies somewhat destitute. Blockchain technology will help checkmate this broadday robbery as every transaction will be recorded, so there will be no hiding of fraudulent transactions. Our economies will not suffer short squeezes because of the greed of corrupt servants operating in the public domain. Through its cryptographic security measures, blockchain can help in verifying the authenticity of goods and documents. This is particularly beneficial for industries like agriculture, where counterfeit products can be a significant issue. Each product will have a unique digital license and meta-data that will be verifiable on the blockchain, so traders can correctly identify original products against counterfeits.

3. Efficient Cross-Border Transactions: Blockchain can streamline and expedite cross-border transactions, reducing the time and costs associated with traditional banking methods. This is particularly beneficial for emerging economies with high remittance flows, as it can lead to more funds reaching their intended recipients. African economies often deal with complex cross-border transactions. Blockchain can facilitate faster and cheaper international payments, cutting down on intermediaries and reducing transaction costs. I’ll use Nigeria to make things clearer. Receiving or sending out foreign currencies has become an increasingly difficult venture in recent years. The exchange rates were not stable, there were lots of fees, including hidden charges for conversion and transfers, and the loss made on the conversion would be quite expensive. Cutting out the

middlemen (banks) and dealing in cryptocurrencies is much more cost-effective and gives traders more value for their money. There will be no hidden fees or fees paid to middlemen. All transaction fees are paid to the blockchain and if you use certain blockchains, like TRC 20, the transaction fee for any amount of $USDT you send will be $1. This fee will be the lowest compared to the fees charged by traditional finance. With blockchain technology, sending more value has become a whole lot simpler.

4. Supply Chain Transparency: blockchain’s distributed ledger technology can be used to create transparent supply chains, enabling consumers to trace the origin and journey of products. This is especially important for industries like agriculture, where provenance and authenticity play a crucial role. Another crucial benefit blockchain technology offers to supply chain management is that it ensures authenticity, quality, and compliance with standards. This can boost export potential. Farmers can have total control over the movement of their crops from the farm to the final retail store. They will not be cheated or robbed of what they are due since every product is correctly accounted for and identified, and the entire journey is monitored by an independent network.

5. Efficient Government Services: Implementing blockchain in public services like identity management, voting systems, and social welfare distribution can enhance efficiency, reduce fraud, and increase transparency. This leads to better governance and builds trust between citizens and the government. Blockchain can enable individuals to have control over their own digital identities. This is particularly important in regions where formal identification systems may be lacking. With blockchain technology, the anomaly of ghost workers would be history as every worker in the public sector will have a unique verifiable identity. This will curb excess expenditure and keep more money in the public treasury. The distribution of social welfare will be enhanced due to these digital identities. No more double distributions or zero distributions, every verifiable person will be given an equal share of the welfare provided.

6. Stimulating Innovation and Entrepreneurship: The adoption of blockchain can foster a culture of innovation and entrepreneurship. It can create opportunities for startups and developers to build on top of blockchain platforms, leading to new business models and services. There are limitless amounts of opportunities open to Africans in the blockchain industry. From writing about it like I do to creating video content, X threads, blockchain development, analytics and data science, marketing and copy, and many more opportunities that have presented themselves to Africans. We are in a period where we can create wealth for ourselves and others around us.

Blockchain technology has opened the gateway for our economies to explode into life. We can create sustainable and progressive markets across Africa through this technology. Not just in the digital space, blockchain has the potential to enhance our trade and the ways we do business. We must be active and intentional, not waiting for an Anglo-American or Eurasian to set our economies on the right track. It’s ours to build, maintain and develop, it’s ours to create and propel. With blockchain technology, the future of African economies rests in the palms of Africans.

Till next time.