Blockchain technology has garnered immense attention and excitement worldwide, holding the promise of revolutionizing various industries and sectors. Africa, with its unique set of opportunities and challenges, has also been swept up in the blockchain hype. However, despite the potential benefits it offers, implementing blockchain in Africa faces significant roadblocks. This article delves into the showstoppers that hinder the widespread adoption of blockchain technology in Africa, emphasizing that while the concept is captivating, the technology is not yet ready for prime time. By exploring infrastructural limitations, regulatory obstacles, financial implications, skills gaps, trust and adoption concerns, and privacy/security issues, this article aims to provide a comprehensive overview of the unreadiness of blockchain to serve as the Internet of grand scale in Africa.

1. Real-World Limitations: Infrastructure and Connectivity Constraints

1.1 Limited Internet Access and Connectivity

While blockchain technology relies heavily on internet connectivity, Africa continues to grapple with limited access to the internet. Despite recent growth in internet penetration all over the world, Africa is still lagging. Globally, there are 400 million people not covered by a mobile broadband network (5% of the world’s population), with half of them living in Sub-Saharan Africa. Yet, there are substantial differences within the continent. In Central Africa, 39% of the population live outside a mobile broadband coverage area, while this figure is 16% for West Africa, 13% for East Africa and 12% in Southern Africa (GSMA, 2023). This digital divide creates a significant barrier to widespread blockchain adoption, as it requires a robust network infrastructure to achieve secure and efficient transactions.

1.2 Inadequate Power Supply

Another challenge that hinders blockchain implementation in Africa is the continent's unreliable power supply. Frequent power outages and limited electricity access make it difficult to maintain the constant operation required for blockchain networks. The power poverty of Africa is staggering as 600 million people or 43% of the total African population lack access to electricity, most of them in sub-Saharan Africa. Without a stable power infrastructure, the uninterrupted functioning of blockchain technology becomes a pipe dream for many African citizens.

1.3 Outdated Technology Infrastructure

In addition to connectivity and power limitations, Africa's technology infrastructure often lags behind. Outdated hardware and software systems can struggle to support the demands of blockchain technology. Updating and modernizing the existing technological ecosystem requires substantial investment and commitment from governments and businesses, which can be a slow and arduous process.

2. Regulatory Roadblocks: Navigating Legal and Policy Frameworks

2.1 Lack of Clarity in Blockchain Regulations

Blockchain technology operates in a legal grey area in many African countries. The absence of clear regulations on blockchain poses a challenge for businesses and organizations looking to adopt the technology. Although countries like South Africa and Mauritius are front-runners in developing regulatory frameworks for cryptocurrencies, other countries need to follow along. The lack of legal clarity leads to uncertainty and hesitancy, inhibiting the growth and innovation potential of blockchain applications.

2.2 Compliance Challenges and Regulatory Burdens

Even in countries where blockchain regulations exist, compliance can be burdensome. The complex nature of blockchain technology often requires organizations to navigate intricate regulatory frameworks, leading to additional costs and potential legal risks. Compliance challenges can stifle innovation and deter businesses from fully embracing blockchain solutions.

2.3 Slow Adoption of Blockchain-Friendly Policies

While some African countries have shown interest in blockchain technology, the pace of policy adoption remains slow. Without a supportive policy environment, blockchain implementation struggles to gain momentum. Governments need to become proactive in crafting blockchain-friendly policies that provide clarity, encourage innovation, and foster an ecosystem conducive to blockchain growth.

3. Financial Implications: Cost and Scalability Issues

3.1 High Implementation Costs

Implementing blockchain technology involves significant upfront costs, making it a challenge for businesses in Africa, where resources may be limited. The cost of acquiring and maintaining the necessary infrastructure, along with training staff, can be a financial burden that many organizations are unable to bear. The high implementation costs hinder the widespread adoption of blockchain technology in Africa.

3.2 Scalability Challenges

Scalability is a critical aspect of any technology looking to make a widespread impact. Unfortunately, blockchain technology still faces scalability challenges, especially when it comes to handling a large volume of transactions simultaneously. This limitation impedes its potential in sectors such as finance and supply chain management, where high transaction volumes are the norm. The blockchain is prone to capacity problems, systems failures, unexpected bugs, and the frustration of non-tech-savvy users. Some platforms like Kucoin and Scroll.io have gone a long way in solving these problems though. And up-and-comers like Yellow Card may change the game. However, this is still a concern for some applications across Africa.

3.3 Limited Funding Opportunities

Undoubtedly, Africa’s blockchain market is booming with a 429% year-on-year (YoY) increase in funding in 2022 per the African Blockchain Report 2022 by CV VC. Despite this, access to funding is a persistent hurdle that inhibits the adoption of blockchain technology in Africa. It is noteworthy that the high funding generated in the blockchain industry of Africa is still low compared to the global funding figures in other regions. These limited funding opportunities and a lack of investor awareness often leave promising blockchain initiatives struggling to find the resources necessary for successful implementation.

Image: African blockchain venture funding, Source: African Blockchain Report 2022, CV VC, April 2023

4. Skills Gap: Lack of Technical Expertise and Awareness

4.1 Shortage of Blockchain Professionals

Blockchain implementation in Africa faces a major hurdle - the shortage of skilled professionals. Finding individuals with expertise in blockchain technology is like searching for a needle in a haystack. It's as if all the blockchain experts decided to play hide and seek and forgot to tell us where they're hiding. This scarcity of talent makes it challenging for organizations and governments to recruit the right people to drive blockchain initiatives forward.

4.2 Limited Understanding and Awareness of Blockchain Technology

Now, let's address the elephant in the room - the limited understanding and awareness of blockchain technology. Many decision-makers and stakeholders still haven't wrapped their heads around the concept of blockchain, let alone its potential applications. It's crucial to bridge this knowledge gap by providing accessible and engaging resources, so everyone can join in the blockchain revolution.

4.3 Insufficient Training and Education Programs

To make matters worse, there's a lack of proper training and education programs focused on blockchain technology. If we want the technology to flourish, we need to invest in comprehensive training programs that equip individuals with the necessary skills and knowledge to leverage blockchain effectively. To win people over, the training programmers should also focus on presenting the successful use cases of blockchain products. People want to see tangible results and real-world applications of blockchain technology. Sharing stories of how blockchain has transformed industries, improved efficiency, and brought about positive change can help build confidence and encourage adoption. After all, seeing is believing, and a good success story is worth a thousand whitepapers.

5. Liquidity and High Latency: Need for More Powerful Processing Powers

5.1 Liquidity (or Lack of It)

Bitcoin has a fixed quantity. For example, there will be 21 million Bitcoins in circulation by the year 2140. But it will be mined at a decreasing rate. As the number of users grows, the value per coin will increasingly grow. From a price of $0.01 per Bitcoin in May of 2010, Bitcoin is currently selling at $41,880. Perhaps it will continue to grow long into the future. Well, there's a challenge to that. Early adopters hold on to Bitcoin as miners hold onto gold. They hoard it, hoping the value will increase, rather than treating it as something to exchange. There is also the dilemma of coins stored in lost wallets or sent to addresses whose owners have lost their private keys. These coins can't be recovered. And that means there will be fewer Bitcoins in actual circulation than the 21 million that we mentioned before and this may not serve the world's population. A similar challenge applies to numerous other cryptocurrencies on the market.

5.2 High Latency

It takes on average 10 minutes to clear and settle transactions on the Bitcoin blockchain network. It's faster end-to-end than most other traditional payment forms, but it's still too long for certain use cases like the Internet of Things (IoT) where devices need to interact non-stop. Ten minutes is just too long for retail financial transactions where timing matters to get an asset at a particular price. Although entrepreneurs and developers have risen to the challenge by tweaking a few parameters in the source code or by launching a new blockchain known as an alt-coin in place of Bitcoin, the high latency is still challenging in some use cases. Litecoin is a popular alt-coin with a block time of two and a half minutes.

In conclusion, while blockchain technology holds great promise for Africa, it is crucial to acknowledge the current barriers that hinder its widespread implementation. From infrastructure limitations to regulatory challenges and skills gaps, various showstoppers need to be addressed. However, despite these obstacles, the potential benefits of blockchain technology cannot be ignored. With collaborative efforts, government support, and strategic initiatives, Africa can pave the way for successful blockchain implementation in the future. By overcoming these challenges and addressing the concerns, Africa can harness the transformative power of blockchain technology to drive innovation, transparency, and economic growth across the continent.