Corruption is a major problem in Africa, and it is holding back economic development on the continent. According to Transparency International Reports 2022, “Africa is the most corrupt continent in the world, with an average score of 32 out of 100 on the Corruption Perception Index.” This means that people in Africa perceive corruption to be widespread and that it is a major obstacle to doing business.

Again, a report by the World bank, 2016 shows that corruption incurs an estimated $148 billion or 25% of its GDP in annual costs for Africa, impeding the continent from attracting investments worth billions more. Web3 technology emerges as a powerful tool in the battle against corruption in Africa, and can potentially change the game for transparency and accountability.

What is Web3?

Web3 stands as a decentralized version of the internet that is built on blockchain technology. This means that data and applications would be owned and controlled by users, rather than by centralized entities like tech companies. It’s transparent and immutable. This makes it much more difficult for corrupt actors to tamper with or manipulate data on the Web3.

Therefore, one way to combat corruption in Africa through Web3 technology is by making government transactions more transparent. For example, using blockchain technology, immutable records of government contracts procurements, land registry records, and other types of government transactions can be verified. This would make it more difficult for corrupt officials to embezzle funds or engage in other corrupt activities. A 2022 study by the World Bank found that blockchain technology could reduce corruption by up to 30% in government procurement.

How can Web3 be used to combat corruption in Africa?

The use of Decentralized Finance.

Decentralized finance (DeFi) represents a financial system built on blockchain technology, enabling individuals to access financial services directly, eliminating the necessity for intermediaries like banks or brokerages. Traditional financial systems are often opaque and centralized, making them ripe for corruption. DeFi, on the other hand, is transparent and decentralized, which makes it much more difficult for corrupt actors to hide their activities.

For example, DeFi platforms allow people to make financial transactions without the need for a third party, such as a bank. This means that there is no single point of failure where corruption can occur. Additionally, all records of financial transactions on DeFi platforms are stored on a blockchain, which is a secure and tamper-proof ledger. This makes it possible to track and trace every financial transaction, which can help to deter corruption.

In Kenya, the government partnered with BitPesa to use blockchain technology to distribute COVID-19 relief funds. A recent study by the African Development Bank found that the project was successful in reducing corruption and ensuring that the funds were distributed fairly.

In Ethiopia, the government announced plans to use blockchain technology to digitize its land registry. This would make it easier for people to own and sell land, and it would also help to reduce corruption and disputes in the land administration system.

In Nigeria, the startup Farmcrowdy raised $1 million in funding to use DeFi to finance agricultural projects. This will help to improve food security in Nigeria and create jobs in the agricultural sector.

These are just a few examples of how DeFi is addressing some of the challenges facing Africa. DeFi is still in its early stages of development, but it has the potential to significantly reduce corruption in Africa.

Blockchain-based voting systems

Blockchain voting is a system that uses blockchain technology to record votes. These systems allow people to vote securely and anonymously, which can help to prevent voter fraud and intimidation.

As you know, elections in Africa are always marred with malpractices, this is one good way to make it difficult for people to cheat or rig elections. There are a number of blockchain voting projects in Africa, including FollowMyVote.

There is a recent launch of the Democracy Earth Foundation, which is a non-profit organization that is working to develop blockchain-based voting systems around the world.

Web3 technology is also being used to create transparent and immutable records of government transactions. This can help to prevent corruption in government procurement and contracting, as well as in the awarding of government contracts.

In addition, humans can create anonymous whistleblowing platforms, which allow people to report corruption in real time without fear of reprisal.

Land registry

Land registry is a system that records ownership of land. Blockchain technology can be used to create a decentralized land registry that is transparent and immutable. This can help to prevent corruption in land deals. There are a number of blockchain land registry projects in Africa, including Everledger and SimbaPay.

Supply chain management

Supply chain management is the process of tracking the movement of goods from production to consumption. Blockchain technology can be used to create a decentralized supply chain management system that is transparent and immutable. This can help to prevent corruption in the supply chain, such as counterfeiting or smuggling. There are a number of blockchain supply chain management projects in Africa, including TradeLens and Provenance.

The African Continental Free Trade Area (AfCFTA)

The African Continental Free Trade Area (AfCFTA) is a trade bloc that was established in 2019. It aims to create a single market for goods and services in Africa. Blockchain technology could be used to facilitate trade within the AfCFTA, reduce corruption and create a more transparent and efficient trade environment.

As Web3 technology continues to develop, it is likely that we will see even more innovative ways to use it to fight corruption.

The Future of Web3 in Combating Corruption

The impact of Web3 on corruption in Africa is still in its early stages, but it has the potential to be significant. By making data more transparent and immutable, Web3 can make it more difficult for corrupt officials to embezzle funds or engage in other corrupt practices. This can lead to increased accountability and transparency in government, which can help to improve economic development and reduce poverty. The recent launch of the Decentralized Governance Protocol (DGP), which could be used to create more transparent and accountable government institutions is a testament to it.

In addition, Web3 can empower citizens to hold their governments accountable. By using blockchain technology to record votes and track land ownership, citizens can more easily verify the actions of their governments and hold them to account for corruption. This can help to create a more democratic and just society in Africa.

The future of Web3 in combating corruption is bright. For example, Web3 could be used to create a decentralized corruption watchdog that tracks corruption in real time and publishes reports on its findings. This could help to raise awareness of corruption and put pressure on governments to take action.

Challenges of using Web3 to combat corruption

While Web3 has the potential to be a powerful tool in the fight against corruption, it is not without its challenges. Some of the challenges include:

The need for technical expertise: Web3 technology is complex and requires technical expertise to use. This can be a barrier for some people and organizations.

The regulation of Web3 is still evolving. While there are a number of countries and jurisdictions that have begun to develop regulatory frameworks for Web3, there is no single, global regulatory framework in place. This can create challenges for businesses and developers in the space, but it also creates an opportunity for innovation and creativity. Businesses and developers can work together to develop new ways to use Web3 technology that are compliant with existing regulations.

The risk of fraud and scams: There have been cases of fraud and scams involving Web3 technology. Users of Web3 applications should be aware of the risks involved, such as the possibility of fraud, hacking, and scams.

Despite these challenges, the potential benefits of using Web3 to combat corruption outweigh the risks. As Web3 technology continues to develop, it is likely that we will see even more innovative ways to use it to fight corruption and create a more just and equitable society in Africa.

Conclusion

Web3 is a new technology that has the potential to combat corruption in Africa. By making data more transparent and immutable, Web3 can make it more difficult for corrupt officials to embezzle funds or engage in other corrupt practices. This can lead to increased accountability and transparency in government, which can help to improve economic development and reduce poverty. Therefore, the future of Web3 in combating corruption is bright.

Nelson I. Nworie is a Content Fellow