So what’s the big deal?
Blockchain is the technology behind Bitcoin and other cryptocurrencies that provides an anonymous and secure digital way to transfer assets between two parties without the need of a third party intermediary. Both large corporations and small firms are exploring ways to leverage this technology to enhance business strategy and improve efficiency.
If used to its full potential, blockchain could:
- Reduce the costs of maintaining and reconciling ledgers
- Reduce errors by automating important accounting functions
- Increase transparency and accessibility to auditors
- Increase audibility and drive collaboration
What kind of solutions can blockchain provide to our continent?
In Africa, blockchain could provide solutions to various challenges, such as transparency and decentralisation, for both the private and public sectors.
In fact, we are seeing some positive developments in South Africa, Nigeria, Kenya and Uganda, where the finance sector is taking a global lead on blockchain experimentation. For example, BitPesa enables small and medium-sized enterprises (SMEs) in Kenya to pay their suppliers in other countries quickly and cheaply. Instead of relying on a number of banks and other middlemen to move yen into U.S. dollars or euro and then convert those out into African currencies such as the Nigerian naira or the Ghanaian cedi, the licensed BitPesa uses a combination of the bitcoin blockchain and other services to create new currency pairs. BitPesa is revolutionising ancient, but also highly opaque, payment systems such as bokeh in Nigeria and hawala in Malawi, which were often seen as enabling money laundering and even terrorist financing.
In addition, Switzerland-based cybersecurity company WISeKey partnered with Microsoft to help the Rwandan government develop blockchain-based initiatives. The partnership is part of an ongoing collaboration to turn Rwanda into a key player in digital transformation by providing citizens and businesses access to policy, technical and business expertise. This increasingly open, transparent and publicly accessible system could fundamentally change value-exchange, assets, enforcement of contracts, and data sharing processes across all industries – and could ultimately boost the country’s economic growth.
These are only few developments that show that the private sector and governments are taking blockchain seriously in the continent.
We are also seeing an increase in investments in research and development for blockchain technology within private companies. For example, Oracle South Africa has shown a strong interest in exploring how blockchain can transform its business. Earlier this year the company hosted a blockchain roundtable in Johannesburg to drive awareness of blockchain services for various industries.
Meanwhile, the adoption of cryptocurrency has been met with scepticism in Nigeria, even though it is expected to address budget-related corruption if applied in the development of budget-tracking mechanisms. Nigerian banks and financial institutions were encouraged to stop using cryptocurrency. Furthermore, transactions using this kind of technology are not seen as legal, and banks and financial institutions are expected to ensure that existing customers that transact in Virtual Currencies should have Anti-Money Laundering/ Combating the Financing of Terrorism (AML/CFT) control.
Get to grips with blockchain
Because blockchain already has – and will continue to have – a significant effect on the finance function, management accountants must get up to speed to explore the various ways that it can be used to streamline processes and drive growth within their organisation. Gaining an understanding of blockchain basics and how the tool is evolving is a good place to start and we can help.
You can find a range of blockchain CPD courses, all designed to improve your skills and introduce you to how blockchain is transforming finance by taking a look at the CGMAStore.