BLOCKCHAIN IN AFRICA 2023 A CATALYST FOR FINANCIAL INNOVATION AND GROWTH

Blockchain technology is transforming various industries globally, and Africa is no exception. The year 2022 witnessed a significant surge in blockchain funding and investments across the continent. According to the African Blockchain Report 2022, published by CV VC in collaboration with Standard Bank, African blockchain startups raised a staggering $474 million, marking a remarkable 429% increase within a year. This growth demonstrates the rising confidence in the potential of blockchain technology to drive financial independence, infrastructure development, personal identification, and record-keeping in Africa

Expanding Investments And Growing Confidence

In 2022, Africa experienced a 12% increase in the overall number of blockchain deals, covering diverse sectors. Infrastructure, personal identification systems, recordkeeping solutions, and access to financial independence emerged as key areas of focus. The report highlights that African venture funding grew by 34%, totaling $3.14 billion, with blockchain accounting for a 15% share of all venture funds in Africa. These statistics indicate that African blockchain startups are securing larger funding amounts, fostering increased investor confidence. This development is significant, considering Africa’s rise in global funding share surpasses that of any other region by a considerable margin.

THE EMERGENCE OF AFRICAN BLOCKCHAIN “UNICORNS”

In recent months, Africa has witnessed the emergence of its first blockchain “unicorns”privately held startup companies with a valuation of $1 billion or more. The report cites Seychellesbased crypto exchange Kucoin and Scroll.io, a scaling solution for the Ethereum blockchain, as notable examples. These unicorn companies represent the growing potential and maturity of the African blockchain ecosystem, attracting global attention and further reinforcing Africa’s position as a hub for technological innovation.

GEOGRAPHIC CONCENTRATION & OPPORTUNITIES FOR EXPANSION

Although Africa’s blockchain industry has experienced rapid growth, its share of global blockchain funding remains modest, increasing from 0.3% in 2021 to 1.8% in 2022. The distribution of deal value also shows geographic concentration, with Seychelles and South Africa accounting for 81% of African blockchain funding. Nigeria leads in terms of the number of deals but lags behind in deal value compared to Seychelles and South Africa. While concentration exists, other African countries such as Liberia and Kenya are also making notable contributions to the blockchain landscape.

Closing The Knowledge Gap

Despite the promising growth of the blockchain industry in Africa, there remains a significant knowledge gap among corporate leaders and decision-makers. Gideon Greaves, managing director of CV VC Africa, emphasizes the need for more corporate education on blockchain technology’s benefits. Many C-level executives still lack awareness and understanding of blockchain’s potential and its relevance to their organizations. Bridging this knowledge gap and providing comprehensive education on blockchain’s capabilities and applications are crucial steps toward fostering further growth and progress in Africa’s blockchain ecosystem.

ACCELERATING ADOPTION & FUTURE OUTLOOK

The success of blockchain in Africa not only relies on funding and investment but also on widespread adoption and implementation across sectors. To further propel the growth of the blockchain ecosystem, it is crucial to foster collaboration between governments, regulatory bodies, financial institutions, startups, and technology providers.

Education and awareness campaigns play a vital role in driving blockchain adoption. Efforts should be made to educate businesses, government officials, and the general public about the benefits of blockchain technology, including increased transparency, security, and efficiency in various processes. By showcasing successful use cases and demonstrating the positive impact of blockchain, more stakeholders can embrace the technology and explore its potential applications.

Collaboration and partnerships are essential to drive innovation and expand blockchain solutions. Governments and regulatory bodies can create favorable regulatory environments that encourage blockchain experimentation and adoption. Financial institutions can collaborate with blockchain startups to develop innovative financial products and services that cater to the needs of unbanked and underbanked populations. Technology providers can continue to enhance blockchain platforms, making them more scalable, secure, and user-friendly.

Moreover, leveraging blockchain technology can address specific challenges faced by African economies. For instance, blockchain-based digital identity systems can help establish secure and verifiable identification for individuals, enabling access to financial services, healthcare, and other essential resources. Blockchain can also streamline supply chain management, enabling greater transparency, efficiency, and trust in the movement of goods, especially in the agricultural and manufacturing sectors.

Looking ahead, the future of blockchain in Africa appears promising. The continent has already demonstrated its potential to innovate and leverage technology to overcome challenges. As blockchain adoption grows, it is expected to have a transformative impact on various sectors, including finance, healthcare, agriculture, and governance. With continued investment, collaboration, and education, Africa has the opportunity to become a global leader in blockchain technology.

The exponential growth of blockchain funding and investments in Africa is a testament to the continent’s potential for technological innovation and economic development. The emergence of blockchain unicorns and the increasing confidence of investors reflect the growing maturity and relevance of blockchain solutions in Africa. However, there is still work to be done to bridge the knowledge gap and ensure wider adoption of blockchain technology. By fostering collaboration, promoting education, and creating a favorable regulatory environment, Africa can harness the transformative power of blockchain to drive inclusive growth, financial independence, and prosperity for its people.

CYBERSECURITY & THE BANKING AND FINANCIAL SERVICES SECTOR IN AFRICA

ENHANCING BOARD & EXECUTIVE ACCOUNTABILITY

In Africa, as the financial and banking services industries continue to embrace digital transformation, cybersecurity is a growing concern for regulators and executives. Cyber attacks have increased in sophistication and frequency, and the consequences can be devastating for financial institutions, including reputational damage, financial loss, and legal liability. In this context, it is imperative to enhance governance requirements that increase board and executive responsibility for cybersecurity. Cybersecurity has become a necessity in today’s digitally interconnected world, especially for the banking and financial service sector. Cyber threats, such as ransomware attacks and phishing, pose a serious risk to both businesses and customers. Companies are investing in cybersecurity technologies, but there is still a need for improved governance requirements to increase executive and board accountability for cybersecurity. These requirements are even more important in Africa’s banking sector, which is a highrisk area for cybersecurity.

CYBERSECURITY: THE ROLE OF GOVERNANCE

Governance is an essential component of effective cybersecurity. It includes the policies, practices, and procedures that govern how an organisation protects and manages its digital assets. In order to have effective cybersecurity governance, the board of directors and executive management must be involved in the setting of cybersecurity strategy, risk management, and oversight. The board of directors’ ultimate responsibility is to oversee the cybersecurity of an organisation. The board must set clear expectations with executive management on cybersecurity matters and regularly review the organisation’s risk management and cybersecurity strategies. Executive management should, in turn, develop and implement effective policies and procedures for cybersecurity, allocate adequate resources, and report regularly to the board about cybersecurity risks and incidents.

Need For Enhanced Governance Requirements

Cyber threats are becoming more complex and frequent, and therefore it is necessary to enhance governance to make board members and executives more accountable for cybersecurity. This enhancement will ensure that cyber risks are treated with the same attention and focus given to other strategic risks within the organisation. Cyber threats can have serious financial, legal, and reputational consequences for businesses. Inadequate cybersecurity measures may lead to data breaches and financial losses as well as regulatory fines and reputational damage. It is, therefore, essential that executives and boards understand the cybersecurity threats facing their business and take appropriate steps to mitigate them. Implementing enhanced governance requirements will help increase the accountability of board members and executives for cybersecurity.

The Implementation Of These Requirements Should Cover The Following Aspects

Cybersecurity Training: Executives and board members should be regularly trained in cybersecurity to ensure they are aware of the latest cyber threats and how to defend their business against them. The training should include topics such as phishing scams and ransomware attacks.

Companies should regularly conduct risk assessments in order to identify vulnerabilities and cybersecurity risks. These assessments should be reported back to the board, and appropriate measures taken to mitigate risks.

Incident Response Plans: Companies should have plans that detail the steps they will take in the event of an incident involving cybersecurity. Plans should be reviewed and updated regularly, and any changes should be communicated to the board.

Public Disclosure: Companies must publicly disclose any cyber incidents that could have an impact on customers or stakeholders. This disclosure should be done promptly and include the details of the incident as well as the steps taken to minimise its impact.