Julian Roper

Executive summary: Blockchain Innovation in sub-Saharan Africa; Remittances, Bitcoin and Wider Applications.

In 21st Century sub-Saharan Africa (SSA) the costs of remittance in SSA are the highest in the world, and have been so for decades. Additionally, the total amount sent back home to SSA is greater than total foreign aid that the region receives.

The recent adoption of mobile phones has reduced isolation within SSA, introducing the remittances innovation of mobile banking; allowing users to send and receive money via their mobiles, which have had strong measureable affect on redistributing income and lowering the costs of remittance within SSA. A prime example of a technological solution to institutional problems while showing how formal/conventional institutions can be bypassed effectively. However, mobile money providers such as M-Pesa are not without criticism of monopolisation and anti-competition culture.

Blockchain, a general term for decentralised transparent ledger systems (DTLS), has recently begun to be implemented within many areas, from cross-border payment solutions to internal auditing, and by large banks in developed economies to small start-ups in developing economies. In contemporary times it has been flaunted as tool for utopia, solving institutional issues with smart contracts to trust-less transparent voting. However, its more modest origin is within the cryptocurrency Bitcoin, as its public decentralised transparent ledger, utilised to solve double counting and other issues usually handled by intermediaries allowing it to run without a central authority or regulator. Blockchains in their technological nature are capable of providing immutability, transparency, decentralisation (therefore durability), and faster transactions due to aforementioned factors partially due to the lack of intermediary reliance. Therefore, digital currencies and financial ledgers are theoretically able to provide cost savings while also introducing elements of transparency and efficiency.

The aim of this thesis was therefore to explore and emphasise the possible implementations, effects and limitations that blockchain technology could have within the remittances market of sub-Saharan Africa. Additionally, it looks at current and potential implementations of blockchain technology within SSA from a wider perspective. The primary hypothesis was that the largest immediate effect of blockchain implementation will be through financial innovation, primarily by lowering of remittance costs (in both speed and price).