DEFI AND THE AFRICAN MONEY SYSTEM

• Adeshina Ajayi
• February 18, 2022

DeFi means Decentralized Finance.

It is an emerging financial technology based on secure distributed ledgers similar to those used by cryptocurrencies.

A major industry that has enjoyed and will continue to enjoy the benefits of blockchain technology is the finance sector. Safe to say what the finance sector is enjoying is “The First Mover Advantage”. While other sectors are trying to catch up fast and take their place in the technology of the future, the finance sector is taking the front seat.  This is so because bitcoin (money) was the first and major successful experiment of blockchain technology.

With blockchain technology, people practically become their own banks. Meaning the banks can be boycotted and at the same time still enjoy all the amenities being provided by the banks and even more.

The most powerful tool of the government is CONTROL and that is what blockchain technology has come to fight. With control, the government can put fear in people and toss them in any direction they want them to go. Blockchain takes control from the government and give to individuals.

When people control their own banks, then the traditional banking system will be of no relevant use.

Africa, being home to some of the fastest growing economies in the world, and with a demographically youthful population, the time has come for the needed disruption in financial services and technology.

Talk of mobile money adoption, Africa is a pace setter with digital transactions accounting for over 45% of mobile money transactions globally serving the unbanked all over the continent.

And in spite of this growth, centralized finance (CeFi) still controls much of digital finance in Africa. This means that banks, government institutions, and other traditional institutions are still responsible for most of the infrastructure through which the digital banking revolution is taking place. This structure is limited, and at a huge disadvantage when it comes to innovation.

With DeFi, people in Africa with adequate access to banking can finally gain access to financial tools such as being provided liquidity, borrowing, lending and saving that will be essential in a growing economic market.

This is possible because with blockchain technology comes DeFi which helps people become their own bank and enjoy all the services offered by traditional banking system seamlessly and more profitably. DeFi also gives access to crypto loans. A situation where loan is given to a borrower in exchange for his crypto assets.

While DeFi is a liberation tool to the people of Africa, there is still a wide knowledge gap as most Africans have no idea about decentralized systems, never mind how they work.

There are also regulatory bottlenecks. African regulators are loathe to accept any technology that challenges their control of financial system.

There is still so much sensitizing to be done and that is where blockchain education comes to play.

You will agree with me that without education, there can never be adoption hence, the need for continuous education and awareness creation about blockchain technology.