WHICH WAY FOR BLOCKCHAIN IN KENYA?

Joe Mucheru, the Cabinet Secretary for Information, Communications and Technology, recently appointed an 11-member taskforce to chart the roadmap for Kenya’s use of distributed ledger technology and artificial intelligence. This is a positive step by the Government – signaling its openness to embrace technology, such as blockchain.

Blockchain is a database which differs from other electronic databases because it allows records of multiple transactions to be maintained in an open and transparent system that is not easy to manipulate. All records in blockchain – both their content and sequence – are permanent. Any data added in the blockchain cannot be changed assuring the blockchain user of its authenticity.

What does blockchain offer the Government?

Blockchain allows records to be maintained in a tamper-proof form, which is a game changer for Government registries. It allows public records to be indisputably verified which would almost eliminate the risk of forgery and tampering of documents. This, coupled with the ongoing digitization will in time eliminate any questions regarding the integrity of documents. Under blockchain, the registries would no longer need to archive documents which would also alleviate the problems currently encountered in retrieving information from such archives.
Blockchain would enable the Government to be more efficient because reoccurring transactions would be fully automated. For instance, approvals of applications for company incorporations and records of payments for property rents can be automated.

How will blockchain affect businesses?

By adopting blockchain, the burden of maintaining accurate shareholder records will be less for public companies because a permanent, non-destructible electronic history would be created. Businesses can also automate operational tasks, such as supply chain management, through blockchain. In other jurisdictions, businesses are looking at blockchain as a platform to anchor delivery of their core products by implementing smart contracts.

In our view, the adoption of blockchain is inevitable; however, its effectiveness is dependent on whether the Government will enact the necessary laws and regulations that will enable the development and use of blockchain. The right regulatory framework will catalyze the development of multiple blockchain applications which will, in turn, increase the rate of adoption of blockchain, creating a positive cyclic effect. Kenyans will gain from the widespread adoption and use of blockchain because both Government and business processes will be more efficient and easier to navigate.

For further assistance please contact our Fintech Business Line partners or your relationship partner at Bowmans Kenya.