By Daniel Makina and Rogers Dhliwayo

“Trust is the new currency, blockchain will enable that trust” – Tim Vasko, Founder of BlockCerts International

Across much of Africa, institutional fragmentation, lack of transparency, and exclusion from financial systems have historically hindered the capacity of public institutions and markets to deliver inclusive and equitable development. As the continent seeks pathways to leapfrog traditional development constraints, emerging technologies offer new possibilities – none more so than blockchain.

In the literature, blockchain is defined as a decentralized, tamper-proof digital ledger that records transactions across a distributed network in a secure and transparent manner. It eliminates the need for central intermediaries by enabling peer-to-peer verification and immutable data recording, making it especially useful in environments where data manipulation, inefficiency, and trust deficits undermine development outcomes.

Blockchain’s core attributes, viz: decentralization, transparency, and immutability present a unique opportunity to rebuild trust in public institutions and economic systems that have often failed to serve the majority. In both Africa and South Africa, where governance challenges intersect with inadequate infrastructure and low financial inclusion, blockchain-based systems promise auditable records, secure identity verification, and transparent service delivery.

But can blockchain move beyond pilot projects and hype cycles to deliver meaningful, scalable transformation? This piece critically examines the promise and limitations of blockchain as a tool to bridge structural development gaps in Africa and South Africa.

Development Gaps That Blockchain Might Bridge

African economies continue to contend with critical bottlenecks in governance, transparency, and financial inclusion. In South Africa, studies  show that persistent issues in public procurement, fragmented service delivery, and data fragmentation undermine institutional accountability and citizen trust.

The trajectory of inclusion has improved markedly, but significant gaps remain. According to the 2025 World Bank Global Findex Report, 79% of adults globally held a financial account in 2024, up from 74% in 2021. In Sub-Saharan Africa, account ownership increased from 23% in 2011 to 49% in 2021, and further to 58% by 2024, mainly driven by rapid mobile money adoption.

South Africa remains a regional exception with relatively high account penetration; around 85% of adults held a formal or mobile money account as of 2021, reflecting sustained gains in financial inclusion efforts.

Nevertheless, account ownership does not equal meaningful access. Among Sub-Saharan adults, only about 56% of adults reported saving formally, and only roughly 62% of account holders made or received digital payments in 2024. Moreover, equity gaps persist; women, rural residents, and low-income adults continue to have lower rates of account ownership and usage, indicating persistent structural constraints and vulnerabilities.

These persistent development gaps translate into real-world consequences:

1. Higher transaction costs and inefficiencies, especially for marginalized communities.
2. Constrained revenue mobilization and fiscal capacity, limiting public service delivery.
3. Limited participation in formal economic opportunities by rural and informal groups.

Blockchain technology offers a suite of transformative solutions tailored to these challenges. With its decentralized, tamper-proof, and programmable nature, blockchain can unlock enormous efficiency gains in sectors such as agriculture, forestry, fisheries, gas and water supply, manufacturing, public administration, and communications. In the literature  four key areas where blockchain has already shown development promise are highlighted:

1. Facilitating intra-African trade: Blockchain enhances transparency and lowers transaction costs for cross-border trade across African countries.
2. Reducing remittance costs: Cryptocurrencies powered by blockchain can eliminate the need for traditional remittance intermediaries, cutting transfer fees to near zero.
3. Increasing access to financial services: In regions where formal banking infrastructure is lacking, blockchain-based mobile applications can extend financial inclusion.
4. Supporting small and medium-sized enterprises (SMEs): Smart contracts built on blockchain can improve access to credit for SMEs through more secure and transparent lending mechanisms.

Blockchain Use Cases in African Context

Across the African continent, successful blockchain pilot initiatives have demonstrated the technology’s potential when embedded within broader governance and financial systems. In South Africa, the enactment of the Electronic Trade Documents Act in 2024 legally recognized blockchain-issued trade documentation, significantly reducing bureaucratic inefficiencies in the export sector. It has been observed that for small and medium exporters, this innovation translated into tangible cost savings of approximately US$100–200 per shipping container through platforms such as CargoX, while simultaneously enhancing export competitiveness by accelerating port clearance and improving documentation traceability.

In East Africa, the AfriBit Africa initiative has made notable strides in advancing financial inclusion in Nairobi’s Kibera slum, one of the largest informal settlements in Africa. In Soweto West, approximately 200 residents now use Bitcoin for daily transactions, facilitated via QR code payments without the need for formal identification or access to traditional banking infrastructure.

AfriBit Africa co-founder Ronnie Mdawida explains that Bitcoin’s peer-to-peer design has enabled unbanked residents to participate in the digital economy for the first time. However, experts caution that financial literacy should be prioritized, as some users reportedly hold 70–80% of their net worth in volatile cryptocurrencies, exposing them to potentially devastating financial losses in the event of price shocks.

At a national and regional level, blockchain technology is increasingly being explored by African governments and development partners to address transparency deficits in aid disbursement, procurement processes, and fiscal governance. According to Devex Partnerships, the real potential of blockchain lies not merely in technological deployment but in the integration of blockchain into policy frameworks, the establishment of trusted delivery channels, and investment in local institutional capacity

Together, these emerging use cases demonstrate the promise of blockchain to drive inclusion, reduce transactional friction, and rebuild trust in public systems. However, they also highlight the critical importance of regulatory oversight, user protection, and targeted education to ensure equitable and sustainable impact.

Risks, Limitations, and Institutional Preconditions

Despite its potential to revolutionize governance and public administration, blockchain’s effectiveness is contingent on institutional readiness and change capacity.

One study published in Africa’s Public Service Delivery and Performance Review investigated the South African public sector’s preparedness for blockchain through the lens of the Technology Acceptance Model and Diffusion of Innovation Theory. The authors found that while blockchain could meaningfully address issues such as financial misreporting, bureaucratic inefficiencies, and lack of accountability, its adoption is significantly constrained by limited digital literacy, organizational resistance, and inadequate change management frameworks. Public sector leaders displayed low receptivity to change, citing fears of obsolescence and distrust of new systems.

Likewise, systematic review in Frontiers in Blockchain identified core adoption barriers across African bureaucracies: insufficient infrastructure, risk-averse organizational culture, weak project management, and absence of clear governance protocols. They emphasize that countries should invest in technical and soft skills, stakeholder training, and institutional reform before blockchain can fulfill its promise of improving transparency and operational efficiency.

Strategic Imperatives for Scaling Blockchain in Africa

To harness the full developmental potential of blockchain, African governments should adopt a strategic, multi-layered approach that aligns technology deployment with governance reform, financial inclusion, and institutional capacity-building.

1. Policy and regulatory clarity: Governments should enact comprehensive legal frameworks that formally recognize blockchain-based records, such as trade documents, contracts, and identity credentials as legally valid.
2. Public sector integration and institutional reform: Blockchain systems should be introduced through targeted pilots in high-impact public sector areas such as public procurement, land registries, and social protection disbursements.
3. Financial innovation and market access: Regulatory support for crypto exchanges and decentralized finance (DeFi) tools is essential.
4. Capacity development and inclusive ecosystems: Technology alone is insufficient. Governments, universities, and development partners should invest in local talent through blockchain-focused training programs for developers, public officials, regulators, and entrepreneurs.
5. Cross-border coordination and pan-African standards: As blockchain transcends borders, platforms such as Smart Africa advocate for harmonized standards to promote blockchain’s use under the African Continental Free Trade Area (AfCFTA). This is especially critical for advancing goals under AfCFTA, where blockchain could reduce trade friction and promote intra-African commerce.

Conclusion

Blockchain alone is not a silver bullet. But when strategically embedded within legal frameworks, public sector reforms, inclusive financial ecosystems, and sustained capacity development, it can help address some of the most persistent development gaps: lack of trust, inefficiency, and exclusion. It offers a new digital architecture through which African countries can strengthen accountability, empower underserved communities, and reduce the friction that undermines inclusive growth.

If Africa, especially South Africa, uses technology wisely and inclusively, blockchain could turn systemic challenges into opportunities for sustainable development.

Daniel Makina and Rogers Dhliwayo are editors of Economic Business Insights.