What you need to know:
- Last week I joined leaders in policy, business and academia from around the world in Kampala for Africa’s largest blockchain conference.
- A majority of the people have no clue what cryptocurrency is, let alone how it works. There are just a few excited people who will want to move with lightning speed. But it requires the courage of a few to speak out like the governor did.
- Uganda has set aside resources to support innovation. No country, however, will succeed alone. The emerging business models require a significant population to make it.
- In President Museveni we have that political will and hopefully we can rally behind him to get other African countries interested in these emerging technologies that will drive the upcoming fourth industrial revolution.
Last week I joined leaders in policy, business and academia from around the world in Kampala for Africa’s largest blockchain conference.
Some 700 delegates from 23 countries had converged at Kampala’s Serena Hotel to discuss the role of blockchain technology in Africa’s transformation. President Yoweri Museveni officially opened the conference.
I considered my role as a keynote speaker ordinary. However, at dinner on the eve of the conference, someone whispered to me that I would moderate the presidential panel featuring President Museveni and Mauritian President Ameenah Firdaus Gurib-Fakim.
Although I have worked around presidents before, this was different. President Museveni is unlike many presidents. He is sharp, witty and bluntly honest at times.
I bade farewell to my colleagues at 11pm to start preparing for the next day’s speech and the panel moderation.
We agreed to meet at breakfast at 7.30am and be at the conference venue at 8am before the president’s arrived.
My strategy that night was to get as much data as possible for East Africa right in case the presidents were to seek clarification for my questions. It was getting to 3am when I slept.
My phone rang at 8.30am in the morning.
“What happened?” inquired Kwame, the event organiser.
“Oh oh, I overslept!” I explained.
“Please send your presentation,” he pleaded.
By the time I was arriving at the conference hall, it was 9am. Luckily, due to security arrangements, delegates were still queuing.
I had some time to reset before giving my opening speech at 9.45am, followed by a panel discussion that was interrupted by the President’s arrival.
Organisers shifted the programme to opening ceremonies, inviting the minister for communication, Frank Tumwebaze, who invited the governor of the Bank of Uganda, Emmanuel Tumusiime-Mutebile, then Prime Minister Ruhakana Rugunda.
I have in the past interacted with Frank and Rugunda on matters related to ICT. The minister’s speech was revolutionary and resonated with the audience, which wanted to hear the government’s position on cryptocurrencies.
The governor’s speech was from the old school of thought and took the audience through an introductory lecture in economics.
“Money is a medium of exchange, a measure of value, a store of value …it will be risky to invest in cryptocurrency that is unregulated and undermines the role of central banks,” he inveighed.
“Cryptocurrencies do not have the privilege of legal tender,” he declared.
BANK GOVERNOR OUT OF TUNE
His speech dampened the spirit of the audience that was obviously looking forward to Uganda’s endorsement of the emerging financial disruptions.
When President Museveni got to the podium, he did not waste time to declare his governor irrelevant in this day and age.
His largely off-the-cuff speech differed sharply with that of the governor. Sarcastically, he warned the governor not to be dogmatic. “Be inquisitive,” he advised.
He spent a great deal of time talking about the history of money over the past 3,000 years, from the origins of batter through the time Africans used cowrie shells as a medium of exchange to gold and silver.
He said that at some point there was a monetary system in which the standard economic unit of account was based on a fixed quantity of gold.
This too was replaced by fiduciary (faith or trust) in paper money that is issued by central banks.
He, however, respected the governor’s views and explained areas of convergence in blockchain.
In his understanding, he likened blockchain to the cooperative movement, where people agree to work together for the common good and any party that fails the group’s trust threshold is thrown out.
He explained how the cooperative movement failed when only a few had the knowledge but the majority were mostly illiterate and were taken advantage of.
If this blockchain is to succeed, every participating member has to be equally knowledgeable, he concluded.
He was right in his description of blockchain. It is indeed a process of automating trust, with all participating members having similar information.
In retrospect, both the president and the governor were right. A majority of the people have no clue what cryptocurrency is, let alone how it works.
There are just a few excited people who will want to move with lightning speed. But it requires the courage of a few to speak out like the governor did.
In so doing, we seek a middle ground that does not condemn the ignorant majority at the expense of a few, just like the cooperative movement did to Ugandans.
Eventually, the shape of currency will change. Cryptocurrency itself may become legal tender.
To facilitate digital transactions, perhaps we may consider some electronic token that translates to fiat currency one on one, just like M-Pesa.
We can then graduate to some other encrypted currency.
The president urged delegates to focus on four areas in order to help African economies to grow: agriculture, industry, services and ICTs.
In agriculture, Museveni said more than 68 per cent of Ugandans were involved in subsistence farming. They are not capable of using land to create wealth, he said.
He hoped that such systems could be used to transition farmers to large-scale production where they can create wealth.
He finished his speech by clearly differentiating cryptocurrency from the blockchain technology, which no one, including the governor, had a problem with.
THE VIEW FROM MAURITIUS
These were basically some of the issues that the conference was seeking to tackle. The delegates were ecstatic, giving him a standing ovation.
As the aides signalled me to move to the dais for the panel discussion, I was struck by temporary paralysis. What do I ask a man who understands all these emerging jargons?
I nevertheless gathered myself and walked to the front. “Your Excellency, thank you for succinctly capturing what our purpose here today is all about. Your Excellency, these technologies are new innovations and will require new regulations, but before the law is made, we require legal sand boxes to enable us to move forward. Can you comment on this, sir?”
He was gracious in his response, offering to help in any way he can. Africa should not be left behind this time around, he said.
His many years of public experience had given him many examples that he took time to explain. I could not cut him short and it is one thing that had not featured in my planning.
I had a small window to profusely thank him, and then turned to President Gurib-Fakim.
“Your excellency, how do we foster collaboration in these emerging technologies that will drive the fourth industrial revolution?” I posed.
This affable academic-turned-politician had the answers at her fingertips. She talked about across-country, and industry-academic collaborations, and emphasised the role of women in these collaborations.
Then President Museveni interjected to share his broad experience. With the kind of support that the presidents were offering, it was clear that the challenge was in the hands of the young innovators to seek the support.
Uganda has set aside resources to support innovation. No country, however, will succeed alone. The emerging business models require a significant population to make it.
For example, blockchain is used in many countries to raise funds for start-ups to scale.
In our case, we need resources for both start-ups and small and medium enterprises (SMEs).
In this case, we need an enabling environment to issue the Initial Coin Offers (ICOs), the equivalent of Initial Purchase Offers (IPOs), in listed companies that can help raise funds for SMEs.
This will require guidelines for responsible and practical use of the digital assets framework throughout the African continent.
It needs just a few countries, possibly East Africa, to start, then it can be expanded to the rest of Africa.
The potential in Africa to leapfrog is enormous but what has been lacking in the past was political will.
In President Museveni we have that political will and hopefully we can rally behind him to get other African countries interested in these emerging technologies that will drive the upcoming fourth industrial revolution.
The writer is an associate professor at the University of Nairobi’s School of Business. Twitter: @bantigito