By Francis Chanthunya:
Africa’s economic landscape is filled with both immense opportunities and critical challenges.
The continent boasts of a young and fast-growing population, abundant natural resources, and a powerful entrepreneurial spirit.
Yet, it is also marked by systemic inefficiencies such as high levels of bureaucracy, poor infrastructure and rampant corruption which serve to inflate transaction costs.
Blockchain technology, with its decentralised, transparent and secure features, provides a powerful tool for addressing these hurdles.
Blockchain technology is a decentralised ledger that records transactions across a network of computers, or nodes, in a way that is tamper-resistant and transparent.
Each transaction is stored in a “block”, and once filled, it links to the previous block, forming a “chain” of blocks.
This structure makes altering recorded data virtually impossible, as it would require changing every subsequent block—a feat that is both time-consuming and costly.
As a result, all participants in the network maintain an identical, trusted record of transactions, eliminating the need for intermediary institutions, such as banks.
Blockchain has been applied in various fields – the most well-known being cryptocurrencies. It also has use cases in supply chain management, smart contracts and, increasingly, in remittance systems.
Remittances are essential to African economies, with the diaspora sending billions of dollars back home each year. According to the World Bank, remittances to sub-Saharan Africa amounted to around $48 billion in 2021.
These funds support basic needs like food, education and healthcare for families, particularly those in low-income households.
However, traditional remittance methods, including banks and money transfer services like MoneyGram and Western Union, impose high fees—up to 15 percent or more on smaller transactions—hindering the net flow of income into these communities.
Blockchain-based solutions offer an alternative, using peer-to-peer transactions that eliminate intermediaries, thereby dramatically lowering costs and providing faster, more secure transfers.
Blockchain platforms such as Bitcoin, Ethereum, and XRP open opportunities for African nations to reduce remittance fees significantly. With decentralized networks, transactions become faster and safer, facilitating an economic boost at both household and national levels.
By using cryptocurrencies and stablecoins like USDC, African families can transfer funds across borders without traditional financial institutions’ high fees.
For instance, Bitcoin’s Lightning Network enables near instantaneous microtransactions, while stablecoins help families avoid price volatility. Blockchain transactions, depending on the network, can be processed within minutes, reducing the waiting period for crucial funds that families often rely on.
Beyond remittances, blockchain technology also supports cross-border trade within Africa. Currently, trade across African nations can be both costly and complex due to currency exchange rates, bureaucracy, and a reliance on traditional banking systems.
Blockchain technology, however, enables businesses to engage in transparent, trust-based transactions without intermediaries. African businesses can conduct transactions in digital currencies or stablecoins, which simplifies the transfer process and reduces conversion fees and delays associated with bank transfers.
Organisations such as Comesa, which aim to boost intra-African trade, could benefit from blockchain solutions by streamlining payments and making cross-border trade more accessible and efficient.
Blockchain’s potential to increase financial inclusion is also significant, as many African countries have large unbanked populations. These individuals often lack access to formal banking but do have mobile phones, which can serve as a gateway to digital wallets and blockchain networks.
Blockchain technology enables people to participate in the global economy without the need for traditional bank accounts, allowing them to send, receive, and store money securely.
By making financial services more accessible, blockchain can help unbanked populations save, invest, and transact with greater ease and security.
In addition to its cost-saving benefits, blockchain also enhances transparency and security. Transactions recorded on a blockchain are permanent and traceable, which prevents fraud and makes financial dealings transparent.
This is especially beneficial in remittance markets where lack of transparency can lead to hidden costs. Blockchain technology can reduce corruption and ensure that funds reach their intended recipients by making every transaction trackable.
Additionally, smart contracts—self-executing contracts where terms are written into code—can automatically release payments upon fulfilment of certain conditions, benefiting both businesses and families by ensuring funds are transferred only when agreed-upon conditions are met.
For the Malawi economy, reduced remittance fees and smoother cross-border trade could mean a significant boost in economic activity.
As remittances increase household incomes, they directly contribute to GDP growth.
This also helps strengthen financial resilience, particularly during economic downturns or global crises, where remittances have served as a stabilizing factor.
With increased access to affordable remittance and trade channels, families and businesses alike can build savings, invest in growth, and foster resilience against financial instability.
However, while blockchain technology holds great promise, its widespread adoption across Africa is not without challenges. Limited digital infrastructure in many countries poses a significant hurdle.
Access to stable internet connections, particularly in rural areas, is limited, making it difficult to deploy blockchain solutions on a large scale.
Overcoming this digital divide is essential to ensure that all African communities can benefit from blockchain.
Moreover, regulatory challenges must be addressed. Many African countries have not yet established clear regulations for blockchain and cryptocurrency use, which creates uncertainty that can stifle innovation and adoption.
Regulatory frameworks are needed to protect users while also promoting innovation. Some African countries, like Nigeria, have imposed restrictions on cryptocurrency, while others, like Kenya and South Africa, are exploring ways to integrate blockchain within their financial systems. An inclusive approach to regulation could accelerate blockchain’s adoption across the continent, ensuring safe, widespread access.
A lack of technical expertise presents yet another challenge. Blockchain technology requires skilled developers and knowledgeable end-users to build, maintain, and interact with these systems.
Africa and Malawi in particular face shortages in technical expertise, which may hinder the adoption of blockchain-based systems.
Investments in training programmes, workshops, and partnerships with technology firms could help bridge this skills gap, empowering more Africans to engage with blockchain technology.
Despite these obstacles, Africans have a long history of frugal innovation, where technology thrives even in resource-limited environments. From mobile money systems to solar energy solutions, Africans have shown a unique ability to adapt technology to local needs.
By harnessing this same spirit and applying it to blockchain, Africa has the potential to overcome barriers and drive innovation beyond the constraints of scarcity.
As digital infrastructure and regulatory frameworks improve, it may open doors to financial inclusion, increased trade within the continent, and strengthened economic resilience.
The author is an economist.
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