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Tanzania: the Sky is the Limit for Blockchain Projects

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Tanzania blockchain projects

It is no longer a secret that the continent with the highest potential for cryptocurrency firms and services is Africa. It is remarkable how many new tech start-up centres have recently emerged in African cities, from Lagos in the west and Nairobi in the east to Agadir in the north.

Fintech startups can carve out a niche on the continent, where the problem of unbanked people is an urgent one. Humaniq is one such promising project that it is worth paying attention to. The London-based FinTech firm released an application for unbanked last year, which is now available in five African countries, including Tanzania.

The Humaniq app can be used on low-end mobile devices and, thanks to peer-to-peer transactions and referral programme, it is connecting people who do not have access to traditional banking services while not supplanting the latter. A hundred thousand downloads of the Humaniq App in Android is an excellent illustration of Africa’s enthusiastic uptake of technology. In 2018, the company has plans to build on this and achieve one million users.

There is a reason why Tanzania is under Humaniq’s spotlight. At this point in time, the East African nation has a number of challenges that need to be overcome in order to achieve full and meaningful financial inclusion necessary for everybody to participate in the 21st Century economy. This is why Tanzania represents a good target for blockchain startups.

Make hay while the sun shines

According to the National Financial Inclusion Framework (NFIF), Tanzania’s economy is gaining more and more momentum. It is making remarkable progress in expanding opportunities for people to access and use financial services to reach the goal of economic inclusion. Humaniq proposes a shift of emphasis to achieve this: from access to usage. It is only when people and businesses derive value from financial services that they will use them regularly as a matter of choice. A responsive, deeper and sustainable financial sector is one that offers a choice for individuals, households and enterprises and can make a meaningful contribution to economic growth, Humaniq’s team believes.

The uptake of traditional financial services for transactions reached 65 percent in 2017 compared to less than 58 percent four years prior. Accessibility, measured by the proportion of the population living within five kilometres from locations where financial services are provided, has grown from 45 percent to 86 percent nationally and is already at an impressive 78 percent on average for those living in rural areas.

The growth in active mobile wallets has reached over 21 million (75 percent of the Tanzania’s adult population) while those actively using mobile financial services now stands at 16.6 million as reported by FinScope Tanzania 2017. Some of the inhabitants even have more than two mobiles per family, and 14 percent of those who have ever used a phone run their own business from the device.

Despite all these achievements, the level of financial exclusion is still high at 28 percent of the population. And this figure includes disproportionate numbers of people who live in rural areas, smallholder farmers, young people and women. It has also been observed that there is a big gap between the demand and supply of financial services in the market, whereby the majority of products do not meet users’ needs. However, such figures mean for Humaniq a promising user base and a ‘blue ocean’ for thousands of new projects to thrive, bringing ideas that can overcome the economic problems that Tanzanians face.

So what are the problems that continue to act as a brake on the progress of the nation’s citizens that make it impossible for every Tanzanian to enjoy the goods and services that are available to many others in the world?

Humaniq knows where to start

First and foremost Tanzanians do not have consistent sources of income. Typical microfinance clients have low incomes ($1.25 a day) and are often self-employed in the informal economy. These conditions together tend to deny them access to banks and other formal financial institutions. They commonly run small stores or street stalls, create and sell items they make in their homes. In rural areas, they are often microfinance clients who may be small-scale farmers and people who process or trade crops and goods.

Humaniq, for its part, enables a peer-to-peer economy. It allows banking services to be offered everywhere, including to people in areas that are not served by traditional banks, and so are able to enjoy the 21st Century economy’s opportunities. It also opens up the possibility to address the problem of unemployment, as people could directly find each other, and send money to, and receive it from, other people. This way of providing financial services is not only more democratic and accessible, it also offers better security, because there is no central server for hackers to attack, and the information on transactions cannot be tampered with.

Secondly, what cannot be ignored is the fact that a low level of general literacy and numeracy leads to a low level of financial literacy among the general population and business owners, including a lack of knowledge about financial services, institutions and the Internet.

Humaniq’s team has prepared for such a challenging scenario: through the Humaniq app Tanzanians will have the opportunity to take a course in financial literacy and to take part in a number of simulation games, after which they will be rewarded in HMQ, the Humaniq token. Every new user receives $20 worth of HMQ in their account related to these interactions with the app, the value of which bears no relation to their local currency.

Thirdly, in Tanzania, it is very difficult to obtain credit from financial institutions. One cannot avoid high-interest rates, collateral and travelling long distances to and from banks – as much as 20 to 30 km in one day. The process of taking a large loan is complicated by the fact the numerous difficulties in the registration of land ownership, frustrating the receiving of large loans from banks. Only 3 percent of citizens own land. According to VICOBA’s data, the registration of land costs as much as $100 – $ 250. Such sums of money are too high for local farmers. As a result, 44 percent of Tanzanians (12 million adults) took a loan in 2017 but the vast majority, 69 percent of them (8 million), borrowed from friends and relatives, not from traditional banks.

Humaniq facilitates and formalises the process of taking out a peer-to-peer loan. Now, thanks to the power of these people-powered transactions, one can lend and borrow more easily and quickly than before, and without relying on the financial industry and its fee-charging field representatives. And in addition, users gain HMQ cryptocurrency simply for recommending friends and making transactions.

Humaniq’s ambassadors in Tanzania pursue social, humanitarian and commercial objectives, giving isolated people the chance to improve their lives for the better and to improve their prospects in the country.

 

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Bitcoin

Alleged Con Man Taken to Court in Kenya Over Fake Bitcoin Deal

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Fake Bitcoin Deal

A man is reportedly facing charges in a Nairobi court after allegedly swindling an accountant out of 375,000 Kenyan shillings (KES) in a fake bitcoin deal. The accused, Patrick Kamau, allegedly committed the fraud on several dates between December 2018 and May 2019.

Bitcoin Investment Deal Goes Sour

Kamau reportedly promised to open a forex trading account for the complainant and invest in forex bitcoin through BNB Forex. Benjamin Mugoya entered into the deal with the hope of making crypto trading profits after a friend introduced him to Kamau. The accused posed as a sales representative for BNB Forex in Kenya.

BitcoinGet

To open the forex trading account, Kamau asked Mugoya to wire KES400,000 to his bank account. However, after receiving a total payment of KES375,000 on May 22, Kamau switched off his phone.

In addition to this payment, Mugoya had sent Kamau KES50,000 in two installments in December 2018 and January 2019.

This is not the first bitcoin-related case that has been heard in a Nairobi court. In 2017, three bitcoin traders were charged with allegedly stealing KES10.2 million from I&M bank and Mpesa. The case involved a purchase of bitcoin from the traders using stolen money.

The case against Kamau has been scheduled for 22 February 2020. The accused was released on a cash bail of KES150,000 or a bond of KES200,000.

Unregulated Crypto Space

Mugoya could be one of many victims that have fallen prey to fake bitcoin investments despite the Central Bank of Kenya’s warning against investing in bitcoin.

The Bank’s Governor, Patrick Njoroge, has been vocal about the risks associated with cryptocurrencies such as fraud.  In 2018, the Governor ordered Kenyan banks to refrain from making crypto transactions or engaging with entities transacting in virtual currencies.

The unregulated crypto space in Kenya means that victims of crypto fraud are unprotected, thereby, preventing them from recovering their funds. However, with sufficient evidence, Mugoya could obtain justice from the Kenyan court system.

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DRC, Tunisia to Invest in Tech-Focused Impact Fund BLOC Smart Africa

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BLOC Smart Africa

The Tunisian and DRC governments have signed a declaration with Bamboo Capital Partners and Smart Africa to invest in the tech-focused impact fund, BLOC Smart Africa.

The agreement was made in Tunis at the Afric’Up Summit, an event that aims to promote innovation, entrepreneurship, and tech startups in Africa. The 2019 theme was “smart cities and open innovation in Africa,” featuring conferences and workshops with more than 150 speakers and investors.

BLOC Smart Africa

Smart AfricaBLOC Smart Africa is an impact fund that uses blended finance to invest in African startups with social and environmental impact-driven projects that leverage new technologies. For the first fund, the company has a target size of €100 million. The government of Togo committed €5 million in March for the first tranche.

Djibouti and Chad have also expressed their support for the Smart Africa project and they intend to formalise their commitment to the BLOC Smart Africa fund soon. Additionally, Burkina Faso has created an ad-hoc commission that will consider whether the country should become a founding member of the BLOC Smart Africa fund.

“We are delighted to see our partnership with Bamboo Capital Partners evolve today, with the signature of a declaration of intention from the Governments of the Democratic Republic of the Congo and Tunisia, and with the support of the Governments of Burkina Faso, Chad, and Djibouti. BLOC Smart Africa aims to identify and develop the next generation of pan-African technology champions in close co-operation with our members, partners and local technology ecosystems in the public and private sectors. We look forward to seeing our partnership bear fruit by giving young talent across the continent the opportunity to give free rein to their creativity and entrepreneurial spirit,” said Smart Africa CEO, Lucina Koné.

Smart Africa is an initiative comprising of Heads of States and governments from seven African countries that seek to boost sustainable socio-economic development through ICT. The member states include Rwanda, Burkina Faso, South Sudan, Gabon, Mali, Uganda, and Kenya.

In May 2019, Bamboo Capital Partners signed a partnership agreement with Smart Africa to support the BLOC Smart Africa fund. Through the collaboration, Bamboo will offer access to regional and local ecosystems such as incubators and source deal flow.

Jean-Philippe de Schrevel, founder and managing partner of Bamboo Capital Partners, said: “For over a decade, Bamboo has been at the forefront of impact investing, backing companies with innovative solutions to improve the lives of communities in emerging markets. With the support of these countries, we look forward to investing in companies using the latest technology to tackle major social or environmental challenges.”

Bamboo is a commercial private equity company launched in 2007. The firm has offices in Luxembourg, Bogota, Nairobi, Geneva, and Singapore.

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Nigeria’s Capital Markets Regulator to Create Framework for Cryptocurrency Regulation

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Framework for Cryptocurrency Regulation

Nigeria’s blockchain community and cryptocurrency exchanges could get a clear stance on the classification of cryptocurrencies from the country’s Securities and Exchange Commission (SEC) before the end of the year.

A Framework for Cryptocurrency Regulation Is Coming

According to a report by Pulse, the regulatory institution is set to implement the roadmap for the fintech industry as it pertains to its capital markets. According to the roadmap, between the last quarter of this year and the first quarter of 2020, the SEC is expected to:

  • Decide on its preferred classification of cryptocurrencies (either as commodities, securities or currency).
  • Develop a framework for the regulation of Virtual Financial Assets (VFAs) and VFA Exchanges.
  • Issue guidelines and standards for whitepapers and ICOs.
  • Develop a framework for KYC and due diligence for cryptocurrencies, Virtual Financial Assets, tokens, and ICOs.
  • Define clear classification for tokens based on their unique properties. They could be payment tokens, asset tokens, utility tokens or others.  

The Acting Director-General of the SEC, Mary Uduk, revealed at a Capital Markets Committee briefing last month that the Working Group to drive the implementation of the roadmap would be chaired by Adeolu Bajomo, the Vice-President of the Fintech Association of Nigeria. 

Cryptocurrencies as Commodities or Securities But Not as Currency

traderOne of the recommendations that stands out in the roadmap, which was prepared by a committee comprised of officials from the regulatory agencies, the private sector, and a member of the blockchain community, is for the SEC to recognise cryptocurrencies as commodities or securities, and not as a currency. This classification is expected to have tax implications for investors.

This recommendation is in line with the central bank’s directive last year, which stated that “virtual currencies” were not a legal tender.

Cryptocurrencies have lacked a single, definite identity. For example, Germany is treating them as money and means of payment while the US uses the Howey test to decide whether a cryptocurrency is a security or not.

Crypto Adoption in Nigeria

Citigroup, a US investment firm, reported in January 2018 that Nigerians were the third-largest holders of bitcoin as a percentage of gross domestic product (GDP). The use has ranged from ­trading to making fast, low-cost cross-border transactions, saving on the high fees taken by commercial banks and traditional money-transfer services.

Nigeria has a fast-growing young population with a significant chunk below the age of 35. But there is still a small number of people with access to the financial system. Less than 50 million people with bank accounts in a population of over 180 million. Blockchain applications could be a great way to onboard millions of underserved people into the financial system.

With the SEC expected to take responsibility for the regulation of cryptocurrencies in the country soon, we can foresee more scrutiny of Nigeria’s biggest crypto companies, which could lead to a more secure crypto trading ecosystem down the road. 

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