Blockchain in Africa: Lessons from Government Projects

Africa's Market Potential and the Challenges of Government Partnerships

Africa’s substantial population of 1.2 billion individuals represents a significant potential market. However, when targeting governments across 54 different nations, unique challenges arise.

The Founding of Domineum Blockchain Solutions

Domineum Blockchain Solutions was established with the core objective of providing solutions to African governments regarding shipping and record-keeping processes.

While we anticipated a demanding undertaking, the difficulty of securing our initial client exceeded our expectations.

Our Initial Product: Cargo Tracking

Our first offering was a cargo service designed to monitor the origin and movement of shipments, as well as to accurately identify the contents of imported and exported goods. This system was developed to address revenue losses stemming from shipments diverted through unofficial channels.

Early Attempts in Sub-Saharan Africa

Focusing on sub-Saharan Africa, we initiated contact with governmental bodies in four countries during 2019: Nigeria, our home nation, alongside Kenya, Gambia, and Guinea-Conakry.

Despite initiating these conversations, we did not receive a meaningful response from these governments. A lack of familiarity with blockchain technology and the novelty of our solution contributed to their reluctance to trial our system.

Consequently, we decided to broaden our scope to include a smaller nation: Sierra Leone.

Sierra Leone: A Strategic Gateway

The Freetown seaport, situated in Sierra Leone’s capital, serves as the primary trade gateway for the country, handling approximately 80% of all trade. Its location provides a strategic advantage, positioned midway between Europe and the Americas, and it has a long history as a commercial center.

However, Freetown is not a leading port in Africa or even sub-Saharan Africa, processing only a small fraction of global trade shipments. This relatively small African country, representing around 0.1% of the world’s population, exports commodities like diamonds, cocoa, and coffee, while importing essential goods such as food, machinery, and chemicals.

Challenges in Sierra Leone's Supply Chain

Sierra Leone faced considerable difficulties in efficiently managing the import and export of these products. A local supply chain manager highlighted these issues, stating, “We encountered significant challenges during the export process. Port delays were frequent, with trucks arriving before midnight often remaining queued for hours, even days. The documentation procedures were excessively complex.”

The World Bank identified several contributing factors to Sierra Leone’s trade challenges, including limited access to trade information, extensive physical inspections, numerous fees and permits, manual processes, and a lack of inter-agency coordination. Domineum aimed to resolve these issues.

A Successful Partnership

Our initial discussions with the Sierra Leone government proved productive. Sierra Leone had already formulated a five-year plan (2018-2023), backed by the World Bank Group, to streamline trade processes and reduce associated costs.

The objective was to decrease trade costs by 10%. Following three months of dialogue, our cargo tracking system was successfully implemented.

Since the partnership began in late 2019, we have successfully recovered $2 million in revenue that would otherwise have been lost.

Our business model is straightforward: we receive a 40% commission on the additional revenue generated for the Sierra Leone government through our cargo tracking system.

The Importance of Strategic Market Entry

It is common to initially target larger, more prominent African markets like Nigeria, South Africa, and Kenya. However, our experience suggests that these countries may not always be the most effective starting point.

Engaging with governments is inherently complex, involving significant political considerations.

We discovered that establishing a foothold in smaller nations and leveraging that success as validation is a more viable strategy. The positive outcome in Sierra Leone has encouraged us to revisit other countries with renewed confidence.

Expanding Our Service Offerings

The success in Sierra Leone prompted us to re-evaluate our service portfolio. While initial conversations centered on cargo tracking, we considered offering alternative solutions to countries that initially declined our services.

Addressing Land Registration Issues

We identified land registration as a widespread problem across Africa. Over 90% of rural land in Africa lacks formal documentation, making it susceptible to land grabbing. This hinders agricultural and economic growth, as land is either lost to others or seized by the government during conflicts.

We re-engaged with previously unresponsive countries, presenting blockchain-based land ownership registration services. A state government in Nigeria responded favorably, agreeing to a pilot program. We are optimistic about securing a further contract upon completion of this pilot phase.

Navigating Government Partnerships in Africa

Working with African governments involves addressing a smaller addressable market. If you are proposing a product or service to African governments, it is prudent to consider that your first client may originate from a smaller nation.

We will continue to pursue opportunities across Africa, maintaining this strategic mindset.