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How will Cardano’s technology benefit Ethiopia, Africa?

Africa has seen significant growth in terms of technological development in recent years with the expansion of its internet infrastructure and growing adoption in the region. As Cardano has recently announced a deal with the Ethiopian Government to provide an ID solution on their public blockchain to 5m students, we analyze the reasons behind this strategic alliance in Cardano’s vision of global adoption.

What are the benefits of Cardano for Ethiopia

The implementation of Cardano’s blockchain technology within the legacy systems of an African nation-state like Ethiopia hopes to be a watershed moment for the country and the continent. A key vision of Charles Hoskinson and Cardano is to ‘bank the unbanked.’ Currently, one-third of the world population is unbanked of which 350million of them live in sub-Saharan Africa. Technology is becoming a key driver in economic growth in Africa given the younger population of the continent. However, poverty and financial exclusion still persist. The deal represents the largest deployment of a blockchain use case in the world. The deal provides students and teachers of Ethiopia with a digital identity and onboarding them to the Cardano blockchain, thus providing them with an opportunity for financial inclusion in a low-cost and secure system with access to global markets. 

With IDs, Cardano Defi applications can offer Ethiopian users peer to peer lending services and insurance, abolishing abhorrent remittance fees, while enabling commerce and exchange of value through the potential introduction of Local Digital Currencies While, Cardano can offer to solve long-standing issues in the region such as providing immutable property rights, allowing for asset value retention.

Cardano in Ethiopia and Africa

Upon the announcement of the deal, Charles Hoskinson, founder of Cardano and CEO of IOHK, spoke of a young demographic in Ethiopia who are tech-savvy, overseen by leadership that’s cognizant of blockchain technology’s potential benefits. Africa boasts a very young population with the median age estimated at being 19 years and is home to over 1.3 billion people. There are already millions of digital wallets in the region, where individuals can make transactions rapidly via mobile applications as an alternative to cash. However, there still remain 350 million ‘unbanked’ adults in Sub-Saharan Africa. Ethiopia is the second most populated country in Africa with over 112 million people and until the COVID-19 Pandemic. it was one of the fastest-growing economies on the continent. However, the average annual income in Ethiopia remains below $1000. With a young demographic keen to learn and use technology to improve their standard of living and income levels, Ethiopia may be the perfect environment for any blockchain technology to gain a foothold for future adoption and provide an opportunity for its users to leapfrog several decades of western development and legacy systems.

How Cardano Helps Improve Education Standards

During the ‘Cardano Africa Special’, IOHK spoke with the Ethiopian Education Minister, Getahun Mekuria, about their collaboration.  It is anticipated that this large-scale project will include digital identity to 5 million students and 750,000 teachers. These IDs will be based on Atala PRISM, a decentralized identity solution built on the Cardano blockchain.  This ID will provide schools with the ability to accurately store and record academic achievements, attendance and provide data to optimize the curriculum. Schools have been provided with funding from an undisclosed Chinese manufacturer and USAID, to purchase the number of tablet devices needed to make this a tangible project. Education is a cornerstone to improving living standards and future economic expansion. Cardano blockchain system can provide an immutable platform to drive the quality and access to education, highlighting and addressing the high drop-out rates and low learning outcomes.

Digital Wallets & Potential Access to Defi in Ethiopia

With 5.75m people in Ethiopia provided with a digital ID, and a growing number having access to the internet, it lays the foundations for a significant adoption and use of Decentralized Finance on the Cardano blockchain over the coming years. Currently, there are 900k native Cardano wallets. The question then remains, will a high percentage of these digital identities create and use a wallet and use Cardano for their financial services? Developed nations have a legacy infrastructure in place, making blockchain technology an unnecessary luxury in the west. For most western people, cryptocurrency is primarily being used as a speculative investment.

Hoskinson believes DeFi demand will come from people who need it the most. Not those who use it speculatively to become relatively more wealthy. In turn, it’s the overwhelming demand that will drive value, not the technology itself. In Ethiopia and Africa, people could use their IDs to bank themselves and benefit from financial opportunities for the first time, such as peer to peer lending, insurance and access to global markets.. According to Hoskinson, DeFi can “create liquidity for the poorest people in the world and allow them to build wealth and protect the wealth that they’ve acquired”.

Director of African Operation for Cardano, John Connors, projected that this is just the start of Cardano issuing digital identities in Africa and estimates that 100m more will be created over the next two years, or 136,000 IDs per day. On average, 40-50k wallets are created per day on Cardano. If this projection comes to fruition, and users are incentivized to create wallets and participate in Defi, this would greatly increase the number of wallets created per day on Cardano from Africa alone. It would also match Ethereums, the 2nd largest cryptocurrency in the world, in current wallet creation per day, just from one continent.

Property Rights can be recorded and stored on the blockchain, which can solve a long standing issue in developing countries ensuring individuals’ asset value is retained, while avoiding disputes over homes or farms. 

Users will be able to benefit from the immutable nature of blockchain and of Cardano’s low transactions fees. Ethiopians who work abroad or in large cities will have the ability to send re  remittances to families in rural or disadvantaged areas, without paying disproportionate high fees of up to 30%

Final Thoughts

Ethiopia will become the incubator for the largest amount of users of public blockchain technology in the world. It is reported that other national sectors are in line for similar implementation. These IDs are to be issued in 2022, while there is a  civil war happening in the X region. Adoption and effective deployment will no doubtedly require time and patience. However, IOHKs patient endeavor of operating from Ethiopia with this vision in mind, could prove to be hugely worthwhile.

Dennis is the owner / operator of BonafideADA Stakepool. He has a degree in Architectural Technology and works as BIM Manager at an Architectural practice in Dublin. In his spare time, he operates the pool and helps provide educational content for new delegators to grow the pool and increase the adoption of Cardano.

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