Africa nations need to adopt emerging technology such as blockchain and artificial intelligence to boost economic growth.
This came out in discussions during the 7th Pan African Conference on Illicit Financial flows and Taxation where taxation in the digital economy was the main topic of discussion amongst industry players.
Speaking at the event, Professor Bitange Ndemo, who is the Senior Advisor to UN’s Global Pulse Big Data Initiative, noted that African countries are too quick to ban blockchain and cryptocurrency simply because they do not have regulatory frameworks in place.
“Our biggest problem is failure to understand emerging business models. If we understood these emerging business models, then we can play at a level playing field”, said Ndemo.
According to Professor Ndemo, African countries can deal with disruptive business models like Facebook and Uber by first understanding the level of data involved.
“Things have changed. We are now beginning to move very close to diagnostics where we look at what happened and why at any time, so that we block that,” he said, adding that predictive analytics can with simulating events and prevent things from going wrong.
Professor Ndemo further urged Africa governments to first understand the business model behind AI and blockchain-based businesses instead of rushing to ban such companies or drafting regulatory frameworks. He suggested that blockchain be utilised in tax and financial services as the technology can aid in curbing illicit financial flows by enhancing transparency and accountability.
“If we create a Blockchain for this country (Kenya) to trace illicit financial flows, it would mean that all within the system the banks, the civil societies. If I put wrong information within the system, someone within the system questions that wrong information because of a distributed ledger.”
Professor Ndemo, whose team recently submitted a blockchain report to the government, indicated that distributed ledgers have the potential to end financial secrecy and tax havens for good.
Besides, tax authorities can use data analytics such as those obtained by fintech companies to get sufficient information about individuals in both the formal and informal sectors.
However, that would not be possible unless African countries take it upon themselves to educate their citizens about emerging technologies.
“Every country in Africa must have a digital learning program.” he said.
In many countries across Africa, including Kenya, the use of cryptocurrencies is illegal. One of the reasons for banning digital currencies in these countries is due to lack of proper regulatory frameworks that govern their use and adoption.
Explaining the experience of Kenya’s MPesa, Professor Ndemo said that African governments should not allow lack of regulatory frameworks to hinder the growth of innovation within their countries.
“We let M-Pesa to operate where we don’t have any regulation at all. Some people said this company is going to take money of this country. But we (government) said let’s wait and see what we can do about it. Now mobile money is regulated in Kenya”.
“We should in Africa jump into Blockchain and take the leadership”, he said.
The 7th Pan African Conference on Illicit Financial Flows and Taxation brought together global leaders, researchers other stakeholders who gathered in Nairobi Kenya to discuss how African countries boost their local revenue in today’s digital economy.