Kenya follows Zimbabwe in using web3 in low-income segments
Web3 technology is the innovation that brought the world digital assets such as cryptocurrencies and is now being used to bring traditional assets into the virtual world.
Business and Technology Reporter in Nairobi, Kenya
Nation Media Group
On October 5, 2023, the Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya announced what he thought not only changes the lives of many Zimbabweans, but also significantly boosts the country’s economic trajectory.
After years of development, the RBZ finally announced that a gold-backed digital token could be used for domestic payments, ending reliance on the US dollar for transactions in the country and also allowing poor people to own a piece of gold.
Gold is Zimbabwe’s key mineral product, and it is one of the continent’s top producers of the precious metal, but for ages, only the elite and financially well-off members of the society could manage to own or trade it.
Like Zimbabwe’s gold, Kenya’s financial markets are among the continent’s most vibrant, with the Nairobi Securities Exchange (NSE) ranking high in Africa, but just a small fraction of well-to-do Kenyans are able to invest or benefit from it.
But now, some companies in Kenya are borrowing a leaf from Zimbabwe, and are now deploying the same web3 technology used by the Southern African nation to tokenize real-world assets, allowing the poor to also invest.
Web3 technology, also known as the decentralised ledger technology (DLT), is the innovation that brought the world digital assets like cryptocurrencies, nun-fungible tokens and the likes, and now, it is being used to bring real-word traditional assets into the virtual realm.
This happens through a process known as tokenisation, which is the digitisation of the traditional assets and subsequently breaking them down into smaller identical units to allow purchasing or ownership of just a fraction of the traditional asset digitally.
In Kenya, NSE is leading tokenisation efforts, with its joining of the Hedera Council meant as a strategic move to fuel its plans to launch digital tokenised securities, allowing fractional investments in Kenyan stocks by end of this year.
Hedera Council is the governing body of the Hedera hash graph network, and alternative DLT using a less energy intensive mechanism than Blockchain, on which Bitcoin is built.
“Tokenisation has the potential to transform industries across Africa and the NSE is committed to driving this innovation through the Hedera network,” said NSE chief executive Frank Mwiti.
Private tokenisation firm Ubuntu Tribe is also pursuing a licence from Kenyan regulators to tokenise gold and allow investments in small units for prospective investors who may not afford to buy a full once, for instance.
“The main idea behind tokenising gold is to give everyone equal access to opportunities. Right now, not everyone in Kenya can invest in the rare earth minerals,” said Mathew Munyao, the Web3 culture manager at Ubuntu Tribe.
“It’s not just investing. It’s also saving, hedging against inflation, and in a country where the local currency has a history of volatility, saving money in gold assets rather than cash can help many better store value over time.”
NSE and Ubuntu Tribe are not alone in their quest to tokenise real-world assets in Kenya, a number of firms are lining up for the task and the technology is proving to be a life saver in the country, as in Zimbabwe.
Another notable company tokenising asset in Kenya include Alphbloq, which digitalises investments in real estate and is currently in the Capital Markets Authority’s regulatory sandbox. Other upcoming ones include Kenya Security Tokenisation and My Shamba, which tokenise farms and land.
With these innovations, anyone can now own a piece of real estate, land, farm, gold, diamond or other traditional assets that were traditionally a reserve for the rich.
Mr Munyao argues that with tokenisation, anyone has the power and ability to invest in real-world assets that were previously a reserve for the rich, allowing wealth creation even for the poor.
“Because investing in these assets were previously reserved for the poor, many didn’t know about them, but with tokenisation, investing will be simplified, and cheaper, and now many can invest in them,” he told The EastAfrican.
