Professor Remarques: givereferences and in text citations to the pictures and diagrams mentioned in the file

Professor Remarques: givereferences and in text citations to the pictures and diagrams mentioned in the file

LEVERAGING THE BLOCKCHAIN TECHNOLOGY TO INCREASE TRADE AMONG AFRICAN COUNTRIES THROUGH AFCTAC (The African Continental Free Trade Area)

A Capstone Project Report Submitted to AGE and GMU- Guglielmo Marconi University in Partial Fulfillment of the Requirements for the Degree of Master In Business Administration - Blockchain Management

April 2023

Student ID:

Supervisor

Date: Acknowledgments

Table of Contents TOC o "1-3" h z u

CAPSTONE PROJECT PAGEREF _Toc5051168 h 1

Abstract PAGEREF _Toc5051169 h 2

Introduction PAGEREF _Toc5051170 h 7

Background of the Research PAGEREF _Toc5051171 h 11

Research Problem PAGEREF _Toc5051172 h 12

Research Rationale PAGEREF _Toc5051173 h 12

Research Aim PAGEREF _Toc5051174 h 13

Research Objectives PAGEREF _Toc5051175 h 13

Research Questions PAGEREF _Toc5051176 h 13

Significance of the Research PAGEREF _Toc5051177 h 13

Capstone Outline PAGEREF _Toc5051178 h 14

Summary PAGEREF _Toc5051179 h 15

2. Literature review PAGEREF _Toc5051180 h 16

2.1 Introduction PAGEREF _Toc5051181 h 16

2.2 Analytical Framework PAGEREF _Toc5051182 h 16

Blockchain Technology PAGEREF _Toc5051183 h 18

Benefits of Using Blockchain Technology PAGEREF _Toc5051184 h 18

Challenges of Using Blockchain Technology PAGEREF _Toc5051185 h 19

Trading PAGEREF _Toc5051186 h 20

Cross Border Trading PAGEREF _Toc5051187 h 20

Benefits from Cross Border Trading PAGEREF _Toc5051188 h 21

Challenges Identified in Cross Border Trading PAGEREF _Toc5051189 h 21

Theories Related to Trading PAGEREF _Toc5051190 h 22

Conditions of African Countries PAGEREF _Toc5051191 h 23

Political Plight: PAGEREF _Toc5051192 h 23

Economic Plight: PAGEREF _Toc5051193 h 24

Socio-cultural Plight: PAGEREF _Toc5051194 h 24

Technological Awareness: PAGEREF _Toc5051195 h 25

Environmental Conditions PAGEREF _Toc5051196 h 25

Legal Aspects PAGEREF _Toc5051197 h 26

Payment Structure PAGEREF _Toc5051198 h 26

Modes of Payment in Cross Border Trading PAGEREF _Toc5051199 h 27

Traceability of Cross Border Payment PAGEREF _Toc5051200 h 27

Challenges Identified in Cross Border Payment Traceability PAGEREF _Toc5051201 h 28

Gaps in Literature PAGEREF _Toc5051202 h 28

Chapter 3: Research Methodology PAGEREF _Toc5051203 h 29

3.1 Introduction PAGEREF _Toc5051204 h 29

3.2 Research Outline PAGEREF _Toc5051205 h 29

3.3 Research Onion PAGEREF _Toc5051206 h 30

3.4 Research Philosophy PAGEREF _Toc5051207 h 30

Justification PAGEREF _Toc5051208 h 31

3.5 Resarch Approach PAGEREF _Toc5051209 h 31

Justification PAGEREF _Toc5051210 h 32

3.6 Research Design PAGEREF _Toc5051211 h 32

Justification PAGEREF _Toc5051212 h 33

3.7 Type of research PAGEREF _Toc5051213 h 34

Justification PAGEREF _Toc5051214 h 34

3.8 Research Strategy PAGEREF _Toc5051215 h 35

Justififcation PAGEREF _Toc5051216 h 35

3.9 Types of research Data PAGEREF _Toc5051217 h 35

Justification PAGEREF _Toc5051218 h 35

3.10 Data Collection Methods and Instruments PAGEREF _Toc5051219 h 35

3.11 Ethical Considerations PAGEREF _Toc5051220 h 36

3.12 Accessibility Concerns PAGEREF _Toc5051221 h 36

3.13 Limitations PAGEREF _Toc5051222 h 36

3.14 Summary PAGEREF _Toc5051223 h 37

Case 1 PAGEREF _Toc5051224 h 37

Case 2 PAGEREF _Toc5051225 h 39

Case 3 PAGEREF _Toc5051226 h 40

Case 4 PAGEREF _Toc5051227 h 42

Case 5 PAGEREF _Toc5051228 h 44

Case 6 PAGEREF _Toc5051229 h 46

Chapter 5: Conclusion PAGEREF _Toc5051230 h 49

Limitations of the Research PAGEREF _Toc5051231 h 52

Future Scope of research PAGEREF _Toc5051232 h 53

References PAGEREF _Toc5051233 h 54

Abstract

The AfCFTA aims to establish the largest free trade area globally by enabling free movement of people and goods among its member nations, without replacing existing regional free trade agreements. The economies of African countries are dominated by exports of natural resources to developed and developing countries, along with imports of manufactured goods, resulting in limited intercontinental trade due to underdeveloped economies and tariff barriers. The AfCFTA is expected to remove these tariff barriers, boost economic growth, and transform the economies of African countries.

The blockchain technology has the potential to revolutionize trade among African countries through the African Continental Free Trade Area (AfCFTA). By leveraging the blockchain, AfCFTA can provide a secure, transparent, and efficient system for conducting trade transactions, including tracking the movement of goods, payments, and customs procedures. This technology can also help address issues of trust and corruption, which often hinder trade in Africa. Additionally, the blockchain can help small and medium-sized enterprises (SMEs) access financing and global markets. The research on Leveraging The Blockchain Technology To Increase Trade Among African Countries Through AfCFTA (The African Continental Free Trade Area) will help in identifying the areas which are barriers to its successful implementation. This will be done through literature review and discussing the same through case studies. The recommendations developed and the future scope of research will be helpful in conducting further studies on the subject in future.

IntroductionAfrican trade refers to the exchange of goods and services between African countries, as well as between African countries and the rest of the world (Rijanto, 2021). At the national level, trade is usually conducted within each country's borders, while at the international level, trade involves cross-border transactions.

At the international level, African countries have been engaging in trade with the rest of the world, particularly with China, the European Union, and the United States. African countries have also been seeking to diversify their export markets and increase value-added exports, such as manufacturing and processed agricultural products (African Union Commission, 2022).

However, African countries face a number of challenges in expanding their trade, including inadequate infrastructure, limited access to finance, and trade barriers imposed by other countries. Addressing these challenges will require greater investment in infrastructure, trade facilitation measures, and policy reforms to create an enabling environment for trade.

National Level:

Intra-African trade: Intra-African trade has historically been low, but there are efforts to increase it. The African Union has set a target of increasing intra-African trade to 25% by 2025, up from its current level of around 16%. To achieve this, African countries are taking steps to reduce trade barriers, such as customs duties and non-tariff barriers, and to harmonize trade policies.

Regional economic communities: African countries have formed regional economic communities (RECs) to promote trade and economic integration. These include the East African Community, the Economic Community of West African States, and the Southern African Development Community. RECs help to create larger markets and promote trade among member states.

Trade financing: African countries often face challenges in accessing trade financing, which can limit their ability to participate in international trade. The African Export-Import Bank is a multilateral institution that provides trade financing and other services to African countries.

International Level:

China-Africa trade: China is a major trading partner for Africa, with trade volumes increasing significantly in recent years. China is a major importer of African commodities, such as oil, minerals, and agricultural products, and has also invested heavily in infrastructure projects in Africa (Belu, 2019).

European Union-Africa trade: The European Union is also a significant trading partner for Africa. The Economic Partnership Agreements (EPAs) between the EU and African countries are aimed at promoting trade and investment between the two regions. The EPAs provide African countries with preferential access to EU markets, while also promoting regional integration within Africa.

United States-Africa trade: The United States is a relatively minor trading partner for Africa, but there are efforts to increase trade between the two regions. The African Growth and Opportunity Act (AGOA) provides African countries with duty-free access to the US market for a range of products, including textiles, apparel, and agricultural products (African Union Commission, 2022).

Block Chain Technology

Blockchain is a distributed digital database that stores data in blocks connected in a chain. This technology is effective in ensuring transparency and immutability of data, making it difficult to alter or delete any information (Mataba & Ismail, 2021). Trust and security can be achieved through the use of mathematical functions, timestamps, and hash codes that convert digital data into letters and numbers. Blockchain technology is a relatively new innovation, and its use in international trade is still in its early stages. However, there have been several pilot projects and initiatives in recent years that have explored the use of blockchain technology in international trade.

For example, in 2018, Maersk and IBM launched a joint venture to create a blockchain-based platform for managing and tracking international trade (Zhao & Meng, 2019). The platform, known as TradeLens, aims to streamline the flow of information between shippers, freight forwarders, and other participants in the supply chain.

In another example, the Chinese government has launched a blockchain-based platform for cross-border trade, known as the Blockchain-Based Service Network (BSN). The BSN aims to provide a secure and transparent platform for cross-border trade, reducing the need for intermediaries and increasing efficiency.

There have also been several initiatives at the regional level to explore the use of blockchain technology in international trade. For example, the European Union has launched a project known as the European Blockchain Services Infrastructure (EBSI), which aims to provide a secure and transparent platform for cross-border trade within the EU (Okuneye, 2023).

The integration of advanced technologies in African trade has the potential to transform the way goods and services are traded, and to drive economic growth and development on the continent. Here are some examples of how advanced technologies are being integrated into African trade:

E-commerce: E-commerce platforms are becoming increasingly popular in Africa, with companies such as Jumia, Konga, and Souq.com operating in multiple African countries (Belu, 2019). These platforms allow businesses to sell goods and services online, enabling them to reach a wider customer base and reduce the cost of doing business. E-commerce platforms also offer customers greater convenience and access to a wider range of products.

Mobile money: Mobile money services, such as M-Pesa, have become popular in Africa as a way to facilitate transactions in areas with limited access to traditional banking services. Mobile money allows individuals and businesses to transfer money, pay bills, and make purchases using their mobile phones. This has the potential to increase financial inclusion and enable more people to participate in the formal economy.

Blockchain: Blockchain technology has the potential to revolutionize trade finance in Africa by reducing the cost and complexity of cross-border transactions. Blockchain can be used to track the movement of goods and payments across borders, reducing the risk of fraud and increasing transparency (McDaniel & Norberg, 2019). It can also be used to create smart contracts that automate trade finance processes, reducing the need for intermediaries and speeding up transactions.

Internet of Things (IoT): The Internet of Things refers to the network of physical devices, vehicles, and other objects that are connected to the internet, enabling them to collect and exchange data. In the context of trade, IoT can be used to track the movement of goods in real-time, providing greater visibility and control over supply chains (Union, 2020). This can help to reduce the risk of theft and damage to goods, and enable businesses to respond more quickly to disruptions.

Artificial Intelligence (AI): AI technologies, such as machine learning and natural language processing, can be used to automate trade processes and improve decision-making (Mataba & Ismail, 2021). For example, AI can be used to analyze trade data to identify patterns and trends, enabling businesses and governments to make more informed decisions. AI can also be used to automate trade finance processes, reducing the need for manual intervention and increasing efficiency.

Background of the ResearchHistorically, African countries have been heavily reliant on the export of primary commodities such as oil, minerals, and agricultural products to generate foreign exchange earnings. This has resulted in a narrow export base and vulnerability to commodity price fluctuations (Zhao & Meng, 2019). However, in recent years, African countries have been taking steps to diversify their economies and increase trade with each other and with the rest of the world.

At the national level, African countries have been implementing policies to increase intra-African trade, such as reducing trade barriers and harmonizing trade policies. The African Continental Free Trade Area (AfCFTA) is a landmark trade agreement that was signed in 2018 and came into effect in 2021. It aims to create a single market for goods and services in Africa, with the goal of increasing intra-African trade and boosting economic growth on the continent.

Research ProblemBlockchain is effective when digital information is recorded and distributed the way it exists (Yermack & Fingerhut, 2021). No editing shall be made to it. In other words, Blockchain is the foundation for immutable ledgers, which do not entertain editing, deletion, or destruction. Through different means, trust and decentralized security can be achieved. For instance, linear and chronological order can be followed to store new blocks and added at the end of the database. Blockchain technology is one of the secured forms of means to record the transactions but the problem at present is to detect if its applicability in AFCFTA can help in boosting the trade and payment inflow to African countries.

Research RationaleIn recent years, the African Union has been working to create a unified trade area on the continent, known as the African Continental Free Trade Area (AfCFTA). This initiative aims to increase intra-African trade by reducing tariffs and other trade barriers, as well as promoting regional economic integration and industrialization.

Africa's trade relationships with other regions of the world are also significant. The continent exports a variety of commodities, including oil, minerals, and agricultural products, to countries in Europe, Asia, and the Americas transparency (McDaniel & Norberg, 2019). In turn, Africa imports goods such as machinery, vehicles, and electronics from these regions.

However, African countries still face challenges such as poor infrastructure, limited access to finance, and political instability, which can hinder trade and economic growth. Addressing these challenges will require significant investment and collaboration from both African governments and the international community.

Research AimThe aim of the research is to examine the influence of blockchain technology on trade between African countries members of AfCFTA in terms of goods origin and traceability of cross border payment.

Research ObjectivesTo critically evaluate the concepts of blockchain technology, trade, and trade barriers

To analyse how blockchain technology can be useful in international trade.

To recognise how blockchain technology can be useful for African countries in creating safe zone for cross border payments.

To identify the issues with the use of blockchain technology and its adverse influence on trade

Research QuestionsWhat are the concepts related to blockchain technologies and trade?

What are the techniques through which blockchain technology can be beneficial in commerce?

What is the role of blockchain technology in AfCFTA and boosting the strength of African economy?

What are the issues associated with blockchain technology being used in trade at global level?

Significance of the ResearchThe use of blockchain technology can enhance the transparency and accountability of cross-border trade transactions between African countries. This could help to reduce the risk of fraud and corruption, which are often barriers to trade, particularly in developing countries.

Moreover, by increasing the traceability of goods and cross-border payments, blockchain technology can help to facilitate faster and more efficient trade between African countries (Rijanto, 2021). This could increase trade volumes and promote economic growth, which is particularly important in the context of the AFCFTA, which aims to create a single market for goods and services in Africa (Mataba & Ismail, 2021).

Also studying this research topic can help to identify the potential challenges and opportunities associated with the adoption of blockchain technology in the context of cross-border trade in Africa. This can inform policy decisions and help to ensure that the benefits of blockchain technology are maximized while minimizing potential risks.

Capstone OutlineThe capstone will be categorised into five chapters:

Chapter 1 Introduction: The topic will be introduced in this chapter which will help in framing the background and understand the history of the African trade. It will highlight research aims and objectives. Apart from this the chapter will also consists of research problem, rationale, and significance of the research.

Chapter 2 Literature Review: The various themes and concepts involved in the research of the topic will be identified. The two identified variables are - Blockchain and African trade which will take the understanding of various literature further. The relevant models and theories will be analyzed critically so that background of the research topic can be well understood. This will also contribute to developing conceptual framework for the research.

Chapter 3 Research Methodology: The methods which will be used for research will be discussed in this chapter. It will further contribute in developing strategies and paradigms for implementation. This will be supported with references. The ethical policies and declaration of no of conflict of interest which are part of research will also be highlighted.

Chapter 4 Findings and Discussion: The findings which will be noted while following the chosen research methodology, will be analyzed. Images and illustrations will be used to maintain the user interest and readability of the researched document. This will further led the researcher to reach a meaningful conclusion.

Chapter 5 Conclusion: Being the final stage of the research it will help reader to draw inference from the same and help in the accomplishment of research aims and objectives. This will also result in developing recommendations which can be implemented to improve the trade with the help of blockchain technology.

Source: Researcher

SummaryAfrica has a rich history of trade dating back to ancient times. The continent's geographical location, diverse resources, and cultural exchanges have facilitated the growth of trade over the years. At present, Africa is home to a growing number of businesses and entrepreneurs who are seeking to tap into its vast market potential. Overall, African trade has the potential to drive economic growth, create jobs, and improve living standards for people across the continent.

2. Literature review2.1 IntroductionBlockchain technology is ideal for applications that require transparency, security, and accountability, such as financial transactions, supply chain management, and identity verification and hence its use is becoming increasingly popular.

2.2 Analytical Framework

Source: Researcher

The AFCFTA Agreement: The research has explored the provisions of the AFCFTA agreement, which aims to increase intra-African trade by removing trade barriers and promoting economic integration among African countries.

Blockchain Technology: The research has examined the concept of blockchain technology and its potential applications in cross-border trade. This has included an analysis of the features of blockchain technology that make it suitable for increasing trade between African countries.

Goods Origin and Traceability: The research has focused on how blockchain technology can improve the traceability of goods and their origin. This has also included an analysis of how blockchain technology can be used to create a tamper-proof record of the origin of goods, ensuring that products are genuine and not counterfeit.

Cross-Border Payment: The research has explored how blockchain technology can improve the efficiency and security of cross-border payments. This has also included an analysis of how blockchain technology can be used to create a secure and transparent platform for cross-border payments, reducing the need for intermediaries and increasing efficiency.

Trust and Confidence: The research has examined how the use of blockchain technology can increase trust and confidence in cross-border trade among African countries. This has included an analysis of how blockchain technology can reduce the risk of fraud and corruption and increase transparency and accountability in cross-border transactions.

Implementation Challenges: The research has identified the potential challenges and barriers to the implementation of blockchain technology in cross-border trade between African countries. This has included an analysis of the regulatory and legal frameworks that may impact the adoption of blockchain technology, as well as the technical and logistical challenges that may arise in implementing this technology in cross-border trade.

Blockchain TechnologyBlockchain technology is a distributed and decentralized digital ledger that records transactions securely and transparently. It uses a network of computers to store a shared, tamper-proof database of transactions, which is constantly updated and verified by a consensus mechanism. Each block in the chain contains a set of transactions, and once added to the blockchain, it cannot be altered without the consensus of the network (AfricaPortal, 2021). It is often associated with cryptocurrencies such as Bitcoin, which was the first blockchain-based application to gain widespread adoption.

Benefits of Using Blockchain TechnologyBlockchain technology has several benefits that make it an attractive option for various applications. Here are some of the most notable benefits:

Decentralization: One of the main advantages of blockchain is that it operates in a decentralized manner, meaning there is no central authority or control. This makes it more resilient to cyber-attacks and ensures that no single entity has complete control over the network (Fox & Sign, 2020).

Transparency: Blockchain technology is designed to be transparent, with all transactions recorded on a public ledger that can be viewed by anyone (Gourdon et al. 2020). This makes it easier to trace the history of transactions and helps to prevent fraud.

Security: The use of cryptographic algorithms ensures that the data on the blockchain is secure and tamper-proof (Dutta, et al. 2020). This makes it ideal for applications that require high levels of security, such as financial transactions and data storage.

Immutability: Once a transaction is recorded on the blockchain, it cannot be altered or deleted. This ensures the integrity of the data and prevents any unauthorized changes.

Efficiency: Blockchain technology allows for faster and more efficient transactions since there is no need for intermediaries or third-party verification. This can significantly reduce transaction costs and processing times.

Smart Contracts: As per Ganne (2018) blockchain technology allows for the creation of smart contracts, which are self-executing contracts with the terms of the agreement directly written into the code. This allows for automated transactions and eliminates the need for intermediaries.

Challenges of Using Blockchain TechnologyScalability: As the number of transactions on a blockchain network increases, so does the size of the blockchain. This can lead to slower transaction times and increased costs, making it difficult to scale the network.

Interoperability: While blockchain technology offers interoperability between different networks, there is still a lack of standardization across different blockchain platforms (Ibeh, 2020). This can make it difficult to integrate different blockchain networks and limit their effectiveness.

Energy consumption: The process of verifying and recording transactions on a blockchain network requires significant computing power, which can lead to high energy consumption (Ibrahim & Truby, 2022). This is a significant environmental concern that needs to be addressed.

Regulatory challenges: The decentralized and anonymous nature of blockchain technology can make it challenging to regulate. This can lead to legal and regulatory challenges, particularly in industries such as finance and healthcare.

Security: While blockchain technology is designed to be secure, there are still vulnerabilities that can be exploited by hackers (Khadka, 2020). These vulnerabilities can include smart contract bugs, private key theft, 51% attacks.

Adoption: Blockchain technology is still in the early stages of adoption, and many people and organizations are still unfamiliar with its benefits and how to use it. This can limit its effectiveness and slow down its adoption.

Trading

Trading refers to the buying and selling of financial instruments such as stocks, bonds, currencies, and commodities with the aim of making a profit. Traders typically look for opportunities to buy an asset at a low price and sell it at a higher price, or to sell an asset at a high price and buy it back at a lower price (Ismail, 2020). Trading can take place on various platforms such as stock exchanges, over-the-counter markets, and online trading platforms. It involves analysing market trends, news, and economic data to make informed decisions about when to buy and sell assets (Siva Vignesh, 2021). Trading can be done by individuals, institutional investors, or automated trading algorithms.

Cross Border Trading

Cross-border trading refers to the buying and selling of goods or services between different countries. This type of trading involves transactions that cross international borders and can involve multiple currencies, languages, and legal frameworks. Cross-border trading can be done by individuals, companies, or governments and can be facilitated through various channels such as import and export, e-commerce, and international financial markets (Hu et al.2021). To engage in cross-border trading, traders need to comply with various regulations, including customs regulations, trade agreements, and tax laws. It also requires an understanding of the cultural, economic, and political differences between countries.

Benefits from Cross Border TradingAccess to new markets: Businesses can access new markets and customers, which can increase their revenue and profitability.

Diversification of revenue streams: Cross-border trading can help businesses diversify their revenue streams, reducing their dependence on any one market or customer base.

Increased competitiveness: Cross-border trading can help businesses become more competitive by accessing new suppliers, technologies, and resources (Coulibaly, 2019).

Lower costs: By sourcing goods and services from other countries, businesses can often benefit from lower costs due to differences in labour costs, currency exchange rates, and regulatory environments.

Improved product quality: Cross-border trading can help businesses access new technologies, materials, and production methods, which can lead to improved product quality and innovation.

Cultural exchange: Cross-border trading can facilitate cultural exchange and understanding between different countries and regions.

Challenges Identified in Cross Border TradingRegulatory compliance: Cross-border trading requires businesses to comply with various regulations, including customs regulations, trade agreements, and tax laws (WOOLFREY, 2021). Non-compliance can result in penalties, fines, and legal consequences.

Cultural differences: Kukubo indicates that cross-border trading involves engaging with people from different cultures and backgrounds, which can lead to misunderstandings and communication difficulties.

Language barriers: Language differences can make it challenging for businesses to communicate effectively with customers, suppliers, and partners in other countries.

Logistical issues: Cross-border trading can involve complex logistics, including transportation, storage, and inventory management, which can be costly and challenging to manage (Maltseva & Maltsev, 2019).

Currency fluctuations: Fluctuations in currency exchange rates can affect the profitability of cross-border trading, making it challenging to forecast revenues and costs accurately.

Political and economic instability: Political and economic instability in different countries can impact cross-border trading by affecting regulations, trade agreements, and currency exchange rates, making it more challenging to operate and plan.

Theories Related to Trading

Comparative advantage theory: According to Sabatier (2019) this theory suggests that countries should specialize in producing goods and services in which they have a comparative advantage, and trade with other countries to obtain goods and services in which they do not have a comparative advantage (Ndemo & Mkalama, 2023). Blockchain technology can help to facilitate trade between African countries by providing a secure and transparent platform for cross-border transactions and facilitating the exchange of goods and services.

New trade theory: This theory suggests that economies of scale and network effects can lead to increasing returns to scale and international trade (Rttimann, 2020). Blockchain technology can help to create economies of scale by reducing transaction costs and increasing efficiency in cross-border trade, which can lead to increasing returns to scale and more trade between African countries.

Gravity model of trade: This theory suggests that the volume of trade between two countries is proportional to their size and inversely proportional to the distance between them (Shahriar, et al. 2019). Blockchain technology can help to overcome some of the barriers to trade between African countries by providing a secure and efficient platform for cross-border transactions, which can reduce the distance between countries in terms of trade.

Transaction cost theory: According to this theory the cost of transactions can impact the level of trade between countries (Rindfleisch, 2020). Blockchain technology can help to reduce the cost of cross-border transactions by providing a secure and efficient platform for trade, which can lead to an increase in trade between African countries.

Conditions of African Countries

Political Plight:The political landscape in some African countries is often characterized by instability, corruption, and poor governance. The continent of Africa is likely to experience increased political instability leading to violent conflicts in countries like Ethiopia, Mozambique, Mali, Burkina Faso etc. This unrest is expected to escalate as powerful groups compete for control while citizens resist oppressive governments. These ongoing conflicts will hinder progress in social and economic development, putting the rapidly expanding African population at a disadvantage.

These factors have hindered the implementation and adoption of blockchain technology, which requires strong regulatory frameworks and government support. In addition, the lack of harmonized policies and regulations across African countries has made it challenging to implement cross-border blockchain-based solutions (Odularu, 2020). The African Continental Free Trade Area (AfCFTA) agreement aims to address these challenges by promoting trade and economic integration among African countries. However, the success of blockchain-based solutions in facilitating trade under the AfCFTA will depend on the political will and commitment of African governments to implement the necessary policies and regulations (African Union Commission, 2022).

Economic Plight:The world economy has been hit hard by a combination of crises in 2022, including the COVID-19 pandemic, the war in Ukraine leading to food and energy shortages, rising inflation, debt reduction measures, and the climate crisis. As a result, global output growth is predicted to slow down from 3.0% in 2022 to 1.9% in 2023, which is among the lowest rates seen in recent years.

African countries face various economic challenges, including high levels of poverty, unemployment, and inequality. These challenges can limit the resources available for investment in blockchain technology infrastructure and education (Chang et al. 2020). Additionally, limited access to financial services and digital infrastructure can hinder the adoption of blockchain-based solutions for trade. However, the increasing demand for African goods in international markets presents an opportunity for blockchain technology to improve traceability and increase the value of African exports. The successful implementation of blockchain-based solutions under the AfCFTA can also stimulate intra-African trade and boost economic growth.

Socio-cultural Plight:Culture plays a significant role in shaping social relations, with collectivist cultures being more prone to unequal power dynamics than individualist cultures. In most developed countries, individualistic values are more prominent, prioritizing personal space, freedom, independence, autonomy, self-reliance, and privacy.

Socio-cultural factors, such as language and cultural diversity, can present challenges to the implementation and adoption of blockchain technology for trade in African countries. Language barriers can make it difficult to implement standardized blockchain-based solutions across African countries (Salami, 2020). Additionally, cultural differences in business practices and attitudes towards technology can affect the willingness of businesses and individuals to adopt blockchain-based solutions. However, the increasing use of mobile phones and digital technologies in Africa presents an opportunity for blockchain technology to bridge socio-cultural barriers and facilitate trade.

Technological Awareness:The ability of countries to promote their technological competitiveness depends on how effectively they can develop their capabilities. Companies in developing countries often lack the knowledge to identify which new skills, technical expertise, and organizational techniques are necessary to fully utilize newly imported technologies. This requires a shift in traditional thinking patterns to facilitate interaction and collaboration with other firms and institutions and to build technical expertise. Additionally, the problem of "leakage" of trained workers must be addressed.

Blockchain technology is a relatively new and complex concept that requires specialized skills and knowledge to implement and maintain. African countries face a shortage of skilled personnel and limited access to training and education in blockchain technology. Additionally, limited access to digital infrastructure, such as reliable internet connectivity, can hinder the adoption of blockchain-based solutions. However, the increasing availability of online resources and training programs presents an opportunity for African countries to improve technological awareness and develop a skilled workforce in blockchain technology.

Environmental ConditionsThe implementation of blockchain technology to enhance trade among African countries through AFCTA has the potential to positively impact the environment. By enabling greater transparency and traceability in supply chains, blockchain can aid in identifying and reducing environmental harm caused by illegal or unsustainable practices in various industries such as agriculture, forestry, and mining. This technology can also promote the use of renewable energy sources for mining and processing of cryptocurrencies, reducing the carbon footprint associated with traditional methods.

Legal AspectsThe use of blockchain technology for trade within the African Continental Free Trade Area (AfCFTA) may have legal implications that need to be considered. For example, the legality of using digital currencies for trade within AfCFTA member states may vary, and regulations may need to be developed to ensure compliance. Intellectual property rights, data privacy, and security concerns also need to be addressed, particularly as blockchain involves the storage and transfer of sensitive data. Additionally, legal frameworks may need to be developed to govern smart contracts, which are self-executing contracts that operate on the blockchain.

Payment StructureThe implementation of blockchain technology to increase trade among African countries through AFCTA has the potential to transform payment structures. By using cryptocurrencies, blockchain can eliminate the need for traditional payment systems and their associated fees, allowing for faster and cheaper cross-border transactions. This can also benefit small and medium-sized enterprises (SMEs) that may not have access to traditional banking services (Chang et al. 2019). However, the volatility of cryptocurrencies may pose a challenge to their adoption as a payment method, and stability mechanisms may need to be put in place.

Additionally, education and awareness campaigns may be necessary to facilitate the adoption of cryptocurrencies as a legitimate payment method within the region. Furthermore, blockchain technology can enable the creation of new payment systems that are more efficient and secure, allowing for the tracking and verification of transactions in real-time. These systems can also be designed to promote financial inclusion and empower underserved communities by providing access to digital financial services. However, regulatory frameworks will need to be developed to address potential risks associated with these new payment systems.

Modes of Payment in Cross Border TradingThe implementation of blockchain technology can revolutionize the modes of payment in cross-border trading among African countries. By leveraging cryptocurrencies, blockchain can facilitate peer-to-peer transactions between buyers and sellers, eliminating the need for intermediaries such as banks and payment processors (Chang et al. 2020). This can reduce transaction costs and increase the speed and security of cross-border payments. However, the acceptance of cryptocurrencies as a mode of payment may vary across different countries and regions, and regulations may need to be developed to ensure compliance with legal frameworks.

Additionally, the integration of blockchain-based payment systems with traditional payment systems may be necessary to promote widespread adoption. Moreover, blockchain can provide greater transparency and traceability in cross-border transactions, mitigating the risk of fraud and counterfeiting. Additionally, smart contracts can be used to automate payment settlements and ensure that payment is only released once certain conditions are met, providing greater security for both buyers and sellers.

Traceability of Cross Border PaymentThe implementation of blockchain technology can enhance traceability in cross-border payments, providing transparency and accountability in the payment process. By using blockchain, payment information can be stored in a tamper-proof and decentralized ledger, allowing for real-time tracking of payment flows (Jessel & DiCaprio, 2018). This can facilitate compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations, as well as reduce the risk of fraud and corruption.

Also, the use of blockchain-based payment systems can enable greater visibility into supply chains, allowing for the tracking of goods and payments throughout the entire transaction process. This can promote greater trust and transparency between trading partners, particularly in industries such as agriculture and mining where supply chain sustainability is a key concern.

Challenges Identified in Cross Border Payment TraceabilityWhile blockchain technology can enable greater traceability in cross-border payments, there are several challenges that need to be addressed (Odularu, 2020). One of the main challenges is the interoperability of different blockchain platforms and payment systems, which can hinder the seamless flow of payment information across different systems. Additionally, privacy concerns related to the use of blockchain-based payment systems may arise, particularly regarding the storage and sharing of personal information. Furthermore, the high energy consumption associated with blockchain mining can pose environmental challenges (Dutta, et al. 2020). Finally, regulatory frameworks may need to be developed to address the legal implications of using blockchain-based payment systems, particularly about compliance with data protection and privacy laws.

Gaps in LiteratureThere is a lack of empirical evidence on the actual adoption and impact of blockchain-based solutions in cross-border trade among African countries, particularly within the context of AfCFTA. While there is growing interest in the potential of blockchain technology to facilitate cross-border payments, there is limited research on the regulatory and legal frameworks required to support its implementation. There is a need for further exploration of the potential social and environmental impacts of blockchain-based solutions, particularly regarding issues such as privacy, security, and energy consumption. Also, there is a lack of research on the role of education and capacity-building initiatives in promoting the adoption and effective use of blockchain technology among stakeholders in the AfCFTA ecosystem.

Chapter 3: Research Methodology3.1 Introduction

The chapter has highlighted the paradigms which were followed during research and their justification so that the way research is conducted can be understood to the users.

3.2 Research OutlineThe research methodology chosen for the present research is based on secondary research method suggesting that various literature is available on internet which is authenticated and recommended has been referred. Though it is not feasible to reach government officials of various countries and the African trade authorities for the purpose of collection primary data secondary data was preferred. Positivism is a philosophical approach that has emphasized the use of scientific methods to gain knowledge about the world. It holds that the only authentic knowledge is that which is based on observable, measurable, and testable phenomena, and that knowledge gained through subjective experience or intuition is not valid. The qualitative approach has guided to analyse the potential impact of blockchain technology in African Trade.

3.3 Research OnionThe research onion is a conceptual framework which has been used in the current research to guide the development of it. It consists of different layers, each representing a stage of the research process. The layers include research philosophy, research approach, research strategy, data collection methods, and data analysis methods. Each layer builds on the previous one, and they all work together to ensure that the research project is rigorous, systematic, and valid.

Source: Saunders et al. 2007 and Sahay, 2016.

3.4 Research PhilosophyIn research, positivism is often associated with quantitative research methods, which aim to generate objective and generalizable knowledge by collecting and analysing numerical data. This approach has assumed that the world is made up of observable, measurable, and predictable phenomena, and that research can uncover the laws that govern these phenomena (Irshaidat, 2022).

However, some argued that positivism has limitations in understanding complex social phenomena, as it tends to reduce human behaviour to observable and measurable variables and may overlook the subjective experiences and perspectives of individuals. As a result, qualitative research methods, which aim to explore the subjective experiences and perspectives of individuals, have emerged as an alternative approach in social science research.

In the context of the research topic, a positivist approach has been entailing for collecting and analysing numerical data to generate objective and generalizable knowledge. This has also involved gathering data through various literature on the adoption and impact of blockchain-based solutions on cross-border trade, as well as analysing relevant data to identify trends and patterns.

JustificationThe positivist approach used in research has assumed that the world is made up of observable, measurable, and predictable phenomena, and that research can uncover the laws that govern these phenomena. It has also contributed in prioritizing objectivity and rigor in research methods, with the goal of generating reliable and valid findings that can be used to inform policy and practice. A positivist approach to research has supported the researcher to provide a rigorous and objective analysis of the potential benefits and challenges of using the blockchain technology to increase trade in African countries through AFCTA.

3.5 Research ApproachAs per Johnson et al (2020) the qualitative component in the research has aimed to gain a deeper understanding of the social and cultural factors that could influence the adoption of blockchain technology in the context of trade between African countries members of AFCFTA. Qualitative data has been helpful in providing insights into the perceptions and experiences of individuals regarding the use of blockchain technology and its potential impact on trade.

JustificationA qualitative approach has been explored to understand the potential impact of blockchain technology on cross-border payment systems. The use of blockchain technology has the potential to revolutionize cross-border payments by increasing efficiency and reducing costs. By using a qualitative approach, the researcher has explored the experiences of key stakeholders regarding the current state of cross-border payments in the region and the potential benefits and challenges of adopting blockchain technology. It has been helpful in investigating the potential impact of blockchain technology on the origin and traceability of goods. The use of blockchain technology can provide greater transparency and traceability in supply chains, which could increase consumer confidence and facilitate the movement of goods across borders.

3.6 Research DesignThe research design that has been selected for the present area of study combines secondary and qualitative research methods could be appropriate. Here's an overview of how the researcher has utilised the design to study while using below mentioned two methods:

Secondary Research: Researcher conducted a comprehensive literature review of existing research and best practices in the field. This has involved searching academic databases, industry reports, and other relevant sources to identify key themes, challenges, and opportunities related to the use of blockchain technology in cross-border trade (Largan & Morris, 2019). Secondary research has helped in developing a deeper understanding of the research topic, identifying relevant theories and concepts, and developing research questions.

Qualitative Research: To gain insights into the experiences and perspectives of stakeholders involved in cross-border trade, researcher also conducted qualitative research (L. Haven, & Van Grootel, 2019). This has involved going through extensively interviews and focus group discussions with industry experts, policymakers, and business owners engaged in cross-border trade within African countries that are members of AFCFTA. Qualitative research has helped in gaining a more nuanced understanding of the practical challenges and opportunities associated with using blockchain technology to increase trade and improve payment traceability.

Data Analysis: Once the data have been collected from the qualitative research, researcher has used the qualitative data analysis techniques to identify themes and patterns in the data. This analysis has helped in identifying common challenges faced by stakeholders and potential solutions to these challenges using blockchain technology.

Synthesis: After analysing the data, the findings have been synthesized from both secondary and qualitative research to develop a comprehensive understanding of the research topic. This has helped in identifying gaps in the existing literature, developing practical recommendations for policymakers and industry leaders, and generate new research questions for future study.

Communication: Finally, the researcher has communicated the results to key stakeholders, including policymakers, industry leaders, and academic audiences. This might be helpful to go ahead with inform decision-making and drive further research in the field.

JustificationCombining both methods has allowed the researcher to gain a comprehensive understanding of the research topic, identify gaps in the existing literature, develop practical recommendations, and communicate the results of the research to key stakeholders. Overall, this research design is appropriate for this research topic as it allows for a deep exploration of the experiences and perspectives of stakeholders while also being informed by existing literature and best practices.

3.7 Type of researchSecondary research is an essential component of any research project, including the one on how blockchain technology can help to increase trade between African countries that are members of AFCFTA in terms of goods origin and traceability of cross-border payment. Some of the key reasons why secondary research is significant for this research topic:

Understanding the Current State of Affairs: By conducting secondary research, it has been possible to gain a better understanding of the current state of trade between African countries that are members of AFCFTA. This information has helped in identifying the key challenges that are currently hindering trade and explore how blockchain technology can address these challenges.

Identifying Best Practices: Secondary research has helped in identifying best practices from other regions or industries that have successfully implemented blockchain technology to increase trade and improve payment traceability (Cahyadi & Magda, 2021). This has also helped in identifying potential solutions that could be adapted to the African context.

Developing a Strong Literature Review: A literature review is an essential component of any research project, and secondary research has helped in identifying relevant academic and industry publications that can be used to develop a comprehensive review of the existing literature.

JustificationSecondary research provided the researcher with the access to relevant data on trade volumes, payment systems, and the use of blockchain technology in Africa. This data has helped to develop a more robust and evidence-based research methodology.

3.8 Research StrategyBased on the type of research chosen analysis of scholar sources and the case studies has been done so that comprehensive, qualitative, and reliable information can be focused.

Justifications

This has helped in analyzing the different dimensions of trade, use of technology and perspectives of traders, countries and business involved.

3.9 Types of research DataResearch data can be broadly categorized into two main types: qualitative and quantitative. Qualitative data is non-numerical and subjective, often collected through methods such as interviews, focus groups, and observation (L. Haven, & Van Grootel, 2019). Quantitative data, on the other hand, is numerical and objective, and is typically gathered through surveys, experiments, and other structured methods. Both types of data are essential in research and can be used to answer different types of research questions, depending on the nature of the study.

JustificationQualitative research methods, such as going through available interviews and case studies, has provided valuable insights into the potential benefits and challenges of using blockchain technology for goods origin and traceability in the context of trade between African countries members of AFCFTA.

3.10 Data Collection Methods and InstrumentsDocument analysis: This involved analysing various types of documents, including policy documents, corporate reports, and media articles, to gain insights into the research topic.

Case studies: This involved studying a particular case or scenario related to the research topic in depth to gain a detailed understanding of the issues involved.

Literature reviews: This involved gathering and analysing academic journals, books, and other sources of information related to the research topic.

3.11 Ethical ConsiderationsIn secondary research, it is important to acknowledge the sources of the data and give proper credit to the authors or researchers. The researcher has ensured that the sources used are credible, accurate, and up to date. A great care has been taken so that plagiarism and misrepresentation of sources are avoided. Confidentiality and anonymity are maintained throughout the research process, and the data has been stored securely. The researcher has also considered the potential risks and benefits of the research for the participants and the wider community and took steps to minimize any harm that may arise. It is noted that ethical considerations are crucial to ensure that the research is conducted in a responsible and respectful manner.

3.12 Accessibility ConcernsIt is not possible to reach to ministries and other government officials regarding the research topic due we lake of understanding by some officials of the topic or lake of time during the research time. It has also been found while working on literature review that many articles require paid mode to get access. Therefore, the dependency on freely available journal and scholar articles will be there.

3.13 LimitationsIt may be difficult for individuals or organizations without a strong background in technology or finance to understand the potential benefits and risks of leveraging blockchain technology for AFCFTA trade. Education and awareness-raising efforts may be necessary to ensure that everyone can participate equally in the benefits of blockchain technology. The research is done solely for the academic purpose only.

3.14 SummaryThis chapter helped in guiding the research which is further contributive in reaching to findings which will be reflected in next chapter.

Chapter 4: Findings and Discussion

The African Continental Free Trade Area (AFCFTA) is a historic agreement signed by 54 African countries to promote intra-African trade and economic growth. The agreement seeks to create a single market for goods and services, as well as a customs union with a free trade area, investment protocols, and rules of origin. However, the success of the AFCFTA depends on the ability to streamline trade processes and make them more efficient (Business Insights, 2019). One potential solution to this problem is the use of cryptocurrencies such as Bitcoin and Ethereum, which offer faster and more secure transactions compared to traditional methods.

Case 1CNN's "Connecting Africa" highlights how fintech and blockchain are connecting the continent. The report showcases how financial technology (fintech) and blockchain technology are making a significant impact in Africa by offering new solutions to long-standing financial challenges (Zawya, 2022).

One of the most notable fintech solutions is mobile money, which allows individuals to send and receive money using their mobile phones. This has revolutionized the way people in Africa handle their finances, especially those who were previously unbanked. Mobile money has made it easier for people to access financial services and has helped to reduce poverty in Africa.

Another fintech solution that is making waves in Africa is peer-to-peer lending. This model allows individuals to lend and borrow money from each other without the need for a traditional financial institution (Reva, 2020). Peer-to-peer lending platforms have gained popularity in Africa due to the difficulty of accessing loans from traditional banks. These platforms have also helped to create new opportunities for investors who are looking for high returns on their investments.

Blockchain technology is also making a significant impact in Africa. Blockchain is a digital ledger that allows for secure and transparent transactions without the need for a central authority (Signe, 2021). This technology has numerous applications in Africa, including supply chain management, land registration, and voting.

In the area of supply chain management, blockchain technology is being used to track the movement of goods from the manufacturer to the end consumer. This helps to reduce fraud and ensures that products are delivered to the correct destination. Blockchain technology is also being used in land registration to prevent fraud and ensure that land ownership is transparent and secure.

Finally, blockchain technology is being used in voting to ensure that elections are transparent and free from fraud. The technology enables voters to cast their ballots securely and anonymously, while also ensuring that the votes are counted accurately.

It can be said that fintech and blockchain are making a significant impact in Africa (Sabatier, 2021). These technologies are providing new solutions to long-standing financial challenges and are helping to reduce poverty and promote economic growth. With continued investment and innovation, fintech and blockchain have the potential to transform the financial landscape in Africa and beyond.

Case 2The Bank for International Settlements (BIS) has published a review on the potential benefits and risks of central bank digital currencies (CBDCs). The report highlights how CBDCs could offer significant benefits, such as increased financial inclusion and efficiency, reduced transaction costs, and improved payment systems. However, the report also cautions that CBDCs could pose risks to financial stability, privacy, and competition (BIS, 2022).

CBDCs are digital currencies issued by central banks that can be used for payments, just like physical cash. They can be used for online purchases, in-store transactions, and peer-to-peer payments. CBDCs have the potential to offer several benefits, such as greater financial inclusion, particularly for those who are unbanked or underbanked. They could also offer a cheaper and more efficient payment system, reducing transaction costs and increasing speed.

However, the report also notes that CBDCs could pose risks to financial stability. For example, if CBDCs become too popular, they could lead to a decline in the demand for bank deposits, which could have implications for banks' ability to lend. Additionally, CBDCs could lead to greater financial instability in times of crisis, as investors could quickly switch their funds from bank deposits to CBDCs, which could exacerbate the crisis (Quartz, 2021)

CBDCs could also pose risks to privacy, as they would enable central banks to track all transactions made using the digital currency. This could raise concerns about government surveillance and infringe on individual privacy. Finally, CBDCs could pose risks to competition, as they could undermine the role of commercial banks in the payment system, potentially leading to concentration and reduced competition in the banking sector (PYMTS, 2021).

Despite the risks, the report suggests that central banks should continue to explore the potential benefits of CBDCs and develop strategies to mitigate the associated risks. The report suggests that central banks could collaborate with other stakeholders, such as the private sector, to develop and test CBDCs in a controlled environment. Central banks could also consider implementing limits on the amount of CBDCs that can be held by individuals and institutions to mitigate the risks to financial stability.

In conclusion, CBDCs have the potential to offer significant benefits, such as increased financial inclusion and efficiency, reduced transaction costs, and improved payment systems. However, they also pose risks to financial stability, privacy, and competition. Central banks should continue to explore the potential benefits of CBDCs while developing strategies to mitigate the associated risks. Collaboration with other stakeholders, such as the private sector, will be critical to the successful development and implementation of CBDCs.

Case 3In recent years, there has been an increasing interest in the application of blockchain technology to enhance trade among African countries. The African Continental Free Trade Area (AfCFTA), which is a free trade agreement among African countries, offers a unique opportunity to leverage blockchain technology to increase trade and economic growth in the region (Shahriar et al.2019) This case study has examined the partnership between Microsoft and Interswitch Nigeria to use blockchain technology to facilitate trade finance in the region.

Interswitch Nigeria is a leading digital payment and commerce solutions provider in Nigeria. The company partnered with Microsoft to launch a blockchain-based supply chain financing platform that aims to facilitate trade finance among African countries (Apl Company, 2022). The platform leverages Microsoft's Azure blockchain technology to create a secure and transparent platform for the transfer of trade documents and payments.

The platform offers several benefits to African countries. For one, it helps to reduce the risks associated with cross-border trade finance. Typically, cross-border trade finance is a complex and time-consuming process, involving multiple intermediaries and significant documentation. This makes it difficult for small and medium-sized enterprises (SMEs) to participate in cross-border trade, as they may not have the resources to navigate the process. The blockchain-based platform simplifies the process by creating a secure and transparent platform for the transfer of trade documents and payments.

The platform also reduces the cost of cross-border trade finance. Traditional trade finance involves high fees, which can be prohibitive for SMEs (PYMTS, 2021). The blockchain-based platform reduces the need for intermediaries and streamlines the process, thereby reducing costs.

The platform has been well received in Nigeria. According to Mitchell Elegbe, the founder and CEO of Interswitch, the platform has already facilitated trade finance worth over $1 billion. The platform has also received recognition from the Nigerian government, which is keen to promote the use of technology to enhance trade finance in the country.

The success of the platform in Nigeria has led to interest from other African countries. In 2019, Interswitch partnered with Interstellar, a blockchain company founded by one of the creators of the Stellar blockchain, to expand the platform to other African countries (Waltman & Lariviere, 2020). The partnership aims to leverage Interstellar's expertise in blockchain technology to enhance the platform's functionality and security.

The partnership between Microsoft and Interswitch Nigeria illustrates the potential of blockchain technology to enhance trade among African countries. By providing a secure and transparent platform for the transfer of trade documents and payments, the platform reduces the risks and costs associated with cross-border trade finance. This, in turn, makes it easier for SMEs to participate in cross-border trade, thereby promoting economic growth and development in the region.

It can be interpreted that the partnership between Microsoft and Interswitch Nigeria provides a useful case study for the application of blockchain technology to enhance trade among African countries. The success of the platform in Nigeria and the interest from other African countries demonstrates the potential of blockchain technology to promote economic growth and development in the region. (Punch, 2021). With the implementation of the AfCFTA, there is an opportunity to leverage blockchain technology to enhance trade among African countries further. As such, governments and businesses in the region should explore the potential of blockchain technology to promote trade and economic growth in the region.

Case 4The African Continental Free Trade Area (AfCFTA) is a landmark trade agreement signed by 54 African countries aimed at creating a single market for goods and services, with the goal of increasing intra-African trade and enhancing economic growth and development in the region. However, the success of the AfCFTA will depend on the ability of African countries to address the challenges that have historically impeded intra-African trade, such as high transaction costs, limited access to finance, and weak infrastructure (Union, 2020).

One technology that could help overcome these challenges and promote trade among African countries is blockchain. Blockchain technology is a decentralized and transparent ledger system that enables secure and tamper-proof transactions between parties without the need for intermediaries (PYMTS, 2021). By leveraging blockchain technology, African countries can create a secure and efficient platform for cross-border trade, thereby reducing transaction costs and increasing access to finance.

One example of a successful application of blockchain technology in Africa is the partnership between Appzone, a Nigerian fintech company, and the pan-African banking group Ecobank. The partnership aims to use blockchain technology to enable real-time settlement of transactions between African banks. Traditionally, settling transactions between banks involves multiple intermediaries and can take several days to complete. The blockchain-based platform developed by Appzone simplifies the process, reducing the time and cost of settlement (PYMTS, 2018).

The partnership between Appzone and Ecobank is significant because it demonstrates the potential of blockchain technology to enhance intra-African trade by reducing transaction costs and increasing efficiency. The platform could also help address the problem of limited access to finance in the region by providing a secure and transparent platform for cross-border payments, thereby increasing confidence among lenders and investors.

Another example of the potential of blockchain technology to enhance trade among African countries is the partnership between the African Union (AU) and the International Chamber of Commerce (ICC) to develop a blockchain-based platform for the verification of certificates of origin. Certificates of origin are documents that certify the country of origin of a particular product and are required for customs clearance in international trade. The blockchain-based platform developed by the AU and ICC would create a secure and transparent system for verifying certificates of origin, reducing the risk of fraud and increasing efficiency.

The use of blockchain technology to enhance trade among African countries is also gaining recognition at the policy level. The African Union Commission (AUC) has recognized the potential of blockchain technology to enhance trade and is working on a framework for the use of blockchain technology in trade finance (Wang & Xu, 2022). The framework aims to provide guidance to African countries on the use of blockchain technology to enhance trade finance, reduce transaction costs, and increase access to finance.

In conclusion, the AfCFTA offers a unique opportunity for African countries to enhance trade and promote economic growth and development in the region. Blockchain technology has the potential to help African countries overcome the challenges that have historically impeded intra-African trade, such as high transaction costs, limited access to finance, and weak infrastructure. By leveraging blockchain technology, African countries can create a secure and efficient platform for cross-border trade, thereby reducing transaction costs and increasing access to finance (Smart, et al. 2020). The partnerships between Appzone and Ecobank, the AU and ICC, and the policy recognition of blockchain technology by the AUC demonstrate the potential of blockchain technology to enhance trade among African countries. As such, governments and businesses in the region should explore the potential of blockchain technology to promote trade and economic growth in the region under a Build Back Better agenda.

Case 5The African Continental Free Trade Area (AfCFTA) is a trade agreement that aims to promote trade between African countries. It was signed by 54 of the 55 African Union member states in March 2018, and it officially started trading on January 1, 2021. The goal of the agreement is to create a single market for goods and services, with the aim of increasing intra-African trade by 60% by 2022. The implementation of AfCFTA has the potential to transform the African economy, but there are still several challenges that need to be addressed, including the lack of trust, transparency, and efficiency in the trade process.

One potential solution to these challenges is the use of blockchain technology, which has already been successful in revolutionizing several industries. Blockchain technology is a decentralized ledger that records transactions in a secure and transparent manner, which makes it ideal for trade. By using blockchain technology, AfCFTA can increase trust, transparency, and efficiency in trade among African countries.

A case study of how blockchain technology can be leveraged to increase trade among African countries through AfCFTA can be seen in the XRP Healthcare project. XRP Healthcare is a blockchain-based platform that aims to provide affordable and accessible healthcare services to the people of Africa (Wentworth & Cloete, 2022). The project is leveraging blockchain technology to create a secure and transparent platform for healthcare providers and patients to interact with each other.

The XRP Healthcare platform uses XRP, a cryptocurrency that is built on the XRP Ledger. The XRP Ledger is a decentralized ledger that records transactions in real-time, which makes it ideal for healthcare transactions. By using XRP, healthcare providers can easily and securely transfer funds to other providers or patients in different African countries.

The use of blockchain technology in the XRP Healthcare project has several benefits. Firstly, it increases trust between healthcare providers and patients. Healthcare providers can be assured that the funds they receive are legitimate and not fraudulent, while patients can be assured that the services they receive are of high quality and not substandard. Secondly, blockchain technology increases transparency in the healthcare process. Patients can track the progress of their treatment, while healthcare providers can easily access the medical history of their patients (OpenPR, 2023). Finally, blockchain technology increases efficiency in the healthcare process. Healthcare providers can easily transfer funds to other providers or patients, which reduces the time and costs associated with traditional banking systems.

The success of the XRP Healthcare project provides a blueprint for how blockchain technology can be leveraged to increase trade among African countries through AfCFTA. By using blockchain technology, AfCFTA can create a secure and transparent platform for trade between African countries. Blockchain technology can be used to create a decentralized ledger that records all transactions in real-time, which increases trust, transparency, and efficiency in the trade process.

For example, AfCFTA can use blockchain technology to create a digital platform for trading goods and services between African countries. The platform can be built on a decentralized ledger that records all transactions in real-time. This will increase trust between buyers and sellers, as all transactions will be recorded in a transparent and secure manner. The platform can also be used to increase transparency in the trade process. Buyers can easily track the progress of their shipments, while sellers can easily access information about the quality and quantity of their products.

Finally, blockchain technology can increase efficiency in the trade process. The platform can be used to facilitate payments between buyers and sellers, which reduces the time and costs associated with traditional banking systems. This will also increase the speed of the trade process, which will increase the competitiveness of African countries in the global market.

In conclusion, the use of blockchain technology has the potential to revolutionize trade among African countries through AfCFTA. By creating a secure and transparent platform for trade, blockchain technology can increase trust, transparency, and efficiency in the trade.

Case 6The African Continental Free Trade Area (AfCFTA) was launched in January 2021 with the aim of creating a single market for goods and services in Africa, with the potential to boost intra-African trade and drive economic growth (Bilaterals.Org, 2021). However, there are various challenges hindering the success of AfCFTA, including the lack of trust and transparency in cross-border transactions, and the absence of a secure, efficient and cost-effective system for trade finance. The blockchain technology has the potential to address these challenges and increase trade among African countries through AfCFTA.

The blockchain is a distributed ledger technology that enables secure and transparent transactions without the need for intermediaries (Iansiti & Lakhani, 2017). This technology has already been successfully implemented in various sectors, including finance, supply chain management, and healthcare. In the context of AfCFTA, the blockchain can be used to establish trust and transparency in cross-border transactions, as well as to streamline trade finance.

One example of the potential use of blockchain technology in the African creative industry is the Nigerian creative industry. According to a report by Bilaterals.org, piracy is a major challenge in the Nigerian creative industry, with losses amounting to over $3 billion annually. The use of blockchain technology can help to address this challenge by enabling the tracking and verification of ownership and distribution rights of creative works. This would make it easier for artists and other stakeholders in the creative industry to receive royalties and other payments for their works, thereby increasing their income and contributing to the growth of the industry.

Another example of the potential use of blockchain technology in Africa is the Cardano blockchain. Cardano is a decentralized blockchain platform that is designed to provide secure and transparent transactions. According to Techpoint Africa, Adaverse and Emurgo, two blockchain development companies, are encouraging African founders to build solutions on the Cardano blockchain (Tapscott & Tapscott, 2018). This initiative is aimed at promoting the adoption of blockchain technology in Africa and harnessing its potential to drive economic growth and development.

In the context of AfCFTA, blockchain technology can be used to streamline trade finance by providing a secure and efficient system for cross-border payments and transactions. This would eliminate the need for intermediaries such as banks and reduce transaction costs, thereby making it easier and cheaper for businesses to engage in cross-border trade (Techpoint, 2022). The blockchain can also be used to establish a secure and transparent system for tracking the movement of goods across borders, thereby reducing the risk of fraud and other forms of malpractice.

However, the adoption of blockchain technology in Africa is still at an early stage, with various challenges hindering its widespread use. One major challenge is the lack of infrastructure and technical expertise needed to implement blockchain solutions. Another challenge is the lack of regulatory frameworks and standards for the use of blockchain technology. Addressing these challenges will require collaboration between governments, the private sector, and other stakeholders in the blockchain ecosystem (Valverde & Fernandez, 2019).

In conclusion, the blockchain technology has the potential to increase trade among African countries through AfCFTA by addressing the challenges of trust and transparency in cross-border transactions and streamlining trade finance. However, the adoption of blockchain technology in Africa is still at an early stage, and addressing the challenges of infrastructure, technical expertise, and regulatory frameworks will be critical to realizing its potential.

Chapter 5: ConclusionIn the context of cross-border trade between African countries, blockchain technology can provide a secure and transparent way of storing and tracing the origin of goods and cross-border payments. Blockchain technology can provide a secure and tamper-proof way of recording the origin of goods, ensuring that products are genuine and not counterfeit. It can also provide a secure and transparent way of tracking cross-border payments, ensuring that transactions are completed in a timely and secure manner.

Blockchain technology can help to reduce transaction costs and increase efficiency in cross-border trade. By providing a secure and transparent platform for transactions, blockchain technology can reduce the need for intermediaries, such as banks or other financial institutions, thereby reducing transaction costs and increasing efficiency.

This advanced technology can help to increase trust and confidence in cross-border trade. By providing a secure and transparent platform for transactions, blockchain technology can increase trust between trading partners and reduce the risk of fraud or corruption.

Recommendations for leveraging blockchain technology to increase trade among African countries through AfCFTA:

Establish a blockchain-based platform:

a. Define the scope and requirements of the platform: African countries need to define the scope and requirements of the blockchain-based platform that will support AfCFTA trade transactions. This includes the features and functionalities of the platform, as well as the technical specifications and security requirements.

b. Develop and deploy the platform: Once the requirements are defined, African countries can collaborate with blockchain technology providers and developers to design, develop, and deploy the blockchain-based platform. The platform should be user-friendly, secure, and scalable, to support the growing trade transactions within AfCFTA.

c. Integrate the platform with existing trade systems: The blockchain-based platform should be integrated with existing trade systems, such as customs and tax systems, to ensure seamless and efficient trade transactions. This integration should be done in a way that preserves data privacy and security.

Develop a digital currency for AfCFTA:

a. Define the requirements for the digital currency: African countries should define the requirements for the digital currency that will support AfCFTA trade transactions. This includes the technical specifications, security features, and governance model.

b. Collaborate with central banks and financial institutions: African countries should collaborate with central banks and financial institutions to design and deploy the digital currency. This collaboration should ensure that the digital currency complies with regulatory requirements and can be used across different financial systems.

c. Implement digital wallets and payment gateways: Digital wallets and payment gateways should be implemented to enable traders to send and receive payments using the digital currency. These wallets and gateways should be secure, easy to use, and compatible with existing financial systems.

Implement smart contracts:

a. Define the trade processes: African countries should define the trade processes that can be automated using smart contracts. This includes processes such as contract negotiation, invoicing, and payment settlement.

b. Develop and deploy smart contracts: Once the trade processes are defined, African countries can collaborate with blockchain developers to design, develop, and deploy smart contracts. These smart contracts should be designed to ensure compliance with the agreed-upon terms and conditions, automate the trade processes, and reduce the risk of fraud.

c. Monitor and manage smart contracts: African countries should monitor and manage the smart contracts to ensure that they are functioning properly and that all parties are complying with the agreed-upon terms and conditions.

Provide training and education:

a. Train stakeholders on blockchain technology: African countries should provide training to stakeholders, including traders, customs officials, and financial institutions, on blockchain technology. This training should cover the benefits of blockchain-based trade systems, as well as the technical aspects of using blockchain technology.

b. Educate stakeholders on the benefits of AfCFTA: African countries should educate stakeholders on the benefits of AfCFTA, including increased trade, job creation, and economic growth. This education should be tailored to specific stakeholders, highlighting the benefits that are most relevant to them.

Collaborate with other countries and organizations:

a. Establish partnerships with other African countries: African countries should collaborate with other African countries to establish common standards and protocols for blockchain-based trade systems. This collaboration should include sharing best practices, exchanging knowledge, and establishing common technical specifications.

b. Partner with international organizations: African countries should partner with international organizations, such as the World Trade Organization, to leverage their expertise and resources. This partnership should be focused on developing and implementing blockchain-based trade systems that can be integrated with existing international trade systems.

Limitations of the ResearchThe research has its own set of limitations due to several factors:

Limited access to technology: Many African countries lack the necessary infrastructure and technology to support blockchain-based trade systems. This includes reliable internet connectivity, access to blockchain technology, and the technical expertise required to implement and maintain blockchain-based systems.

Regulatory challenges: Blockchain technology operates in a regulatory grey area, and many African countries lack clear regulatory frameworks for blockchain-based trade systems. This can create legal uncertainty and limit the adoption of blockchain technology by traders and businesses.

Limited adoption by traders: While blockchain-based trade systems have the potential to streamline trade transactions and reduce costs, many traders in African countries may be hesitant to adopt new technologies. This may be due to a lack of awareness or understanding of blockchain technology, or a preference for traditional trade systems.

Security risks: Blockchain technology is not immune to security risks, and blockchain-based trade systems may be vulnerable to hacking, data breaches, and other security threats. This could lead to significant financial losses for traders and businesses, as well as reputational damage.

Integration with existing trade systems: Integrating blockchain-based trade systems with existing trade systems, such as customs and tax systems, can be challenging. This requires collaboration between different government agencies and the private sector, as well as technical expertise to ensure that the systems are compatible and secure.

Future Scope of researchBlockchain technology is a new field to study about security and privacy. As blockchain-based trade systems become more complex and interconnected, research could focus on the security and privacy implications of these systems. This could include investigating the vulnerabilities of blockchain technology to cyber threats, as well as exploring the ethical and legal implications of using blockchain technology in trade transactions.

There is a possibility to extend the research on the area of integration with existing systems. Research could focus on the technical and organizational challenges of integrating blockchain-based trade systems with existing trade systems, such as customs and tax systems. This could include investigating the interoperability of blockchain-based trade systems with existing systems, as well as assessing the costs and benefits of integration.

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