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How Blockchain can transform small businesses in Kenya

Blockchain is incorruptible digital ledger that can be programmed to record virtually everything of value across many computers in a verifiable and permanent way. It comprises of a decentralized network that verifies transactions and an immutable ledger that network maintains. Because of the decentralized nature the shared records and digital assets cannot be easily hacked or corrupted even if everyone in the network can be able to view it. The rationale behind blockchain is to ensure that virtually everything of value not just financial transactions is secured and cannot be easily manipulated.

Blockchains great characteristics, for instance, security and permanent data recording, can be of very great importance to small businesses in Kenya today. This is so because most small businesses store their data manually which is not a very safe way of data storage as the data is prone to theft and manipulation. In this case, small businesses need to embrace blockchain technology as it has a lot of benefits or advantages such as:

Safeguarding competition

All businesses, whether small or already established, feel the pressure to innovate. Innovation gives businesses of any size added advantage, and small businesses want to keep up with larger competitors. A research conducted by global study by IDC states that’s 40% of fast moving small businesses consider innovation as their top priorities. Blockchain is one innovative technology that can deliver transformative change in small businesses, because it is moving from niche technology to mainstream technology. With innovation the businesses are assured of increased workplace productivity and beating tough competition from established businesses through:

  • Better quality of products, this will help meet customer needs.
  • Building a product range that will provide opportunities for better sales and more profits.
  • Providing more value added products and services that customers are willing to pay for more. This also helps the business to differentiate itself from competitors.

Eliminating middlemen

Blockchain is a digital ledger of transactions that are distributed across a network of computers. “Blocks” of information are linked together through cryptography to create a blockchain. Specific security parameters are given to users, which allow them to access information in the ledger securely without the need of central oversight. In small businesses this can help cut out middlemen like banks and other financial service providers for transactions. As a result, this will increase transparency, reduced international transactions cost, provide a permanent secure ledger and accurate tracking of records and transactions in small business operations in Kenya.

Reduced transaction fees

Credit or debit payments are not for free. There is some transaction fee charged which is between 2-3% of the total fees. These small charges may not have a significant impact on the big businesses; however for small businesses these fees can add-up quickly and cause some negative impact on the businesses cash flow and rack up costs thus reducing profitability. Blockchain technology can help eliminate or reduce those fees. This is by eliminating middlemen such as banks and financial institutions, who are also trying to make profits by charging payment processing fees. There are cryptocurrencies such as Bitcoin, Litecoin, Monero and Zcash that businesses can use as means of payment. For consumers with cryptocurrencies it is easier for them while also allowing businesses to accept it as means of payment because it is cheaper, faster and the owner is in full control.

Better business processes

In Kenya most small businesses do not have a proper record keeping system. This is so because most use the old manual way of keeping records and business data which makes it prone to loss, theft and even manipulation. For instance, when you visit a mama mboga or jua kali person in Kenya you find him or her with a booklet written the capital used to stock the business, the quantity of stock in business, the unavailable and available stock records and other related business records. Such records are not safe because the book can get lost or even be stolen. But with blockchain technology this problem of data loss and manipulation can be solved permanently.  This is so because it provides a distributed ledger that stores all records in a transparent, secure and immutable manner. An example is ChamaPesa which is currently exploring how small scale savings groups can use blockchain to improve tier book keeping systems.

Smart contracts

Smart contracts in blockchains enables two parties exchange almost everything of value without involving third parties. That is true freedom to say the least. Smart contracts automatically facilitate and verify the performance of a contract after meeting all the necessary criteria. For small businesses in Kenya, smart contracts can be of help in one or two ways. Firstly everything that requires contracts can be empowered by blockchain, for instance, insurance policies; payment terms and financial contracts like start-up loans can be tracked on a decentralized ledger and enforced by automatic protocols.

For example, if you agree to purchase an insurance policy, you can write the transaction on the blockchain that holds a set amount of cryptocurrencies in contract agreement in return for a digital receipt. The protocol would release the funds to the insurance seller and a private access key to the home be sent to you as a blockchain transaction. If the key is not sent before a set period of time, the blockchain protocol refunds the cryptocurrency to you the buyer of the insurance policy who is the holder if the digital receipts.


Small businesses that want to take advantage of the blockchain technology should first start by learning what blockchain technology is all about. This can be done through research, attending forums and meet ups. Getting started is not difficult as long as you are educated, ambitious and open-minded.




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