Home Africa Kenya Blockchain and AI taskforce report focuses on Government’s Big Four Agenda

Kenya Blockchain and AI taskforce report focuses on Government’s Big Four Agenda

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The just-released Blockchain and Artificial Intelligence (AI) task force report in Kenya has laid emphasis on leveraging these technologies in areas of Big Four Agenda which is the president’s main area of focus as per elections pledge: housing, healthcare, manufacturing, and food security. Areas such as public service delivery, cybersecurity, financial services, land titling, the election process, and supply chain, therefore, seem to be the main focus.

The full recommendations are:

  1. The Kenya government should consider developing a digital asset framework to enable citizens to raise funds through Initial Coin Offerings (ICO). This is as a strategy to help local investors put their resources in cryptocurrencies underpinned by the utility of local resources.
  2. Blockchain-based land titling: to improve citizens ability to prove land ownership and provide an access point to credit and reduce corruption.
  3. AI in education to deliver personalized and virtual lessons.
  4. Use of blockchain and AI in the electoral process to offer real-time polling results. The best way is to adopt gradual improvements starting with members of county assembly (MCAs) to build confidence before being used nationally for presidential vote tallying.
  5. Supply-chain streamlining in the agriculture sector in various ways such as Agri-token for farming subsidies, end-to-end tracking of produce and AI & IoT for weather data and prediction
  6. Housing: raise development finding and lower finance costs
  7. Creation of national payment gateway using a public-private partnership model to become a central point for all digital transactions/payments creating an ecosystem where all payments modes such as ATMs, banks, mobile money interact with each other.
  8. Elimination of counterfeits through drugs in the healthcare sector as well as manufacturing and logistics
  9. Create BRAIN TRUST that will handle all emerging technologies that impact initiatives that Kenya government embarks on now and in the future.

Regulatory framework

Underpinning all these are two main issues: a favorable ecosystem that supports innovation and connectivity. The report acknowledges that the existing legal frameworks may not apply and therefore need new regulations that allow the innovation to thrive while ensuring consumer protection. The Mauritius Regulatory Sandbox License (RSL) is given as an example of how national regulation can accommodate innovative blockchain projects. It had already issued two RSLs one to SelfKey, a digital identity firm and SALT Lending, an online lender.

Some of the successful use cases in Kenya mentioned in the report are:

  • Twiga Foods and IBM use of blockchain, AI and big data to developed a programme to develop credit profiles to enable small to medium businesses access non-collateralized loans
  • M-shule, which leverages AI to provide adaptive learning engine that analyses each learners’ abilities to track and build skills and generate personalized learning.

Other notable mentions for their work in the industry are:

BanglaPesa: a community currency that has widely been tested in Kenya. it is only used in a particular area of the city. It acts as a complementary currency where physical bills are issued representing units of the BanglaPesa currency

BitPesa: founded in 2013, one of the earliest platforms to leverage bitcoin for cross-border remittances.

Globally Stellar network also represents an interesting opportunity to link payment systems, banks to a global payments network.

Bitcoin missing

The report mentions cryptocurrencies and ICOs but no concrete analysis of bitcoin in terms of regulation and its outlook going forward.

Blockchain hype & Challenges

The report also rightly cautions against over-hyping the technology as a panacea. Private blockchains still need parties working together to collaborate. Cases of crediting blockchain undeservedly were also witnessed in Sierra Leone whereby it was reported that it was the first blockchain election only for the contracted company Agora to clarify that it had just developed a prototype to show potential not that it was used in the election.

The notion of self-sovereignty is also explained which would determine the borders within which decisions are made and negotiations with others. For the online world to work like the offline world, there needs to legal digital identities and that the infrastructure need to be there.

Implementation

To achieve the above, the taskforce recommends a National Digital Infrastructure Framework as shown below

 

The obvious concerns for such comprehensive digital infrastructure, data protection laws, and user rights will have to be highly enforced and implemented. Adequate checks and balances would also need to be implemented to prevent abuse.

Second is the development of Digital Asset Framework to provide the guidelines which a cryptocurrency must meet in order to be listed on an exchange. This will go a long way in protecting consumers. Capital Markets Authority (CMA) could also provide guidelines for issuing ICO (initial coin offering) such as token issuance, crypto-economics, among others. This also extends to fintech regulatory framework that should cover cryptocurrencies.

Third, introduce Central Bank Digital Currency (CBDC) that would be a stablecoin applicable in areas such as;

  • payments, clearing, and settlements
  • Lending
  • Alternative currency configurations (digital) and transition of fiscal and monetary policy

The Full report is available on Ministry of ICT website.

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