It is no secret that digital assets create a secure way for people to trade peer-to-peer, across borders without requiring expensive infrastructure.

This presents an opportunity to create trade networks for commerce that are borderless. As such, due to limited financial infrastructure and fragile currencies but immense development potential, Africa has been a significant focus for blockchain believers over the past few years. Advocates of blockchain believe that the continent can use cryptocurrency and other blockchain tools to “leapfrog” beyond the current state of infrastructure into the developed world. However, there is a need for strong legal and technological standards to support these technologies.

In response, in November 2018, the African Digital Asset Framework (“ADAF”) which had previously been announced in July 2018 at the United Nations, was introduced in an effort to establish unified standards for blockchain development in Africa and beyond.  According to the online publishing platform “Medium”, ADAF is the first “open-source software platform to create transnational standards for digital assets and distributed ledger technologies in line with Pan-African development objectives and complements the African Union’s Single African Digital Market initiative, which seeks to leverage technology to stimulate digitised Pan-African economic integration.” In the long run, ADAF wants to facilitate the ease of doing business for African start-ups and Governments by building a blockchain that embeds compliance with financial regulations across varied jurisdictions. ADAF cofounder Marvin Coleby stated that “what we’re attempting is to essentially embed regulations that exist in the actual code itself. Which means that when I build on top of this, I’ve become compliant. If we don’t do this, we’ll end up with a bunch of silos, and digital assets don’t know that borders exist”.

ADAF is supported by ambassadors from organisations such as the African Union (“AU”), its member states and the African Development Bank (“AfDB”).  Marvin Coleby noted that African Governments haven’t yet established and coordinated clear guidelines that would unlock blockchain’s full potential to smooth transactions across borders, stating that “you can open up a crypto exchange in Uganda now, but someone in South Africa or the Bahamas or Canada can’t participate”.

Out of necessity, Zimbabwe has transitioned into a “cashless” economy. The recent changes announced in the Monetary Policy Statement by the Governor of the Reserve Bank of Zimbabwe (“RBZ”), John Mangudya on 20 February 2019 reflect the prevalence of digital money. Mangudya noted that out of an estimated $10 billion in circulation, 95% of Zimbabwe’s money is in Real Time Gross Settlement (“RTGS”) and thus led to the introduction of RTGS Dollars (RTGS balances, bond notes and coins, mobile money) as the official Zimbabwean currency.

There is however a fundamental difference between RTGS or mobile money and cryptocurrency in that mobile money is the ability to send currency to people virtually whereas cryptocurrency is currency that is not controlled by any one group or government. It is peer-to-peer currency. The comparison between mobile money and cryptocurrency serves to illustrate that Zimbabweans, like other Africans, have already adjusted to the mindset of not having physical money thus making a transition to cryptocurrency organic.

BitcoinAfrica published a list of “African Blockchain Startups to Watch in 2019” and on the list was Golix, previously known as Bitfinance (Private) Limited, a Harare-based cryptocurrency exchange that was founded in 2014 with the aim of offering digital currencies as an alternative to alleviate the economic shortcomings of Zimbabwe’s monetary system. Golix was intended to raise money for future expansion into other African markets as well as expand their portfolio of services however, the company would have to contend with the RBZ which issued a cryptocurrency ban. After taking the matter to court, the order was rescinded, and the company proceeded to relaunch its initial coin offering (“ICO”). Subsequently, investors were able to purchase the Golix utility token (“GLX”). Throughout 2018, the exchange expanded its operations to Kenya, Uganda, South Africa, Cameroon, Tanzania, Nigeria, and Rwanda. Currently investors can purchase a range of cryptocurrencies on the Golix platform including bitcoin, ether, monero and Dala.

Evidently, the age of digital assets and other blockchain technologies is already underway. Despite resistance, the borderless nature of blockchain and the continent-wide development in this area calls for uniformity. In light of the ADAF it is crucial that the legal fraternity of Zimbabwe and Africa understand the mechanisms of blockchain from a legal and practical standpoint in order to inform solution driven legal and regulatory frameworks.