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NEWS & CURRENT AFFAIRS

The Nairobian

Blockchain technology: A new development paradigm for Kenya?

Opinion

By Dr James Mulli | Sep 25, 2024

**Businessman is holding a bitcoin as part of a business network, Cryptocurrency blockchain connection, Technology** **and financial investment background concept.** [Getty Images]

Blockchain technology is not an easy concept to grasp. Its complexity is what makes it both challenging and unique. Essentially, Blockchain represents one of the largest consensus algorithms in operation today, serving as a powerful, decentralized, and distributed system. Alongside Artificial Intelligence (AI), Blockchain offers a transformative approach in addressing social, political, and economic challenges, particularly corruption.

The intersection of Blockchain and AI has generated significant attention, especially as countries like Kenya seek solutions to entrenched corruption. Beyond the speculative rise of cryptocurrencies such as Bitcoin, the true potential lies in how Blockchain technology and AI can be used to create transparent, immutable, and accountable systems. These technologies hold the promise of transforming how financial transactions, public records, and social systems are managed, minimizing the opportunities for fraud and corruption.

Corruption is often fueled by a lack of transparency, weak governance structures, and a dependence on human intermediaries who are prone to manipulation. Traditionally, systems like voting, financial auditing, and government record-keeping have relied on paper or centralized digital systems. These are vulnerable to tampering, especially in environments where checks and balances are weak or absent.

Blockchain and AI introduce a "trust protocol" that removes the need for intermediaries. With Blockchain, each transaction, vote, or record is stored on an immutable digital ledger, while AI can be employed to detect patterns of fraud, nepotism, and irregularities. These technologies together can offer a new level of transparency and accountability to the public and government alike.

At its core, Blockchain is an electronic ledger that records transactions. Unlike traditional systems that rely on human intermediaries to verify and audit transactions, Blockchain distributes this responsibility across a global, decentralized network of participants. Each transaction is encrypted and given a unique "hash" (a secure cryptographic code), making it virtually impossible to alter once it has been added to the ledger.

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In the context of anti-corruption efforts, Blockchain allows for complete transparency. For example, when used in government procurement systems, every transaction can be traced, verified, and validated by the public. This minimizes the chances for tampering, as altering a transaction would require changing all subsequent transactions in the chain, an almost impossible task.

AI offers another layer of protection by detecting fraudulent activities, irregularities, and corrupt practices. Machine learning algorithms can be trained to monitor patterns and detect anomalies that signal corrupt behavior. For example, AI can identify suspicious voting patterns, financial fraud, or irregular public contracts.

Corruption is one of the most persistent challenges facing Kenya, costing the country billions of shillings annually. Below are some use cases where Blockchain and AI could be applied:

Transparent Voting Systems: Blockchain could ensure the integrity of elections by creating a decentralized, tamper-proof ledger of votes. Voters could have more confidence in the system knowing their votes are securely recorded and cannot be manipulated.
Public Procurement and Contracting: Government contracts are often vulnerable to manipulation, resulting in inflated costs and poor-quality services. By using Blockchain, Kenya could establish a transparent, auditable, and tamper-proof record of all procurement processes.
Land Registries and Asset Management: Land disputes in Kenya are often the result of corruption and fraudulent land titles. By moving land registries to a Blockchain based system, Kenya could eliminate duplicate records and ensure that all land titles are accurate and immutable. AI could further help identify patterns of fraudulent land dealings, including irregular changes in ownership.
Financial Transactions and Tax Compliance: Corruption often takes root in financial systems where transactions can be hidden or manipulated. Blockchain can provide a transparent ledger of financial transactions.

At the heart of this discussion on the penetration of technology, it is without a doubt that infrastructure challenges are self-evident not in the lack of seabed fiber optic cables and satellite dishes, but inward penetration and proliferation. Although Mobile technology penetration in Kenya has emerged like a beacon of light, penetration lags behind.

These failings have perhaps ironically also been the root cause for the aforementioned emergence of a well-established mobile banking culture. Without landlines, mobile technology leapt forward and reframed our understanding of how mobile telecommunication, that is more pervasive than in more developed countries can propel banking and thereby economic growth.

So, what does Blockchain promise in term of adoption for early adaptors? If mobile technology was a leapfrog into mobile banking and financial empowerment, can Blockchain prove to be the spring-board effect for a redefinition of political, social and economic development paradigms?