A growing number of African startups are specializing in blockchain, but they face challenges like a lack of funding, limited access to training, and widespread misconceptions associating the technology with fraud. 

The majority of African blockchain startup founders believe there is no government support for blockchain in their countries, according to the “Africa Blockchain Report 2023” published in April 2023 by the think tank Africa Blockchain Institute and the non-profit Algorand Foundation. 

The report is based on a survey and in-depth interviews with stakeholders in four African countries. 80.5% of the respondents reported a lack of government support for the development of this technology, whose application areas and use cases are extremely varied. Referring to the support they need, these players cited funding (58.5%), training (43.9%), entrepreneurial mentoring (29.3%), acceleration programs (26.8%), market access support (22%), and incubation programs (17.1%), among others.

The report confirms that the main challenge facing start-ups in Africa remains the lack of financing (56.1%).  Insufficient access to training programs and widespread misconceptions about blockchain technology tied for second place (39%), ahead of an inadequate regulatory framework (31.7%) and a lack of incubators (17.1%).

According to the entrepreneurs surveyed, widespread misconceptions about blockchain in Africa stem from the fact that the majority of the population thinks the technology is only about crypto-currencies, and often associates it with crypto-related scams and financial fraud. Despite the lack of government support, African start-ups active in this segment are managing to develop innovative solutions. 

The blockchain applications most developed by those covered by the survey are smart contracts (24.4%), identity management systems (22%), cross-border payment solutions (17.1%), cryptocurrency exchange platforms (14.6%), the creation of non-fungible tokens/NFTs (14.6%), supply chain and logistics management systems (12.2%). Other applications include advertising and marketing, anti-money laundering, and electronic voting.

Also, 58.5% of developers surveyed have been working on their applications for less than a year, while 24.4% have been working on them for more than five years. This shows that the adoption of blockchain innovations is still in its infancy in Africa, particularly when it comes to the development of use cases with a direct impact on individuals, businesses, and society as a whole. The report notes in this context that use cases for blockchain technology are much more varied in English-speaking Africa than in French-speaking Africa, where the majority of start-ups focus on the finance segment.

The Africa Blockchain Institute also points out that the majority of blockchain start-ups on the continent are still in the early stages of development. 43.9% of them are in the ideation stage and 29.3% are in the seed phase. 9.8% of these entities are already well-established and profitable, while only 2.3% are in the scaling phase.