Nhial Majok is the founder and CEO of Kesholabs, a venture builder and development studio whose primary focus is in blockchain-driven innovation and disruption.
At Kesholabs, he has overseen the building of four products – Pesabase, Bithela, Vitasphere, and Buymate in his endeavour to build successful and scalable web and mobile solutions that users love.
Prior to Kesholabs, Nhial worked at IBM - Australia for many years, where he quickly rose through the ranks to the position of Tech Lead. During his tenure, he was successful in guiding and delivering large-scale projects, leading sizeable teams, and managing multi-million dollar budgets, working with both the public and private sectors.
He has been a speaker over the last two years at several major Fintech and Blockchain conferences in Europe, Africa, North America and Asia.
He will be a keynote speaker at the Decentralized Finance Conference to be held on March 17 and 18, 2020 at Safari Park Hotel, Nairobi. He spoke to this writer about the future of Africa’s finance in an era of rapid global technological change.
1. The Decentralised Finance Conference will be the first in East Africa. Why do you think it is just the right time to hold it?
I believe that the growth of the crypto-market and blockchain solutions is going to rapidly pick up over the next two to five years. Medium term projections are that the whole space will hit Sh100 trillions in that time frame. Decentralized Finance (DeFi) is the equivalent of M-Pesa but for the whole world.
In a span of less than two years, the ecosystem already has the equivalent of Sh100 billion value. According to Paxful, Kenyans are doing manual trades of Sh100 million a month. This is an industry that is growing and Kenya being one of the top start-up and tech innovation hubs in Africa, it needs to lead this discussion. The time is now.
2. There are low awareness levels about Decentralized Ledger Technologies (DLTs) in Kenya. How can this be addressed?
As pioneers of this industry, it is up to us to create avenues like the Decentralized Finance conference to push the discussion forward and engage all stakeholders from government to private and non-governmental organisations. That aside, we have Blockchain Association of Kenya, which is another avenue through which such knowledge can be disseminated. Blockchain accelerators are also spreading the technology to universities and colleges.
3. You have researched a lot about blockchain. How will the technology benefit Africa’s banking sector?
Africa has inherited the age-old banking infrastructure that has existed for centuries with occasional updates to take advantage of technological progress. However by their nature, banks and financial services are very risk averse and for a very good reason. They are the backbone of any economy.
Blockchain gives them the freedom to test new ways of tracking wealth, sending and receiving money without exposing their already existing platforms to hacking risks. While this also puts them at risk if they don’t innovate, it gives them an opportunity to provide a faster method of payment with lower fees available round the clock, across borders, and with the same security guarantees that the legacy system can offer.
For the global economy it enables new ways of holding wealth and performing transactions that eliminates the need to place data in the hands of third parties like correspondent banks and reduces any risks of a single point of failure.
4. What use cases for decentralized finance exist?
Decentralized finance refers to an ecosystem of financial services that does not require any middleman and is built on top of existing open blockchains networks. The best use cases for DeFi are:
· Borrowing and Lending – Lending in the DeFi space has advantages over the existing standards. They enable instantaneous settlement, the ability to create collateralised digital assets that don’t require credit checks, thus make borrowing and lending cheaper, faster, and available to more people.
· Synthetics – These are financial instruments that are meant to simulate other financial instruments in the real world. These are built to offer flexibility, customization, and ease of use to suit the needs of investors and customers. An example is an asset to simulate the behaviour of an Apple or Amazon Stock.
· Monetary Banking Services – The growth of stablecoins, a blockchain service similar to Kenya’s M-Pesa has resulted in very efficient remittance and payments capability worldwide.
5. Kesholabs has created a blockchain based platforms. What solutions do they offer?
At Kesholabs, we have built four products. Pesabase, Bithela,Vitasphere, and Buymate, as a way of showcasing Kesholab talent, both in Blockchain and traditional software. None of this products are used by customers at the moment.
Pesabase provides Africans with a cheap and social option to remit and pay for goods and services.
Bithela provides users with a cheap and convenient way to trade, buy and sell crypto-currencies.
Vitasphere offers our customers a social platform in which they can brave their skills playing against others from the comfort of their homes. Our aim is to let gamers play their favourite games in free or cash prize competitions.
Buymate connects local consumers with travellers to deliver better-priced goods from international market places.
Therefore, if any organisation or individual wants solutions or consultancy from us, we are well placed to assist them in that regard.
6. Fintech has for long disrupted banking since 2010. What will the future of banking look like in Africa?
I believe banks will not go away, however the most successful ones are going to partner with fintech start-ups and connect to accepted and growing ecosystems like Blockchain. Those that are not paying attention will find themselves pushed out of the market completely by disruptive technology. Even M-Pesa that has disintermediated banks so much will likely face future headwinds from changes in technology and from the fact that the Kenyan government will push for a more diverse financial ecosystem to avoid single points of failures.
Right now if M-Pesa goes down, things grind to a halt, even banks never had that power. If you look at central banks in China and Europe, they are all looking at how best to enable DLTs. China already has a working Stable coin.
7. African central banks have kept on warning citizens against cryptocurrency trade. When do you think this scepticism will end? What are the challenges/solutions?
In my opinion time and growth of the crypto-ecosystem will force governments and countries to engage. Look at the American government, they allow crypto trading but through vetted avenues. Kenya already appointed a task force to look into this matter and they have come back with good finding that can form the basis of proper regulation. Kenyans are ranked in the top 50 worldwide in crypto-trade in spite of the bear market.
8. How secure are decentralised financial systems now that experienced hackers are using quantum computing to hack into blockchain systems?
Quantum computing is yet to be shown as a threat to Blockchain system, remember these are software and they can be upgraded in line with technological growth and challenges. It has been established that bitcoin is more secure than most existing financial services, including legacy banking platforms like SWIFT, which has been compromised repeatedly by hackers.
In my opinion, since DeFi is consistently under attack due to its open nature, this ensures any weaknesses keep getting ironed out. A note of caution here is that we are in the very early stages of DeFi, there are still risks, but there is no doubt that what is being built is going to be fair superior in the long run.
9. What does Kenya need to do to achieve mass adoption of DLT financial systems?
Kenya needs to continue providing a welcoming environment for innovation with of course the right set of rules for any technology. The rest will be done by start-ups and established entities that want to improve their services to customers.
10. 90 percent of start-ups in the world fail within the first 5 years of operation according to Forbes. What is the secret to success, especially for African youths who dream to own profitable tech companies?
Experts in the field are very clear on this, start by building or offering a services someone wants. And if you are in the tech field and have raised some funding, make sure you don’t run out of money before profitability or the next round of funding. However, no one is guaranteed success on first attempt, so learn from every attempt and if possible always try again in future.
11. What is your advice to African companies that still ride on traditional business models for sustainability in the digital era?
I would tell them to keep a wary eye on start-ups and the start-up ecosystem. They should use technology as a tool to improve every service they are offering. Business models are just an efficient means of checking that the service you are providing has some merit and staying power with a chance of making profit in future.