Seemingly, web3 is just what Africa has been searching for all along, to escape the Web1 and Web2 that are permission-driven.
Since the start of the Coronavirus pandemic, e-Commerce has been performing exceptionally. And this has had the unanticipated effect of speeding up Africa’s digital economy.
The shift to digital services and the adoption of transformative mobile technologies have been quick in the last two years. With e-commerce being the biggest beneficiary.
In this post, you’ll get to know how Africa transitioned from Web1 to Web2 and now warming up for Web3, what Web3 is its different layers, examples, FAQs, and why we need it.
So let’s dive in.
Is the Digital Economy of Africa Prepared for Web3?
The digital change has been ridden by homegrown solutions, some built on blockchain and crypto. The world is now moving to Web3, a modern iteration of the worldwide web-based on decentralization with blockchain and crypto technology. Enabling companies to create new things that give a unique value to society. Here is how it will all occur.
In 2020, the International Finance Corporation (IFC) and Google estimated Africa’s internet economy as likely to reach $180 billion by 2025, representing 5.2 percent of the continent’s gross domestic product (GDP).
Whereas by 2050, they project it to get to $712 billion, equivalent to 8.5 percent of the continent’s GDP. This growth is driven by a combination of improved access to faster and better-quality internet connectivity, a quickly expanding urban population, an increasing tech talent pool, a vibrant startup ecosystem, and Africa’s commitment to creating the world’s largest single market under the African Continental Free Trade Area (ACFTA).
The Mobile Economy
The Global System for Mobile Association (GSMA) report for Sub-Saharan Africa in September 2021, placed mobile technologies and services at 8 percent of the GDP of sub-Saharan Africa. And had provided over $130 billion in economic value-add in the year 2020.
This comprised $31 billion from the mobile operators and $7 billion from other industry stakeholders. Indirect benefits made up $11 billion whereas productivity gains brought $83 billion worth of benefits. The economic contribution is set to grow past $150 billion by 2025, including benefits from enhanced productivity.
Google and IFC are estimating the Internet economy to get to 8.5 percent of the tGDP by 2050. The GSMA puts the Mobile Economy in Sub–Saharan Africa in 2020 at 8 percent of GDP. While the Google and IFC work is limited to the internet economy, the GSMA’s is concerned with the mobile economy. Which includes services like SMS, which is a non-internet service and is predominant in Africa.
For instance, Mobile Money (MoMo) which is the main form of electronic payment in Africa is an SMS-based service, which does not need the internet to function. This justifies its availability in the remote parts of Africa where there is limited to no internet access. MoMo’s new interactions link it to the web so that it can be used for online purchases.
The GSMA report also examines the ancillary services born out of mobile services such as agents accepting and processing cash into and out of MoMo. It is the most recent entrepreneurial addition to every economy where MoMo operates. They establish employment and generate economic activity.
The GSMA report gives a detailed account of Africa’s digital economy at 8 percent of GDP in 2020. Africa’s digital economy is going to be dominant by the middle of the century, if not earlier. Web3 will be a crucial component of that growth.
The venture capitalists (VCs) who offer the funding for these tech ventures have invested over $5 billion in 2021 according to a 1 January 2022 report by Briter Bridges. This is equivalent to the collective African startup inflows recorded in 2018, 2019, and 2020.
While it is unfortunate that the majority of the funding is international, local capital seems to find validation in international capital. This implies that we are likely to see more local capital going into these tech ventures going forward. Fintech accounted for more than 60 percent of this funding, and rightly so because of the invention in MoMo. Which is Africa’s Fintech foundation.
It isn’t possible to participate in the digital economy without the presence of an electronic payment system. However, now that we have a well-established Fintech ecosystem, it is having a flooding effect on e-Commerce and delivery.
For instance, Hubtel, a Ghanaian fintech, got into e-Commerce. And during the pandemic, their food delivery business took off. They were also among the three Ghanaian companies that built Ghana.Gov – a payment platform for government services in Ghana.
Flutterwave, a Nigerian fintech company launched Flutterwave Store, a portal for African merchants to establish digital shops to sell online. They followed that with the purchase of Disha to enter the creative space.
Egypt’s ride-sharing company, SWVL is going public through a SPAC merger that would value it at $1.5 billion. It is the onset of many more such deals.
Global e-Commerce increased to $26.7 trillion during the pandemic. Online retail sales’ share of total retail sales went up from 16 percent to 19 percent in 2020, according to estimates in a UNCTAD report published on 3 May 2021.
The pandemic also stirred up healthtech innovations like Bisa from Ghana which enables you to get first-hand information about COVID-19 and other medical conditions, as well as access medical professionals online by logging into the app.
Throughout the last 12 months, healthtech deals have grown to over $77 million in 56 funding rounds. mPharma from Ghana just closed a $35 million series D, while Africa Health Holdings closed an $18 million series A last November, and Nyaho closed $5.2 million. Which, was partly used for their healthtech platform, Serenity Health. South Africa’s RecoMed raised $1.5 million to scale up its online healthcare marketplace.
In December 2021, AlitheiaIDF, a major female-run fund manager, raised $100 million to invest in additional female founders. Aruwa Capital Management, another female founder-focused fund made three investments in November 2021.
Future Females Invest Angels (FFI Angels), an all-female angel investor group based out of Mauritius, closed four deals in 2021. Efforts to close the gender disparity in funding in Africa are changing, but much more needs to be done to overcome the gender gap in Africa’s digital economy.
“Our review of African countries’ policies and strategies demonstrates that most African countries have digital agenda documents. These are found as legal texts, stand-alone digital strategies, as sections of national development plans or within aspects of other policies,” said Olumide Abimbola, Faten Aggad, and Bhaso Ndzendze in their recent publication which looked at the availability of digital agendas across the continent.
In Zambia, part of the government’s digital agenda is to launch their satellite. A local start-up, Ignitos Space, has a little different ambition. To use satellite data for precision agriculture and so on.
When the Coronavirus pandemic struck, Ghana’s Ministry of Education moved to use eCampus as the online learning platform for students who were home because of school closures. Ethiopia’s Ministry of Education announced a partnership with Cardano to create a blockchain-based digital identity for five million students and teachers. Cardano, one of the leading crypto platforms, has a program concerned with Africa.
African blockchain and crypto companies like Topit, Luno, and Yellow Card which recently raised $15 million, are championing the building of exchanges that trade globally. According to the BBC, Nigeria ranks 3rd globally in terms of countries with the greatest bitcoin trading volumes last year, after the US and Russia.
But in February, Nigeria suddenly announced they were blocking their banks and financial institutions from trading in or facilitating transactions in cryptocurrencies. The Central Bank of Nigeria then launched the country’s electronic currency, eNaira, in October. That was the first in Africa. Ghana’s Central Bank plans to follow suit.
Kenya has been ranking as the world’s leader in peer-to-peer (P2P) trading volumes for two consecutive years. And in 2021 challenged other countries to adopt a friendlier attitude towards cryptocurrencies. Emurgo Africa’s $100m dedicated Africa blockchain fund is going to be a game-changer. Also, Senegalese American award-winning artiste, Akon, argued that crypto could change Africa’s future. That future is here.
These technologies started off on Web1, which was primarily text-based with SMS as the holy grail in Africa, with a subsequent move to Web2, a combination of the spoken word and moving images, aka multimedia. We are now headed for Web3, which is characterized by great decentralization of the web using blockchain and crypto, creating transparency as a result.
The biggest pain point of Web2 was the centralized and controlled nature of multimedia databases that chiefly rested with big tech companies such as Facebook, Google, YouTube, Twitter, and so on. Web3’s basic promise is to change that, so we don’t need permission from the big tech firms to use our data from their databases. A permissionless world beckons.
So what is this that will usher in permissionless services?
What is Web3?
Web3 generally refers to the next generation of the world wide web. Just like Web2 which started from an abstract concept of sending information on an open network, Web3 goes an extra mile into creating a fairer and more transparent internet. For this reason, Web3 is often associated with blockchain technology.
In part, Web3 will become closer to a “web of data” that can comprehend, combine and automatically interpret information to offer the users a much more enhanced and interactive experience. But it would also be a decentralized web that challenges the dominance of the tech giants by concentrating the power (and data) in the hands of the users, as opposed to corporations.
What Are the Layers of Web3?
Whereas web2 was primarily based on the introduction of mobile, social, and cloud technologies, web3 is powered by three new layers of technological innovation:
- edge computing
- decentralization
- artificial intelligence & machine learning
- blockchain
Edge Computing
While presently commoditized personal computer technology was modified in data centers in web2, the change to web3 is moving the data center out to the edge (i.e. edge computing) and occasionally straight into our hands.
Data centers are filled out by an array of progressive computing resources distributed among phones, laptops, appliances, sensors, and cars, which will produce and consume 160 times more data in 2025 than in 2010.
Decentralized Data Networks
Decentralized data networks enable various data generators to sell or trade their data without losing ownership, risking privacy, or depending on intermediaries. As a result, decentralized data networks will maintain a long list of data providers in the growing ‘data economy.’
For instance, when you log in to an app using your email and password, or when you like a video or ask Alexa a question, all these activities are tracked and monitored by tech giants like Google and Facebook to better target their advertisements.
However, in web3, data is decentralized which means that users will possess their data. Decentralized data networks make it possible for the various data generators to sell or trade their data without relinquishing ownership, risking privacy, or depending on intermediaries. It enables you to log in securely over the Internet without being tracked by using Internet Identity.
Artificial Intelligence and Machine Learning
Artificial intelligence and machine learning algorithms have progressed to make valuable, and sometimes life-saving, predictions and acts.
When built on top of emerging decentralized data structures that offer access to a plethora of data that today’s tech titans desire, the possible applications extend far beyond targeted advertising into areas such as:
- precision materials
- medication creation
- climate modeling
Although web2 has related capabilities, it is still primarily human-based, giving room for corrupt behaviors like biased product evaluations, rigged ratings, human errors, and so on.
For instance, Internet review services such as Trustpilot enable customers to leave feedback on any product or service. Unfortunately, a firm may pay a large group of people to write excellent evaluations for its products or services.
As a result, to deliver accurate data, the Internet needs AI to learn how to differentiate between the genuine and the fraudulent.
Following the Gamestop trading incident, Google’s AI system recently eliminated almost 100,000 negative ratings on the Robinhood app from the Play Store. After discovering attempts at rating manipulation meant to downvote the app intentionally:
This is AI in action, which will soon be incorporated into Internet 3.0, letting blogs and other online platforms sift through data and personalize it to each user’s preferences.
Blockchain
Simply put, blockchain is one more layer of the technology behind web3. It is specifically the foundation of web3, as it redefines the data structures in the backend of the semantic web.
Blockchain is a decentralized state machine that deploys intelligent contracts. These smart contracts clarify the logic of an application for web3. So anyone who aspires to build a blockchain application needs to deploy their application code on the shared state machine.
What Are the Examples of Web3?
Examples of Web3 in real life
Web3 is already enforced in several areas, including virtual assistance, education, social networking, messaging, exchange services, and browsing.
For example, while you’re sitting in the office, if you desire to check the availability of groceries in your home, you can ask your digital assistant to assess the contents of your fridge by communicating with the interconnected smart devices at your house.
Moreover, you can organize your holiday plan, business trip, weekend party, household tasks, and even make sure your home is secure using your ubiquitous Internet-connected devices at home. The virtual assistant’s personalized suggestions help you arrange the perfect weekend, from booking your tickets with a discount to finding exciting places to explore to reserving hotels.
Here are some popular examples of web3 applications that illustrate the scope of its adoption:
Siri
Siri is an excellent example of voice recognition software as a key component of web3. Using this technology, Siri and other personal assistants communicate, share information through linked blocks, and provide users with more useful search results for every meaningful query, including how to, why, and what. Earlier, Siri could only do simple tasks, like reminders and directions to the local grocery store, by using pre-programmed algorithms.
Wolfram
Wolfram Alpha is a computational intelligence platform that currently uses web3. The platform can compute answers of users from different fields such as mathematics, nutrition, and science. It quickly connects with other apps to gather information from their databases and simplifies the information for end-users. As a result, it is presently faster and offers more accurate results than it used to be with web2. Siri is a frequent user of Wolfram Alpha.
Steemit
Steemit is another great example of web3 social network websites. It is a decentralized reward platform that runs totally on the Steem Blockchain social media model. It rewards content creators or bloggers with cryptocurrencies for contributing content on the site. This is precisely where web3 becomes crucial as it helps the platform reward contributors’ cryptocurrencies in a secure environment.
Sola
Another good example of a web3 social network website is Sola. It is a decentralized social platform powered by distributed nodes, IPFS, and the Ethereum blockchain.
Different from the Steemit, Sola utilizes blockchain AI to establish social networks and media combinations. It incentivizes and benefits all the involved parties, including users, third-party developers, and the core team for viral content.
The website uses AI algorithms to filter in only good content to ratify and doesn’t only depend on user reaction to spread posts. Also, Sola pays users with its internal virtual currency, called the Action Points, and users can spend it on their content or for endorsing fellow users’ content.
Why Do We Need Web3?
Web3 is a system meant for the users and designed by users in the form of creator-driven platforms.
Here are the main justifications why web3 will become crucial in the coming years:
Reduced reliance on centralized repositories: Web3 will endeavor to make the Internet a diverse source so that hackers, leaks, and reliance on centralized repositories are prevented. Using verifiable data scarcity and tokenized digital assets, there will be a possibility of users owning their own data and digital footprints. Platforms will no longer be held accountable for data usage.
More personalized interactions: Web3 will become increasingly important in 2022, as most users continue to prioritize customized and individualized browsing experiences on the web
Better search assistance powered by AI: There will be an increasing demand for humanized digital search assistants that are far more intelligent, pervasive, and powered by semantics, blockchain, and AI.
Reduced dependency on intermediaries: It will help disintermediate businesses, eliminate rent-seeking intermediaries, and provide this value directly to the customers and providers in a network. Network users collaborate to address the formerly hard-to-control issues by mutual ownership and governance of these new decentralized intelligence structures.
Increase in peer-to-peer connectivity: Through current Internet inventions, the connection between members and organizations will remain naturally robust to keep in line with more adaptive peer-peer interaction and governance. With peer-to-peer connectivity, humans, businesses, and machines will be able to share more data while retaining greater privacy and security.
Improved trust: With the knowledge of the next Internet generation, we can tremendously reduce dependency on individual platforms to future-proof entrepreneurial activities.
Web3 FAQs
What is Web3?
Web3 is just as it sounds and is considered to be the third iteration of the internet as we know it. Web1 is the early foundation of the internet. Think of the archaic HTML websites you’d look at in the 1990s next to your beige computer tower. This is where it all started, and this period resulted in much innovation.
Web3 is the internet as we know it today, beginning with prototypical Facebook pages and e-commerce. This is a time where connectivity is vastly emphasized; you can chat with friends, receive instant answers to any question in the world and buy nearly anything you want online.
What’s so wrong about Web2 that we want to change it?
While Web2 came in with useful changes, it also brought some problems for end-users. A lot of the criticisms people have charged against Web2 have been regarding who holds the power on the internet. Sure, the origin of companies like Meta Platforms (NASDAQ:FB) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) brought huge conveniences, but they also have disrupted who is in control in the digital space.
Meta’s new scandals have been the most shining example of this displacement of power. Whistleblowers have revealed ways in which the firm exploited its users, the end consumers of the internet. Moreover, there is much disagreement over how companies mine personal data and use this to target specific users.
Do we need a world where the data you provide can be used for the wrong purposes because of greed or malice? No, this goes way beyond privacy, the center of our problem concerns control. On a daily basis, we give over the control of petabytes of data to companies and individuals with no apparent choice.
How does Web3 seek to fix these problems?
Web3 is the direct response to this power imbalance. It seeks to address this situation by laying power back into the hands of the end-users through decentralization. Data and power are centralized currently among the tech giants such as Meta and Alphabet. With Web3 this data can remain as private as a user needs it to be.
It also sets free users of the indiscretions of these companies’ rules over users. The internet is perceived as a frontier for freedom of speech, thanks in large part to the connectivity facilitated by social media. And yet, users are still subject to rules made at the fancy of the ruling corporations.
How will Web3 “decentralize the internet”?
Thanks to the progress in blockchain technology, the way forward for Web3 is fairly clear. You hear crypto bulls discussing decentralization all the time on blockchain networks. There are decentralized applications, decentralized finance, decentralized autonomous organizations (DAOs), and so on.
The internet as we know it is slowly shifting to the blockchain because it is where users can maintain their independence. As cryptocurrency is indicating, there’s a lot of demand for a place where people can invest their money the way they like and for greater returns than banks can offer. That much is clear from the success of DeFi protocols, which enable one to do things such as stake assets for passive income.
There’s a huge demand also for a decentralized internet. With Web3, one will be able to use things like social media dapps, where developers have been denied power and users make rules on the type of content that can and can’t be posted through community voting efforts.
They could then get to a DeFi protocol and make a token swap, or use their tokens in the metaverse. Most greatly, they could do all of these things on one personal account, log-in free. The chances are as endless as the internet as we know it today, but without sacrificing one’s power or data.
Elon Musk just called Web 3.0 “BS.” Is he right? Or is it just a buzzword?
Clearly, Elon Musk is tweeting currently that Web3 “sounds like BS.” Alongside this thoughtful statement, Musk called the eruption of blockchain tech and Web3 hype “nuttier than ’99,” referencing the dot-com explosion of the late 1990s. There are a lot of naysayers out there just like Elon Musk.
Since he isn’t inclined to give any insight on his views, we can’t know for sure what is holding the business magnate back from Web3. But, if his views are the same as those of other skeptics, he likely thinks there’s no real vision to it that makes it more meaningful than the Silicon Valley-led Web2 we encounter today.
Others believe the idea of Web3 taking over isn’t such a ridiculous idea. However, they find it difficult to believe that these corporations won’t simply adopt Web3 ideas for their products. Many believe that these Silicon Valley companies are going to continue taking heed of decentralization efforts, and they are going to implement Web3 ideas into their businesses to retain relevancy.
Conclusion
So there you have it, all the information you need about Africa’s preparedness for Web3, what Web3 is, its layers, examples, FAQs, and why Africa needs it.
In a world full of the various types of pandemics that are making it hard for businesses to get back to normal, Web3 is likely to come in handy.
