​African Infrastructure Investment Enters the Crypto Age

J. Frank Sigerson  |

With African countries battling high inflation, cryptocurrency is an alternative source of financing not affected by disastrous central bank policies. As a non-scrutinized digital currency, it offers the African continent alternative options for banking as well as privacy, and allows for cross-border payments.

Cryptocurrency’s ability to facilitate international trade will become increasingly important over the next decade. The fourth industrial revolution of technology and electronics will be highly dependent on Africa’s resources. Raw materials like lithium and graphite, which are vital in the next stage of technological and electrical advancement, are concentrated in Africa.

The rise of alternative energy and electric vehicles has increased the demand for energy metals, or e-metals. With demand on the rise, liquidity will become a problem, and companies like Swiss EMX plan to solve this through emerging technologies such as blockchain.

Liquidity is key

The lifeline for any market is liquidity. For it to occur, the buyer and sellers need to be brought on board. Swiss EMX plans to solve this challenge by utilizing blockchain technology to clear the way for the trading of e-metals using smart contracts.

Smart contracts enable transactions and agreements to occur independently and securely without the need for centralized control by either banks or governments.

Swiss EMX is the first company to issue security tokens in the energy metals sector in Africa, where the tokenization process is conducted in three stages: first by offering the commodity-backed tokens, second by trading the tokens themselves and finally by the delivery of the physical commodity.

The tokens are digital contracts that denote a share of ownership or equity of an underlying asset, which in this case is graphite. These tokens are openly traded to investors as securities for the underlying products. They are regulated by the firm offering them, and are specifically utilized for investment. Most firms use tokens to raise startup capital from investors.

Utilizing its blockchain technology in the mining sector for African raw materials, Swiss EMX provides an avenue for both local and international investors to take advantage of this exciting profitable prospect.

Using tokens offers a free market with no stringent restrictions of finances experienced in the banking sector. Tokens act as the certificates that represent ownership of a particular commodity—in this instance, the raw materials in Africa.

Global Li-Ion’s MOU with Swiss-EMX

Global Li-Ion Graphite Corporation  (LION:CNX)  (GBBGF) signed an MOU with Swiss EMX to supply graphite from the Ambato-Arana graphite project in Madagascar, which it acquired by purchasing full ownership of the Ambato project owned by Avana Resources Limited.

LION is to supply 10,000 tonnes of graphite within the first three years and an additional 10,000 tonnes within five years.

The deal is significant because prices for premium large flake graphite supply are on the rise due to increasing demand. The majority of graphite in the market presently is of lower purity and has a smaller flake size, used in common applications like pencil lead.

An evaluation process of the Ambato Arana mine by SGS Canada, an ISO certified laboratory, found the graphite to be of high purity at 96% carbon and of premium value, with larger flake size. This kind of graphite is a good source for emerging lucrative businesses in the era of technological advancement. Graphene, a product of graphite, is used for conducting electricity, and through technological innovations, will be critical for energy storage devices used in electric vehicles.

According to the International Energy Agency, the demand for electric or greener cars will increase to around 125 million by 2030 from just 3 million in 2017. This is because electric cars are cheaper to run than hydrocarbon-powered vehicles, and have been proven to reduce carbon emissions. Interestingly, graphite is a key part of this supply chain.

An incredible African opportunity

Africa was left behind in previous industrial revolutions, with the West gaining the most in terms of socio-economic progress and transformation. For Africa to succeed in this fourth revolution, the countries have to come together and work on solutions that will push the continent into the next chapter of technological advancement.

The Africa Moves conference provides an opportunity for Africa to showcase its potential in technological innovations, as well as its raw materials’ incorporation into what promises to be a technologically driven economy.

As the event gains momentum, it can act as an avenue for countries in Africa to reinvent their startup laws and improve their infrastructure, so as to attract and accommodate investors. This will be a big boom for Africa’s economy, with the conference bringing together various respected and innovative leaders, investors, startups and tech lovers.

Africa’s wealth of natural resources rarely translates to its citizens. In fact, the infrastructure to ensure accessibility of the vast wealth of resources has been the greatest barrier to Africa’s economic development. If the continent could develop its infrastructure to be at par with the developing world economies, it could increase its per capita GDP by 1.7% per year.

Most African governments have limited resources to finance their own infrastructure and therefore rely on international investment and lenders. China, for instance, is allocating significant funds of up to $60 billion into the African continent, though it's important to bear in mind that China’s motivation for investing in Africa is to secure Africa’s raw material to propel its own growing economy.

Investment Fund Africa (IFA) is an African-owned infrastructure development fund that solely works to fund African countries’ infrastructural development. The firm secured $6 billion for its first phase of infrastructure development in Africa.

The lack of investment and infrastructure development led to the creation of IFA, which currently focuses on six African countries in its first quarter of operations: Ivory Coast, Lesotho, Namibia, Botswana, Mozambique and Mauritius.

Africa is anticipated to power the next industrial revolution and impact technological advancement. Nevertheless, for Africa to reap maximum benefits, it has to adopt new and innovative ways of doing business and encouraging investments.

DISCLOSURE: I have no financial interests or connection with any of the companies mentioned in this article.


The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
LION:CNX Global Li-Ion Graphite Corp. 0.13 0.00 0.00 0
GBBGF Global Li-Ion Graphite Corp 0.10 -0.00 -1.00 100

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