# Barriers and drivers of blockchain adoption in emerging markets: Large-scale text analysis and survey experiments among African regulators and citizens

## Project Abstract

What are the key drivers and barriers to blockchain adoption across Africa? We aim to systematically document the perceived potential benefits and risks from the perspective of individuals and regulators through novel survey, interview, and digital text data. We first plan to scrape digital trace data related to blockchain in Africa from social media (Twitter, Facebook), news articles (African News Archive), and google search trends to map the landscape and compare rhetoric, topics, sentiment, and stance between regulators and individuals. We will aggregate this data into a country-level Blockchain Attitudes Adoption Index for all African nations which we compare against measures of financial sector stability. We then focus on the case of Ghana to collect original data via survey experiments and semi-structured elite interviews to examine the perceived potential benefits and risks from the perspective of individuals and regulators.

## Objectives

The aim of this research is to document the key drivers and barriers to blockchain adoption in Africa by systematically examining the perceived potential benefits and risks from the perspective of individuals and regulators.

The empirical objectives of the proposed project are as follows:

1. Systematically examine sentiment, stance, and topics related to blockchain adoption across Africa by collecting and analyzing digital trace data using computational methods. Sources include social media data (Twitter, Facebook), news articles, and Google search trends data.
1. Collect original data on adoption from the perspective of regulators (using a survey experiment and semi-structured interviews).
1. Collect original data on adoption from the perspective of individuals (using a survey experiment).
1. Develop a Blockchain Adoption Attitudes Index for African nations (distinct from existing indices which examine only on-chain transaction volume and are limited to the payments use-case by focusing on cryptocurrencies, e.g. Chainalysis’ Global Adoption Index)
1. Further analysis likely includes using econometric techniques to compare adoption index and survey data to outcomes such as financial sector stability, remittance in-flows, etc. We also hope to build on the proposed research by expanding the survey and interview research to include other cases beyond Ghana (Nigeria, Kenya, South Africa).

In addition to the above 5 data-driven objectives, a notable contribution of this research is the theoretical framework we will set forth to motivate the empirical analysis. To do this, we will survey the literature on economic development, successful political and technological movements in African nations, public-private partnerships, mobile banking and fintech developments, remittance and diaspora influences, and cross-border payments across Africa. This will set the stage for our proposed research and be useful for other researchers and practitioners interested in better understanding the African context.

## Outcomes

This project examining the blockchain adoption in Africa is likely to benefit the greater Ethereum ecosystem in several ways.

* Determine how Ethereum might be modified to better meet the needs and preferences of African governments and their residents, potentially boosting Ethereum's reach and utility in the region.
* Provide Ethereum and other blockchain developers valuable insights into how different African nations view and prioritize blockchain technology, allowing them to better aim their efforts and resources toward the most promising areas.
* Discover novel implementations of blockchain technology in Africa, with the potential to inspire new initiatives and applications within the Ethereum community.
* Create a Blockchain Adoption Attitudes Index for African nations that can be used to benchmark and compare blockchain technology adoption across different countries, thereby assisting in the identification of emerging trends and opportunities.
* Help to the Ethereum ecosystem's growth and development by broadening its reach, uncovering new opportunities, and offering a greater grasp of the African context.
* Improve Ethereum's reputation as a globally relevant and helpful technology by proving its ability to meet the unique issues and opportunities that African countries confront.
* Encourage collaboration and partnerships between Ethereum developers and African businesses and organizations, which could lead to the creation of new and creative blockchain projects and applications.

## Grant Scope

Much is discussed about the potential of blockchain to transform the way businesses, governments, and individuals operate, thereby addressing persistent economic and political problems plaguing many developing nations. **How blockchains impact the political and economic well-being of individuals worldwide, however, depends on the extent and nature of web3 adoption in practice - both adoption at the national-level, and at the individual-level.**

The proposed project focuses on Africa, a continent home to over 1.2 billion people with a young, tech-savvy population that is projected to double by 2050. Africans have already shown a willingness to adopt new financial tech, with mobile banking solutions penetrating the market prior to the current growing levels of crypto usage. Vitalik Buterin’s recent discussions with the Zambian Minister of Finance, or Q&A remarks with Ghanaian builders at Web3 Accra during his February 2023 visit to the continent, suggest that Africa is increasingly seen as a potential important driver for blockchain innovation and adoption. Our analysis aims to systematically test hypotheses about the key drivers and barriers to long-term infrastructural web3 transformations across Africa by analyzing rhetoric and attitudinal data from regulators and individual citizens.

This research employs a mixed-methods approach to study the key barriers to blockchain adoption in Africa by systematically examining the perceived potential benefits and risks from the perspective of individuals and regulators through survey, interview, and digital text data. Methods include using natural language processing (NLP) applied to a large text corpus containing social media, news articles and Google Trends data related to blockchain and Africa, and an original survey experiment and semi-structured interviews in Ghana.

In this proposal, we focus on Ghana, though we hope to eventually expand this research to include additional emerging African economies which have varying levels of regulatory hostility and individual-level usage, for example Nigeria, Kenya, and South Africa. Ghana is an interesting case for this study, as it is one of Africa’s most durable democracies, though is currently experiencing high levels of inflation while battling its worst financial crisis in decades. Accra, Ghana’s capital city, is becoming an international hub for blockchain technology, having recently hosted various web3 conferences attracting many foreigners and diaspora members. This suggests interesting subnational variation in individual-level familiarity with and opinions toward blockchain that we hope to leverage in our survey and interview analyses. Moreover, the Ghanaian government has announced plans to incentivize blockchain, for example with a Regulatory and Innovation Sandbox focused on consumer interest and protection. This suggests a much friendlier regulatory approach compared to more hostile West African nations like Nigeria, where banks are banned from engaging crypto-related transactions and the government is prioritizing launching its own centralized e-Naira digital currency instead.

In our analysis, we intentionally focus on blockchain adoption more generally rather than focusing on cryptocurrency. This allows us to incorporate information related to other relevant use-cases, such agricultural land title record storage, or health care data, or coordination via DAOs. In our survey, for example, we hope to include information about potential uses beyond payments and try to see if people are more interested once we move past cryptocurrencies which are often associated with volatility and money laundering. While these concerns are certainly of interest to this question about blockchain adoption, payments are only one application and we are interested in attitudes toward the emerging technology more broadly.

We plan for this project to culminate in a peer-reviewed academic article documenting the key drivers and barriers of blockchain adoption in Africa. Upon publication, we will make our data, replication files, and Blockchain Adoption Attitudes Index publicly available for use by other researchers. In addition to the published article, we would be happy to present the project at DevCon or other EF events as well as summarize findings in the form of an EF blog post/ podcast for a broader, non-academic audience.

## Project Team

The team is comprised of the following individuals:

* Eliza R. Oak, Principal Investigator (Yale University, Department of Political Science & Statistics). She will commit 40 hours per month to work on this project until September 2023, when she will commit 80+ hours per month for the fall 2023 semester.
* Emmanuel J. Aikens Abakeh, co-PI (University of Ghana Business School, Department of Finance). He will commit 60+ hours per month to work on this project.
* Mohammad Abdullah, co-PI (Universiti Sultan Zainal Abidin, Malaysia, Faculty of Business and Management). He will commit 60+ hours per month to work on this project.

## Background

Our team has the combined expertise to achieve the project objectives:

* **Eliza Oak:** Eliza Oak is a third-year PhD candidate in political science at Yale University, also earning an en route Master’s in statistics and data science. This summer, she will work as a research intern at a16z Crypto Research studying questions related to blockchain governance, regulation, and adoption. She is an active participant in the Yale Council for African Studies and serves as Director of Outreach for Yale Blockchain Club. She has experience applying machine learning techniques to collect and analyze text and image data, and experience analyzing original survey and experimental data. Some of this research is currently under Review & Resubmit at top political science journals. Outside of Yale and research, Eliza is a proud Afropolitan Founding Citizen #53 and has written newsletter articles for Bankless Africa.

Profile Link: https://www.linkedin.com/in/eliza-riley-oak-322292109/

Other Links: https://a16zcrypto.com/

https://www.afropolitan.io/citizen

https://banklessafrica.substack.com/

* **Dr. Emmanuel J. Aikins Abakah**: Dr. Abakah is a Lecturer in Finance at the University of Ghana Business School (UGBS), Ghana. He earned his Ph.D. in Finance from the University of Adelaide, Australia. He also holds an MPhil in Finance from University of Ghana, Ghana and a BSc in Statistics with Computing from University of Cape Coast, Ghana. His research tends to cross the boundaries of narrowly defined fields as he constantly looks for promising ideas from several perspectives. His primary research interest lies in the area of FinTech and Digital Finance (blockhain technologies, digital assets etc), Development Finance, Empirical Finance, Corporate Finance, Asset Pricing, Financial Markets, and Applied Finance. He applies a variety of time-series and panel approaches, both linear and non-linear, to validate finance and economic theoretical approaches and has published in international research outlets including high quality ABDC ranked A*/A scholarly journals.

Profile Link: http://ugbs.ug.edu.gh/faculty/emmanuel-joel-aikins-abakah

Google-scholar : https://scholar.google.com.au/citations?hl=en&user=0baKC5wAAAAJ&view_op=list_works&sortby=pubdate

Related article links:

https://www.tandfonline.com/doi/full/10.1080/00036846.2023.2167921
https://www.sciencedirect.com/science/article/pii/S0140988322006272
https://onlinelibrary.wiley.com/doi/full/10.1111/irfi.12393
https://www.sciencedirect.com/science/article/pii/S0040162520312087
https://www.sciencedirect.com/science/article/pii/S1059056020301489

* **Mohammad Abdullah**: Mohammad Abdullah is a third year PhD Research Fellow and GRA at the Faculty of Business and Management in Universiti Sultan Zainal Abidin, Malaysia. He has published several scholarly articles on emerging financial issues in different international journals and has expertise in Econometrics modeling, Machine learning, natural language processing, Deep Learning, Big Data analytics etc. His research interests include asset pricing, machine learning in finance, blockchain market, cryptocurrency, FinTech, etc.

Profile Link: https://sites.google.com/view/abdullahm/

Related article links:

https://doi.org/10.1016/j.intfin.2022.101691

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4355596

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4359071

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4248315

https://www.tandfonline.com/doi/abs/10.1080/13683500.2022.2145458

## Methodology

This research will employ a mixed-methods approach by combining both qualitative and quantitative research techniques to study blockchain adoption in Africa.

Methods include using natural language processing (NLP) applied to a large text corpus containing social media, news articles and Google Trends data related to blockchain and Africa, and an original survey experiment and semi-structured interviews in Ghana. We will use econometric techniques and structural equation modeling (SEM) to examine blockchain in Africa based on the Unified Theory of Acceptance and Use of Technology (UTAUT) model. We will aggregate this data into an index to measure attitudes among different stakeholders within Ghana as well as at the country-level to enable cross-national comparisons.

The primary data we collect from our survey and elite interviews will shed light on the landscape of Ghanaian attitudes toward blockchain. To our knowledge, this is the first attempt to systematically examine African attitudes toward blockchain through an academic lens. From the perspective of regulators, we anticipate concerns about banking stability and money laundering. From the perspective of individuals, we anticipate interest in new technology and skills that can circumvent existing weak institutions, alongside concerns about price volatility in the case of cryptocurrencies and unfamiliarity with the broader technology more generally. In both groups, we anticipate factors such as inflation, remittance usage, age, and awareness of use cases (agricultural record storage; revenue mobilization; cross-border payments) to influence attitudes.

Through our survey experiment, we hope to test hypotheses about the types of information and levels of familiarity with the technology that drive attitudinal differences. For example, by randomly assigning respondents to be primed with different information about how blockchain is being used across the continent, and comparing treated with control groups responses, we can try to isolate whether respondents update their priors once additional information about blockchain is clarified. We will partner with Ghana Statistical Service to assist in running the survey. Professor Emmanuel Abakeh has a working relationship with this survey organization as he has worked with them in the past.

Further analysis likely includes using econometric techniques to compare adoption index and survey data to outcomes such as financial sector stability, remittance in-flows, etc. We also hope to build on the proposed research by expanding the survey and interview research to include other cases beyond Ghana (Nigeria, Kenya, South Africa).

## Timeline

This study will be a 2-year project where we divided the milestones in four phases. We plan for this project to culminate in a peer-reviewed academic article, though we would be happy to present the project at DevCon or other EF events as well as summarize findings in the form of an EF blog post/ podcast for a broader, non-academic audience.

Details on the anticipated project are given below:

| Milestones | Details | Duration |
| -------- | -------- | -------- |
| Phase One | Collect social media, newspaper and search engine data | 3 Months |
| Phase Two | Collect survey and interview data | 9 Months |
| Phase Three | Data analysis and results validation | 6 Months |
| Phase Four | Compilation of report | 6 Months |

## Budget

We request a grant of $50,000 to conduct the proposed research. Most of the budget will be utilized in Phase Two for survey, interview, and online data collection. The remaining funds will be used to offset indirect travel-related costs for the two team members who are not currently based in Ghana. The proposed funds will likely be allocated as follows:

| Budget Justification | Description of Item | Cost (USD) |
| -------- | -------- | -------- |
| **Data collection costs** | | |
| Research assistants | 2 University of Ghana students will be hired as RAs for 24 months to help with survey and interview data collection | $5000 |
| Survey experiments | Survey administration (via Ghana Statistical Service) [Approx. 1,800] | $20,000 |
| Expert panel interviews | Conduct semi-structured elite interviews with financial regulatory body of Ghana [Approx. 30] | $10000 |
| Database access | Africa News Archive | $2,500 |
| **Indirect Costs** | | |
| Travel and accommodations | Travel and accommodation costs for Eliza Oak (travel from the US) and Mohammad Abdullah (travel from Malaysia) to help oversee survey implementation, train RAs, and conduct semi-structured elite interviews | $12,500 |
| **Total** | | $50,000 |