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Thursday, June 29, 2017

The Blockchain Could Launch this African Nation to the Top

How blockchain will ensure property rights in Ghana subsequently allowing the nation to thrive

Ghana is a relatively small West African nation just north of the Gulf of Guinea. Accra, the nation’s capital, is situated on the southern coast of the country. While the coastal and politically-connected southern half of the state does quite well, Northern Ghana is often neglected and forgotten.

The city of Wa, for instance, in the Upper West region of the country has an incidence of poverty between 81-92%.As with most of society’s ailments, the problem of poverty can be traced directly to the state. That is, 81-92% of residents live on less than $1 USD per day.

But why is Northern Ghana so poor? As with almost all of society’s ailments, the problem of poverty can be traced directly to the state. But, before we learn about the problem, we first must understand the Ghanaian people’s traditional system of governance.

Although it cannot be considered “anarcho-capitalist”, the traditional Ghanaian system is quite distinct from the modern state. In traditional Ghanaian society, all land is initially owned by an area’s chief, who is appointed through a variety of mechanisms based on the tradition of the particular community in which he resides.

The chief collects no taxes and is not considered to be a “government”, however, he or she does fulfill certain governmental functions, such as dispute resolution and property title management. For instance, if a rancher allows his livestock to graze on his neighbor’s land, the neighbor can then take the case to their chief, who will be able to determine whether or not the rancher has committed a crime.

Since the chief is the ultimate owner and seller of the land, he is incentivized to uphold property rights and adjudicate as fairly as possible, lest he be abandoned by his community.

This system is extremely efficient and complex. If for example, there is a dispute between two chiefs or people under the jurisdictions of two different chiefs, then there is even a House of Chiefs, that can settle such higher level disputes.

But if this system works so well, why are the people of Northern Ghana so poor?

The reason is that sometime after the modern Ghanaian government was created, in 1957, the power to manage land titles was usurped by the federal government.

To make matters worse, corruption and bureaucracy made it extremely difficult to both receive and validate land titles, leaving the less-connected citizens of the North without any means to delineate property rights.

This has caused many problems because, without land titles, there is massive instability. Any day, it is possible to find out that one is not the true owner of one’s land. But more importantly, it prohibits foreign investors from investing capital into the Northern economy.If land titles are uncertain, investors won’t touch it. If investors won’t touch an area, growth will be non-existent.

An investor is not going to accept a farm as collateral for a loan if there is no way to determine if the recipient truly owns it. Similarly, a company is not going to build a factory in an area in which it cannot assuredly protect its assets.

If land titles in a region are uncertain, investors won’t touch it. If investors won’t touch an area, growth will be non-existent.

But why, then, do I believe that Ghana will be the next great libertarian country?

It’s because of the hard work of the good people at the Center for Liberty and Entrepreneurship. I recently had the pleasure of interviewing Abdul Salam Mahamadu, the founder of the organization.

In this interview, Abdul Salam explained to me how his non-profit think tank is using blockchain technology to issue land titles. Although the federal government has control over the land title registry, they do not have control over the land itself. The land itself is under the jurisdiction of each area’s chief.

If a private enterprise decides to keep a record of land titles, this can and has been, shut down by the Ghanaian government. However, if land titles exist in an immutable cyberspace, there is absolutely nothing the Ghanaian government can do.

But what gives these blockchain records legitimacy?

This is where the chiefs come in. Abdul Salam, and his colleagues, are not lobbying the government to enact this change; instead, they are appealing to the chiefs, who already resolve land title disputes.The block chain will serve as an indestructible global ledger of all land titles.

The Blockchain will serve as an indestructible global ledger of all land titles. The chiefs, who want to be able to fairly adjudicate upon land disputes — but cannot do so due to the lack of proper record keeping — will now be able to simply reference their own peer-to-peer cryptographic system in order to make informed decisions.

This puts power back in the hands of the chiefs instead of the federal government. The government can confiscate and destroy paper and digital records, but cannot prevent people from using open source technology.

The chiefs are very much in favor of this idea. Abdul Salam and friends have taken this proposal to many chiefs in the Northern region, all of whom are extremely excited about the prospect of bypassing the horrible and inefficient government system. Since most people support the chiefs, who are appointed for life, politicians have little-to-no power to stand in the way of this idea.

But Abdul Salam doesn’t stop there. After reconfiguring land titles to utilize blockchain technology, he also wants to institute a special economic zone in the northern region of the country.

The idea behind this is to attract investment to the region by offering extremely low taxes and extremely minimal regulations. 

The Southern region of the country currently is the victim of a massive wealth redistribution scheme, sending tens of millions of welfare cedi (Ghanaian currency) to the Northern region every year. This would lighten the tax burden on those in the South, as well as create extreme prosperity for those in the North. As the people in all regions of the country get richer, the chiefs of those respective areas will be better off, as they will preside over a more prosperous region. 

Abdul Salam believes that these policy changes and technological innovations, if implemented in Northern Ghana, will cascade across the rest of the country, the continent of Africa, and, hopefully, the world. 

The Center for Liberty and Entrepreneurship has an IndieGoGo page to help support their educational campaign. Their goal is to teach the Northern Ghanaian people about the concepts of liberty and how to use blockchain technology, so as to uplift their country from poverty and jumpstart it to be a leader in the third millennium.

  • Liam Cardenas is a software engineer and entrepreneur who blogs at and regularly posts libertarian videos on his YouTube channel.