Entrepreneurs in the developing world seeking capital and investors looking for opportunity. blockchain is the solution for them both.
We live in a world that is increasingly borderless, with the unprecedented growth of technology across a number of sectors. However, geographical and economic borders remain firmly entrenched in the global financial landscape, preventing those in emerging markets from accessing the playing field of capital growth.
None of the three countries with the highest GDP growth between 2008 and 2017 -- Nauru, Ethiopia and Turkmenistan -- have stock exchanges, depriving emerging investors and business owners of much-needed access to global capital. When investors do enter the traditional market, they face extremely high intermediary fees. Despite growth in tech hubs across emerging markets, economic exclusion and inequality remain huge barriers to those looking for a profitable investment opportunity. blockchain technology, as a borderless force, might hold the very solution to this problem. By reshaping international investing to create a more decentralised, secure and accessible means of doing business, blockchain-based exchanges could help eradicate economic inequality and foster a new era of financial inclusion for developing countries.
In comparing the South African Johannesburg Stock Exchange (JSE), the largest exchange in Africa, with its North American counterpart, the New York Stock Exchange, it becomes evident that economic exclusion is a prevalent issue in emerging markets. The JSE has around 375 listings and a market capitalization of about $988 billion. In comparison, the New York Stock Exchange lists more than 3000 companies worth more than $28 trillion as of June 2018. This means that even those privileged enough to gain access to the South African JSE are still not being exposed to the same level of opportunity as those operating on larger foreign stock markets.
There is also a huge gap in the availability and accessibility of financial institutions. Two billion people are financially excluded from formal institutions such as banks. This means that a huge percentage of our global population is prevented from interacting on international investing platforms, despite a clear demand for capital growth in developing countries such as Nauru, Ethiopia and Turkmenistan.
The demand for investment and business expansion from entrepreneurs in emerging markets is increasing year after year. The 2017 Global Findex reported that 71 percent of adults in high-income economies saved in 2017, while the same was true of only 43 percent of those in developing countries. However, both economies reported the same percentage of people saving to start, operate, or expand a business. In Sub-Saharan African economies, this figure was twice the global average, with one-in-three adults reportedly saving for business expansion. The biggest hindrance to business growth within the region has been a lack of supportive financial services, such as stock exchanges, that encourage investment opportunities.
