Blockchain Technology: How is Cardano Blockchain used in Africa

In the previous blog we saw how blockchains can be used in bringing transparency in the real estate sector. We could cut the middle man aka the government, at least during registration, thus reducing cost of maintaining records as well as improving transparency

In this blog, we shall see an actual project in Africa which is using the Cardano Blockchain to build affordable sustainable housing. Let us first understand the problem statement

Africa has a dearth of affordable housing. The backlog is as much as 50 million homes. If you wanted to borrow money to build a home, the mortgage is as high as 30% to 45%

That means, in 2-3 years, you end up paying your whole principle as interest!!! You can forget about the 15-20 year long loans which the rest of the world enjoys

The foreign remittance charge can vary from 5% to 25%

This means, if someone is transferring money from a foreign country, up to 25% of the investment amount will go to middle men (multiple Banks, Governments, etc) instead of its intended user

What role does the Cardano blockchain play here?

Empowa decided to use DeFi (Decentralized Finance) to solve the above issue. They decided to provide a direct channel through Cardano, where those who have money i.e. people from rich countries can finance those who need homes

So as an investor, you would be able to buy an NFT (Non-Fungible Token) created by artists through your native currency (USD, Euro, etc) or Ada (Caradano’s Crypto currency)

NFTs are like the baseball or WWF physical cards we used to have many years ago, which we used to trade; or you can consider it akin to Art. They have an inherent value because the buyer and seller finds them valuable. If the seller and buyer agrees that one card is worth $50, then the trade would go through and the buyer will take possession of the card. He/She may decide to hold on to it or sell it to someone else for a higher value. If you replace the physical card to digital card, in the above example, you then have a NFT – they are unique & non fungible

After you buy the NFT, you would own that piece, meanwhile, the money you bought that NFT will be used to buy EMP tokens at its market price, which is the native token for Empowa. The EMP token is then used to mint (create) a stable coin, through a smart contract, in the local currency, at whatever is the exchange rate at that point of time. These stable coins are released to the project partner to start construction

Stable coin are digital tokens which are pegged to the value of the local currency. For Eg. USDC, BUSD, USDT are different stable coins which in the digital format has the same price value as the USD. In theory, if you hold a stable coin, say 10,000 USDC, you can convert them $10,000

If the above paragraph was confusing, just assume that you put in some money to fund the project and you got a receipt (NFT) for the payment and your money was converted to the local currency (stable coin) to fund the project. If you so wish, you could sell your receipt (NFT) to someone else for a higher price because they value the receipt for historical reasons or see future potential

Now that the builder has received the money, he constructs the house and on completion hands it over to the the occupant, who then start paying the lease amount. This amount is collected by a property manager, who then deposits them as stable coins in the blockchain; the smart contractor then converts it to the EMP tokens at the earlier locked exchange rate, which comes into your possession. You can now sell these EMP tokens to your local currency or hold on to them


So in summary, due to blockchain technology, you can do a good act & invest at the convenience of your home; because all transactions are happening through blockchains, you can trace the complete flow of the money and retrace it back to you for payment of the lease amount; you not only earn the regular lease amount but also hold a piece of NFT, whose value can rise independent of how the project is progressing

For the occupants, they are able to own a house at an affordable rate and they too have full transparency, where every transaction on the blockchain is viewable and handled in a just manner through smart contracts