The South African Reserve Bank’s, Project Khokha, has received the ‘Best Distributed Ledger Initiative’ award from the Central Banking Publications. The award, which was given at a gala dinner in Singapore, comes about three months after the reserve bank reported the successful testing of the project.
The award was given on the premise that the project has shown potential in the “central banking, regulatory and supervisory environment.”
According to the Deputy Governor, Francois Groepe, executive sponsor of the Fintech Programme and Project Khokha:
“We are truly appreciative of and humbled by the award and for the recognition of the effort made on Project Khokha. I am proud of the efforts made by the South African community in deepening knowledge of, and leveraging off, new technologies such as distributed ledger-based systems, especially those that are core to our economy such as wholesale payment systems. The award is the recognition of the importance of collaboration, focused effort and shared knowledge in a productive and transparent manner.”
Project Khokha is a proof-of-concept interbank payment and settlement system that is based on the Quorum blockchain. The project is also the first blockchain-based initiative in Africa to receive global recognition.
Project Khokha kicked off in January this year and ran for 14 weeks, in partnership with a consortium of banks. The project trial showed that the daily volume of transactions handled by the existing real-time gross settlement system can be processed in 75 minutes with complete confidentiality of transactions.
According to South African Reserve Bank (SARB) governor Lesetja Kganyago, several things have to be considered before the project is implemented.
“This is only the starting point. The implementation of a production-ready system requires a deeper understanding of the complexities that were not within the scope of this initial project. Key considerations that need to be addressed, over time, include the evaluation of supporting frameworks and other systems that integrate with the wholesale system, as well as the legal, regulatory and compliance factors.” Said Lesetja.
Lesson to other African Regulators
The award Project Khokha has received is a lesson to other African regulators to drop the wait and see approach on blockchain technology and cryptocurrencies and start applying these technologies in their operations.
For instance, the Central Bank of Kenya needs to start working on a local digital currency as recommended by the blockchain and AI taskforce while the Capital Markets Authority needs to quicken the implementation of a regulatory sandbox.
South Africa is already ahead in the adoption of emerging technologies and other African countries need to catch up or risk falling behind.