Contracts have emerged as an appropriate expanse for the application of Blockchain to eliminate human mediation perceived to be mired by weaknesses. Smart contracts date back to the 1990s, but the proposed Blockchain technology makes it a great force economically. Beyond the transactional processing qualities of blockchain, industries envisage the technology to resolve divergent human-related complications with traditional contracts. Per literature, smart contracts offer superior economic value with respect to legality, formation, deployment, execution, and cost. These qualities of smart contract ensure performance and eliminate risk. Criticised on the inhumane aspect of the technology in terms of contract amendments and the current influx of foreign-based blockchain companies in Africa limiting indigenous design considerations, the application of smart contracts in continent could be hindered by contract renegotiations strongly embedded in cultural values of empathy. Nonetheless, a trade-off would resolve the contractual bottlenecks in Africa.
TopIntroduction-Evolution Of Contracts
Evolutionary, humans have devised resourceful revenues for the formation and enforcement contracts. Aside written evidences either on paper, stones and or woods, most countries in Africa occasionally revert to the use of eggs, schnapps, and other traditional means of establishing contracts to avoid breach, Chiefs revered traditionally in Africa also played crucial roles in contract mediation until the era of foreign colonization. This led to the adoption of civil law making contracts enforceable at the law court. Currently, the practice of primitive methods of contract formation and enforcement in Africa co-exist alongside civil law because of the perceived limitations of civil procedure. A traditional contract is a written or oral (or partly written and partly oral) promise exchanged for another promise or for a performance that the law enforces (Mik, 2017). Although traditional contracts are backed by the laws of specific jurisdiction, holdups like breach and re-negotiations leading to delayed and extra cost of enforcement plaques this type of contracts. Consequently, Nick Szabo in 1990 proposed computer-based smart contracts to resolve the holdups concomitant with contracts. The promise of smart contract includes but not limited to; the elimination of erroneous interpretation by human judges, corruption and bribery, and possible delayed enforcement. This concept did not attract much attention until the introduction of Blockchain by Nakamoto in 2008. Fairfeld (2014) defines Blockchain-based smart contracts as automated program transferring digital assets within the Blockchain upon certain triggering conditions. Although smart contracts are supported by several technologies, current literature refer to smart contracts as Blockchain-based because of the offerings of the technology over others (Zheng et al., 2020;Szabo et al., 2017). Blockchain offers; decentralization, records are shared across various networks resulting in a mediation free dissemination process. This prevents information asymmetry and eliminates the possibility of altering records without the approval of all parties (Catchlove, 2017). Transparency, Blockchain provides all-around transparency due to the use of public ledger. The contents of contracts can be made visible and opened to all stakeholders. Holden and Malani (2017) indicate that it is absolutely impossible for signatories to a smart contract to dispute the terms of the contract once established. Accurate records, error free interpretation of contracts depend on details establishing the contract. Blockchain interprets contracts based on the error free records shared between parties. Speed, Blockchain has an added advantage of executing contracts quickly as a triggered condition leads to a corresponding response (Clack, Bakshi & Braine, 2016). Ultimately, trust, Blockchain executes autonomously without the intervention of humans and therefore trust is assured. Accordingly, the application of Blockchain is wide-spread supporting initial coin offerings (ICOs), crowdfunding contracts, and various cryptocurrency trades. Still at an early stage, smart contract is conceptualized (Savelyev, 2017; Zheng et al., 2020) to have the ability to transform contract formation and execution at peer-to-peer (P2P), business-to-customer (B2C), business-to-business (B2B) levels, and in public survives. However, the application of Blockchain in Africa lags significantly compared to other continents because of the perceived cost associated with the technology (Yermack, 2018), and the prevalence of mobile money running on simpler mobile phones (Coffie et al., 2020). Nonetheless, recently, the uptake of cryptocurrencies in Africa continues to surge with countries like Kenya, Nigeria, and South Africa as the front-runners. Consequently, Africa is earmarked as a region with the highest prospect for Blockchain diffusion (Yermack, 2018), therefore, smart contract could become a reality in Africa in the coming years. In preparation, how should the continent handle smart contract from the perspective of empathy to generate trust and ultimately boost diffusion?