Ebrima Faal reflects on how the Nairobi Securities Exchange’s partnership with Hedera could just be the beginning for blockchain in African development finance.

Tokenization—the process of representing real-world assets on a digital ledger—offers Africa a leapfrog opportunity to build inclusive, transparent, and accessible capital markets. Unlike spreadsheets or conventional reporting systems, tokenization allows each transaction or commitment to be verified, time-stamped, and made visible in real time—automatically and without manual reconciliation.

The Nairobi Securities Exchange (NSE), Kenya’s principal stock market, has joined the Hedera Council, a global governance body overseeing the blockchain-enabled Hedera public ledger. It is a strategic move to integrate decentralised ledger technology into Kenya’s financial architecture. The goal is to tokenize securities. This will enable an expansion of participation in capital markets through real-time settlement, fractional ownership, and increased transparency of stocks (equity in companies), bonds, or infrastructure instruments.    

Blockchain in project evaluation and debt instruments

While tokenization of listed securities garners headlines, the real breakthrough lies in using blockchain to modernise the evaluation, financing and monitoring of development projects.

A solar mini-grid project in Turkana, whose capital stack includes public investment, concessional finance and community equity can use blockchain to digitise this stack. Each layer could be tokenized, automating compliance, disbursement, and performance tracking. Smart contracts could link payments to milestones verified by third-party data feeds or satellite imagery.

This has implications for sovereign debt as well. With increasing scrutiny of public debt sustainability, blockchain can introduce radical transparency. Governments could issue tokenized green bonds, with each tranche tied to real-time reporting on the use of previous payments. Investors could see in near real time how their capital is used to combat social or environmental problems.

Institutions like the African Development Bank (AfDB) have a critical role to play here. The AfDB could incorporate blockchain into its project finance and monitoring frameworks, ensuring faster disbursement, automated reporting, and better data integration. AfDB-backed infrastructure bonds or climate finance tools could be tokenized. This would provide both institutional and retail investors with direct, traceable exposure to African development priorities.

This is a design principle for 21st-century public finance. Tokenization has the potential to redefine how we structure infrastructure delivery, debt sustainability, and citizen trust. By embedding transparency, automation, and real-time data into development systems, we can build institutions that are both more resilient and more responsive.

Tokenization as a gateway to trust and scale

African capital markets are often criticised for being shallow and fragmented. Tokenization allows for fractional ownership. This is the ability for investors to own a portion of a high-value asset, such as a government bond or infrastructure project. This makes investment more accessible to retail and diaspora investors and allows them to participate in large-scale instruments without needing to purchase an entire unit.

Kenya’s integration with Hedera is not just a tech upgrade. It is about redesigning the interface between markets and trust. In markets where trust is the scarcest currency, tokenized development offers a way to embed transparency and traceability directly into the system—by making every transaction time-stamped, verifiable, and visible to all authorized participants in real time.

Instead of relying on post-project audits, investors and citizens can monitor funds and milestones as they happen. As more regulators engage with this shift, there is scope for harmonised protocols across Africa’s regional economic blocs.

The Hedera-NSE collaboration

Hedera’s architecture—fast, low-cost, and carbon-negative—is well suited to Africa’s infrastructure needs. Kenya wants to shape, not just adopt, the next generation of market infrastructure.

This builds on Kenya’s long-standing innovation ecosystem, from M-Pesa to eCitizen services. But it repositions Kenya not just as a user of fintech but as an architect of digital public goods.

However, the promise of tokenization must extend beyond national systems. Regional frameworks such as the African Continental Free Trade Area (AfCFTA) —which aims to unify trade across 54 countries and the African Exchanges Linkage Project—which connects national stock markets—offer platforms where tokenized capital markets can be integrated across borders. Imagine digital markets where a bond issued in Nairobi can be traded seamlessly by an investor in Accra, governed by harmonised smart contract protocols and verified through cross-border data agreements. This is not fantasy. It is the infrastructure of a future-ready Africa.

What must come next

Regulatory frameworks must evolve to support tokenized assets and new forms of digital organisations, where decisions and rules are built into the technology itself. That means recognising digital tokens as legal financial instruments, enforcing smart contracts in courts, and ensuring that citizens—especially in low-connectivity areas—can access these systems through secure, universal digital IDs. Development finance institutions, including AfDB, must pilot blockchain in blended finance, particularly for infrastructure, climate resilience, and business development.

Capacity building is critical, including digital literacy and local developer ecosystems that can build infrastructure with Africans in mind.

We also need to ensure that blockchain does not replicate exclusion. If not designed with care, it could widen divides between those with digital access and those without—leaving behind rural communities, informal workers, or small businesses that lack connectivity, digital IDs, or financial literacy.

A blockchain compact for development

Africa should consider convening a “Blockchain for Development Compact” a pan-African framework that brings together regulators, development finance institutions, fintechs, and capital markets to co-design data standards, sandbox pilots, and shared infrastructure.

Such a compact could position Africa not just as an adopter but as a global rule-setter for ethical, inclusive blockchain innovation.

The future of African finance may not be defined by which countries have the largest banks or capital markets—but by who can build trusted, verifiable, and programmable infrastructure for capital to flow into real, measurable development outcomes.

Kenya’s partnership with Hedera is a crucial first step. But it should be followed by pilots in project finance, sovereign debt, and regional trade infrastructure—areas where trust, transparency, and efficiency are in short supply. We must not stop at tokenization of assets. We must tokenize development itself.

Photo credit: NSE