How can Blockchain help Sri Lanka’s Economy?

Blockchain technology has moved from being a future trend to a reality. In this context can Sri Lankan firms leverage their business strategy towards this technology?

Blockchain is an innovative database technology. In simple terms, it is a distributed digital ledger that stores data similar to how we keep our accounts, but it is spread over millions of computers. Since it distributes identical copies of a database across an entire network, if you want to make a change in the ledger, you have to access 51% of the ledgers to enable a change. This is a key reason why it is referred to as a secure and trustworthy ledger. 

In the midst of the current socioeconomic crisis, the outlook for many firms including exporters is of concern. With rising costs and challenges, firms in particular Small and Medium enterprises (SMEs) will need to leverage on technology that will not only be able to help them survive but also develop a competitive edge. The integration of blockchain by Sri Lankan firms will be a game changer for Sri Lanka, improving the transparency of the supply chain. Blockchain has the potential to pave the way for Sri Lankan firms to leapfrog in the export landscape by providing a greater level of authenticity to the end consumer.  

The technology has its benefit for the economy and in particular for exports. This is due to the traceability aspect of the technology where once it has entered into the system, it will be difficult to alter and is accepted. Blockchain technology enables digital tracking of the supply chain along with the physical flow. For example, with Ceylon Tea you would be able to trace it back to the plantation from where it is plucked from. In the apparel sector, it helps brands provide an authenticity that the product made is an original.  

From a SME perspective, blockchain technology could help SMEs become the first movers in adoption even compared to a large firm. This is because the cost of adoption is very low compared to Enterprise Resource Planning (ERP) type solutions which larger firms could be adopted at present. Further firms won’t need ERP/different software as with blockchain, technology resources can be shared. Blockchain can cut extra layers in the trading process, for SMEs and create a separate ecosystem. The core technology is already pre-built and can be run on a regular computer making integration into existing processes for an SME to be cost-effective.  

The payments landscape has also changed due to the advent of cryptocurrency leveraging blockchain technology. The dynamism is now driven by known global brands utilizing cryptocurrency for payments. However, the key benefit for Sri Lanka from crypto could be through receiving inward remittances given the absence of known providers like PayPal operating in the country. This will benefit in particular the gig economy workers and export companies.  

According to experts, it is important to get the ecosystem right to fast-track adoption citing the case of El-Salvador and the development it has seen. As we don’t have legacy systems holding us back, exporters and SMEs can leverage on blockchain technology and stay ahead of the curve 

Blockchain can contribute to human resources in the value chain. For example, a tip can be given to the person who plucks your tea, and can motivate people in the informal sector to work in the Agri sector and artisanal industries such as handloom in addition to working in a second job such as running a Tuk-tuk. Carbon footprint initiatives – blockchain beneficial in mitigation approaches. 

What are some of the key recommendations for the way forward in Blockchain adaptation?

Technology is moving faster than a bullet, however, a change in mindset and an implementation roadmap is required to reap potential benefits. Education is key to getting grassroots level employees involved in the process to make them feel connected in the supply chain. Further, measures should be taken to ensure a simplified trade process with a minimum number of steps to follow while advocating for changes that need to be made in Government rules and regulations in order to support blockchain initiatives. 

This article is a part of the Business Tips for Trading Across Borders series — A collaborative effort of 
The Ceylon Chamber of Commerce and United States Agency for International Development (UASID) Partnership for
Accelerating Results in Trade, National Expenditure and Revenue (PARTNER) Activity
Will Prices of Essentials and VAT Affect the Quality of Education?

Will Prices of Essentials and VAT Affect the Quality of Education?

“People learn from birth to death; hence it is said that ‘learning’ is a life-long journey.”(Alawattegama, 2020, p. 2) As...

by Communications Economy.lkFebruary 15, 2024
Charting the Course: Sri Lanka’s Path to High-Income Status by 2035-2048

Charting the Course: Sri Lanka’s Path to High-Income Status by 2035-2048

Charting the Course: Sri Lanka's Path to High-Income Status by 2035-2048 The pursuit of economic growth and development is a...

by Communications Economy.lkJanuary 29, 2024
Shrinkflation : When Less Costs More

Shrinkflation : When Less Costs More

Shrinkflation : When Less Costs More The term Shrinkflation refers to the phenomenon where companies reduce the size or quantity...

by Communications Economy.lkJanuary 5, 2024