The Central African Republic became the second country in the world to adopt Bitcoin as legal tender after their parliament voted unanimously in April 2022
With blockchain on its way to becoming a central element in the next digital transformation of the global economy, one region yet to fully tap into the technology’s potential is Africa.
But that has begun to change in the last two years, with blockchain bursting onto the African Fintech (financial technology) scene, as adoption across the continent has accelerated.
As the most populous African nation with over 201 million citizens, Nigeria was hit hard by Covid-19 lockdowns. Compared to a year ago, food prices have increased by 20%, while the inflation rate seems to be winding down, currently settling at 17%.
Kenya, with its 53 million people, has experienced a similar spike in inflation; though less dramatic at only 6.57% compared to 4.2% a year prior. From these indicators we can conclude that uptick in P2P transaction volume will accelerate unabated, driven by:
- Devaluation of fiat currencies.
- Fewer obstacles to remittance payments across borders. Sub-Saharan Africa alone received $48 billion in 2019.
- Convenience, access and speed make using smartphone apps over banks more appealing.
- Blockchain technology is finding real-world utility across Africa via public-private partnership agreements in solving some of the continent’s burning issues.
Blockchain adoption in Africa is on the rise. From transportation to the gaming and lottery industries, reports of companies utilizing decentralized ledger technology (DLT) across the continent are emerging. Several stakeholders in the African blockchain scene say DLT is the key to solving the developmental issues plaguing the continent as a whole. They also believe the technology provides a platform for Africa to elevate itself to a position of greater relevance in global affairs.
While the general attention of governments still appears minimal, some countries are reportedly taking steps to promote increased blockchain adoption. Nations such as Kenya and Nigeria have announced plans in recent months to pursue regulation and greater cooperation with the private sector to leverage the benefits accruable from blockchain utilization.Three African countries — namely Cameroon, the Democratic Republic of Congo (DRC), and the Republic of Congo — are reportedly planning to adopt cryptocurrency and blockchain solutions powered by The Open Network (TON). Separately, Cameroon is considering issuing a national stablecoin that is based on the same blockchain network.
Cryptocurrency adoption in Africa grew 1200% between July 2020 and June 2021, making it the fastest adoption rate in the world. However, in terms of overall values traded, the continent is still playing catch-up to other regions.
Africa amassed $105.6bn worth of cryptocurrencies in forecasts for the year ending June 2021, driven by peer-to-peer (P2P) transactions in key growth markets.
Markets like Kenya, Nigeria, South Africa, and Tanzania had some of the highest grass-roots adoptions in the world and ranked in the top 20 Global Crypto Adoption Index.
Digital analytics firm Chainalysis’ latest figures show transactions volume made up of retail-sized transfers in Africa was seven per cent, against the global average of 5.5%.
Early Adopters and Buyer Persona
A growing number of young investors are looking at cryptocurrency as a real alternative to gold, the oldest safe-haven investment in the world. In October 2020, a team of analysts at JP Morgan referred to bitcoin as a gold alternative for millennials, and findings from A CNBC Millionaire Survey found that 83 per cent of millennial millionaires own cryptocurrencies. Africa ranked third in Chainalysis’ Top 20 Global Crypto Adoption Index with Kenya, Nigeria, South Africa, and Tanzania taking the lead.
A major reason for Bitcoin’s widespread adoption in Africa is its ability to bridge the economic gap, fulfilling both personal and entrepreneurial needs, including remittance, e-commerce, payments, wealth preservation, and social good. Crypto’s ability to bring financial services to anyone regardless of their socio-economic status, where they live or their financial situation is a solution for the unbanked in Africa.
Based on a recent survey by Chainalysis, Kenya ranks 12 out of 27 countries with internet users holding cryptocurrency, making Kenya’s share of the market 15.8%, above the global average of 15.5% by December 2021. In fact, Kenya is set to lead the world’s peer-to-peer cryptocurrency market for the second consecutive year.
According to Finder, Bitcoin is the most popular crypto in Kenya, making up 54.7%, followed by Ethereum at 22% and Dogecoin at 19.8%. At the time Bitcoin was created, its creator, Satoshi Nakamoto, envisioned it as a way to conduct daily transactions. It was intended to solve the problems experienced when using fiat money due to their centralized nature and ensure speedy transaction processing.
Cryptocurrency is a peer-to-peer payment system, meaning that users can send and receive payments anywhere in the world. Crypto transactions generally do not need approval from external sources unless they are sending or receiving the currency from a regulated exchange or institution.
While high transaction fees, brokerage fees and commissions are involved when doing business with fiat currency, with cryptocurrency the middleman and all the extra fees are eliminated. Transactions are made directly between two parties, and with transparency in transactions, it becomes easier to track audit trails, payments and parties to a transaction.
Another important feature of cryptocurrency blockchain is its immutability. Consequently, blockchain transactions are irreversible and cannot be altered by a third party, such as a government agency or a financial institution.
Furthermore, digital currency cannot be physically held making it a safe alternative to hard cash. However, cryptocurrency can be stolen if hackers get access to a wallet’s private key. Bitcoin, the most popular crypto, has made strides in layering security measures. Its exchange remains largely unaffected by such breaches.
Cryptomania is sweeping the continent faster than anywhere in the world, with transaction volumes growing by 1,200% despite facing hot-and-cold rules, growing crypto usage in sub-Saharan Africa is forcing regulators to reconsider the industry.
Cryptocurrency basically works like mobile money, So it’s easier for Africans to understand as opposed to people in the West who already had more financial inclusion and easy access to banking systems.
I see a wave of adoption in the coming days.
Africans love Crypto because of what it REPRESENTS