Acceptance and implementation of cryptocurrency and digital transformation in Africa and the Middle East varies considerably. In this, the region is on a par with the rest of the world.
And, as with the rest of the world, digital transformation is speeding up in a time of global pandemic and economic instability. Cryptocurrency was already rising in popularity in the region before COVID-19, but there is now a much wider acceptance of the use of digital currency throughout the population.
Current rate of digital transformation in Africa and the Middle East?
Economic development strategies are in place across many countries previously known mostly for their oil production. The Gulf Cooperation Council (GCC) in the Middle East is changing its strategic focus to adapt to today’s increasingly digital world.
The GCC region includes Saudi Arabia, the United Arab Emirates (UAE), Oman, Kuwait, Bahrain and Qatar. And while much of the changes are occurring in countries within the GCC, the transformation extends to most of the wider Middle East & Africa (MEA) countries.
If we look at one aspect of technical innovation, blockchain-based projects are now underway across GCC countries. According to the Middle East Institute, we can expect to see blockchain grow exponentially over the next few years. This is particularly the case for Saudi Arabia, the UAE and Bahrain.
However, blockchain projects that have so far been announced are still in extremely early stages. Many are just at the conceptual stage, with some beginning to be established as projects. Only very few projects of this nature in the Gulf are at the QA and testing phase.
Why is blockchain technology important for economic infrastructure?
Blockchain technology is a key component of the Fourth Industrial Revolution (4IR). It is playing a major role in the structure of the global economy and its potential to increase development and innovation have been the subject of much Government focus for a number of years.
In GCC and MEA countries, blockchain has been an area of focus since 2016, led by the UAE, Saudi Arabia and Bahrain. Since then, the legal aspects of blockchain and the necessary framework to allow the technology to be used for financial services have been developed.
The technology is still new. and its uses are only being developed. But as the region undergoes fundamental changes within its operations, systems and administrative procedures across different sectors, it’s fair to assume that blockchain technology will play an increasingly influential role in modernising the commercial, financial and Government sectors over the coming years.
The UN’s 2020 report on the Department of Economic and Social Affairs E-Government status shows that GCC countries are positioned well in the top 100. This survey is, at present, the only report that looks at the e-Government development status of every UN Member State. Bear in mind this is not an absolute measurement, rather it measures e-Government performance of the countries relative to each other.
Middle Eastern countries are highly competitive within e-governance
E-government (electronic government) is a catch-all term for the updating Government services. There is a global shift towards digitisation across all sectors and this includes the targeted increase in e-governance. It covers all of the tech applications that deliver Government services, including exchanging information and all of the fundamental processes and interactions within the framework.
Government services are therefore made much more available to citizens in a transparent and efficient way. So, this is a good measurement to see how far different countries are in their journey towards digitisation.
The UN report mentioned earlier shows that every GCC country is in the Top 100:
- The UAE is at 21.
- Bahrain is at 38.
- Saudi Arabia is at 43.
- Kuwait is at 46.
- Oman is at 50.
- Qatar is at 66.
African countries are trailing the GCC region, with only Mauritius reaching 63, the Seychelles 76 and Ghana just missing out at 101. However, we do have data that shows Africa is just as willing to adopt digital technology including cryptocurrencies.
Nigeria is leading the cryptocurrency way among African countries
Global cryptocurrency platform Luno recently announced results of a global survey on digital currency. These results show that just over half of Nigerian citizens are ready to adopt and use a global digital currency. This shows the extent of interest in Nigeria for new tech, and specifically for cryptocurrencies.
There has been a marked growth in interest in cryptocurrencies since the beginning of the COVID-19 pandemic. And in Nigeria especially, people rank higher than the global average of just over 37% in willingness to use digital currencies. This is significant because Nigeria has the biggest population (200 million) of any country in the MEA region. The survey in question also included respondents from Malaysia, Indonesia, Italy, South Africa, France and the UK.
More than half (54%) of African people say that they think a single global currency would improve their country’s financial system. This compares with only 35% in Europe and 41% in Asia. It appears from the total results that most countries are expecting their current local currency to depreciate in value over the next few years, leading to an increased interest in alternative, digital currencies.
Vast potential for digital transformation across the wider MEA region
The MEA region has a relatively youthful population and a vast economy. According to the UN, countries such as the UAE and Qatar have some of the world’s highest GDP per capita. But the region also boasts some of the lowest too, with mainly African countries ranking much lower.
GCC countries have, of course, attracted global talent over the past few decades, flocking there to build on their oil-based economies. Cryptocurrency and blockchain tech therefore have an enormous potential for growth in the MEA region compared with a lot of the rest of the world.
Digitisation is playing a major role already across most of the Middle East. For example, the Government of the UAE has already adopted blockchain technology to conduct financial transactions. To further cement its commitment, the UAE Government has launched the Emirates Blockchain Strategy 2021 along with the Dubai Blockchain Strategy,
The former aims to utilise blockchain technology to transform at least half of all Government transactions by the end of this year. The latter will eventually mean Dubai is the first city to be fully powered using blockchain technology. Of course, it’s already the case that Dubai and Abu Dhabi are already global leaders in digital transformation.
Other countries within the Middle East are fast following suit. And across the wider MEA region, adoption is also ramping up. Cryptocurrency has already been legalised in Nigeria, with the adoption of regulatory guidelines by start-ups, cryptocurrency-based businesses and digital currencies. South Africa is currently in the process of adopting regulations regarding cryptocurrency, while Kenya has begun the process of considering adopting cryptocurrencies too.