As much as Africa struggles with technological challenges, including the digital divide, still, the second-most populous continent has stood high when it comes to cryptocurrency adoption, bringing the crypto market to $105.6 billion by the year ending June 2021.
In countries such as Tanzania, Kenya, South Africa and Nigeria (ranked in the top 20 Global Crypto Adoption Index), fintech has taken a serious step towards serving millions of unbanked citizens.
These nations have taken another step—they have been a significant catalyst in promoting cryptocurrency’s growth, thanks to the vast expansion of smartphone use which ultimately leads to accessing blockchain networks.
According to a September 2021 publication by The African Report, crypto adoption in Africa has grown massively, by 1200 percent between July 2020 and June 2021, which brings the region at the top adoption rate worldwide.
Further, the publication showed that “Digital analytics firm Chainalysis latest figures show transactions volume made up of retail-sized transfers in Africa was seven percent, against the global average of 5.5 percent.”
The leading cryptocurrency market research firm, Chainalysis report points out that African crypto users engage in P2P platforms much higher than their counterparts. “They account for 1.2 percent of all African transactions volume and 2.6 percent of all volume for Bitcoins specifically,” the report notes.
With all these numbers still, Africa is lagging behind other crypto markets across the globe. The struggle is accounted for by the lagging and pricy internet access, particularly in peri-urban and rural areas, and varying levels of financial literacy, which is vital towards comprehending cryptocurrency markets.
However, Africa is an essential step towards normalizing cryptocurrency into the economy. Nigeria’s Quidax, a platform allowing people to sell and buy cryptocurrencies and 17 other blockchain startups in Kenya, such as Bitpesa—offering digital wallets which allow sending and receiving bitcoins and fiat currencies, are demonstrating that Africa is focused and not stopping.
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Crypto in Africa
Africa’s economic systems are not robust compared to their counterparts, as poverty, infrastructure problems, and civil wars have contributed to most not being banked, leaving at least 57 percent of the population unbanked.
Despite the latter, crypto has made it through Africa’s rugged terrain and landed in the hands of valuable startups who are disrupting crypto in a very creative manner. However, still, there are underlying issues blocking crypto full penetration.
In Nigeria, disruptive blockchain companies such as Convexity face challenges and opportunities as they work towards building healthy blockchain operations. Over the past years, most African central banks in the region disallowed banks from facilitating cryptocurrency transactions.
Still later this year, the Nigerian central bank overturned the action, making Nigeria the first country in Africa to introduce a digital currency to citizens.
The acceptance of the cryptocurrency by Nigeria’s President Muhammadu Buhari, who nailed down the country’s determination to maximizing blockchain potential, saying, “The adoption of the central bank digital currency and its underlying technology called blockchain, can increase Nigeria gross domestic product by $29 billion over the next ten years”.
Nigeria has seen a healthy interaction of blockchain activities. Central Bank Governor Godwin Emefiele noted that since the launch of the eNaira platform, it had received more than 2.5 million daily visits, with 33 banks integrated on the platform, NGN500 million ($1.2 million) successfully minted and more than 2,000 customers on board.
On the other side of the fence, Africa has become a breeding ground for cryptocurrencies—through Nigeria, considered by World Economic Forum (WEF), as the vanguard of crypto adoption for the entire world.
WEF noted that cryptocurrency adoption was relatively fast for the region as it requires a smartphone to access blockchain networks. According to GSMA a global mobile industry body, there are more than 303 million smartphone users in Africa and the numbers are expected to grow to 474 million by 2025.
“Although Africa captures only 2 percent of the global value of all cryptocurrencies received and sent, making it the world’s smallest cryptocurrency economy the rising prominence of this innovative form of money is altering traditional financial flows to and from the continent,” Brookings September 2021 publication argued.
Adoption of cryptocurrency
Concerning the above report, there are vital aspects to understand regarding the progression of crypto adoption in Africa.
Looking at this scenario in terms of numbers, the World Bank noted that the median GDP per capita in Sub-Saharan Africa is $1,483, compared to the European Union with a GDP per capita at $33,927, making African wealth output 22X lower.
“In raw numbers, this translates to $105.6 billion worth of crypto assets between July 2020 and June 2021, accounting for 1,200 percent crypto value growth. Using this metric, Africa has topped peer-to-peer (P2P) payment platforms in terms of transaction volume across all regions,” World Economic Forum, September 2021 publication noted.
On different occasions, crypto has been an essential element in the economy across Africa during challenging times. Various reports, including World Economic Forum’s, noted Bitcoin to be the leading cryptocurrency in the region. It was a haven for countries experiencing inflation, such as South Africa, Zimbabwe, Nigeria, and Kenya, to mention a few.
Although most African countries are hesitant towards ushering cryptocurrency into their economy, the progression of blockchain technology and adoption in other countries in the region signal a possibility for change.
Tanzania is an excellent example of how cryptocurrency adoption has become vital and accepted by governments.
During the last administration led by the late President John Magufuli, the government did find blockchain technologies as viable financial instruments.
However, in June 2021, President, Samia Suluhu Hassan, gave the crypto a shot in the arm, urging the central bank to prepare for cryptocurrency adoption as the rest of the world was taking advantage of blockchain technologies.
The future of cryptocurrency in Africa is possibly significant, as the region does not stay idle and let other technologies take over. A good example is Nigeria’s fintech companies Flutterwave and Andela, which disrupted digital payments in the region and are recognized by TIME Magazine’s 100 Most Influential companies (within digital payment).