The first time I heard about Cryptocurrency was in 2017. I was tasked with writing on the topic "Cryptocurrency and its effects on small business" by my university newspaper. I surfed the internet, and I wrote an interesting article that made the newspaper's front page on matriculation day. Although, I honestly wished I paid attention to the Crypto Space as it blew up in 2017. While doing my research, I found Crypto interesting because it is used for international payment without a central bank or the government. It saves business and private individuals time and allows them to facilitate trade instantly and with reliable means. Because of this, I believe that Cryptocurrency connects the world in a much broader way, like the internet. In the financial world, It has enabled some Africa markets to contribute heavily to global trade. It has revolutionized payments and the financial market for African businesses.
This article aims to help you to understand
Cryptocurrency adoption in the Africa Markets
Promote the local use of Cryptocurrency across African Cities
Provide use cases of Cryptocurrency in the Africa Markets.
To begin, a report from Deutsche Welle suggests that at least $316 million crypto transactions have been performed in Africa as of June 2020. Also, Luno, a U.K.-based crypto company, surveyed six million customers and found out that 54% of Africans were ready to use a single global digital currency as a means of transaction. The continent boasts 60 active cryptocurrency exchanges platforms that operate peer-to-peer transactions (such as Luno) or involve in trade financing exchanges (such as Bitpesa).
Many might wonder why Cryptocurrency adoption is on the increase in the region. However, the ever-increasing inflation rate, poor banking system, and disastrous central bank policies have forced many Africans to use Cryptocurrency as a form of commerce and investment. In 2017 (The year I first knew about Cryptocurrency), Bitcoin (one of the popular cryptocurrencies) experienced a financial boom with its prices, increasing from USD 900 per coin to USD 20,000 per coin. For a country like Nigeria, the event created massive awareness about Crypto. Out of 74 countries in the Statista Global Consumer Survey, Nigerians were the most likely to say they used or owned Cryptocurrency. Even with a cryptocurrency trading ban by the country apex bank, 32% of respondents in Nigeria claim to still use Crypto, according to Statista Survey in March.
Africans with an unstable political and economic atmosphere are attracted to Cryptocurrency because they do not need to have a bank account to receive and exchange funds. In Senegal, for example, only 8% of the population has a bank account, while in Uganda, it's 11 % of the country's population. Millions of Africans' mass adoption of broadband internet has undoubtedly transformed business and trade for the continent. One key indicator has been the Mobile money revolution which has been spearhead by Mpesa. Mpesa, which Safaricom owns, allows people to transfer digital money using cellphone devices. Safaricom reported over 6 billion M-Pesa transactions in 2016, and its 2017 Annual Report registers £1.39 billion worth of "social impact." Cryptocurrency has come to stay in Africa, and it would keep evolving the business ecosystem.
Many of the use cases of Cryptocurrency in Africa has been for trade. Many people prefer to use Cryptocurrency as a means of payment compared to fiat currency. It is now becoming a popular means of transaction for both small and medium-sized businesses. It is evident when the CEO of Okra Solar, Afnan Hannan shared his experience of using Cryptocurrency as a means of payment in a local store in Nigeria. He described how the Australian government blocked all his primary bank account, and he was left stranded in Nigeria (minutes after his arrival for a community project ). In his article (published on April, 2021), he highlighted the statement the computer engineer fixing his laptop made:
"We can fix your laptop, my friend, less than 24 hours, but this is Nigeria, it'll cost you 500k Naira, and you're going to have to pay me now, but I'll accept USD, Euro, and Bitcoin — what do you have?"
The payment experience was inspiring for Afnan, who later made a video and shared it with the world. It made him conclude that Decentralized currency — just like decentralized energy — doesn't need to wait for the future, It is now in the present. Payment in Crypto is not new for many individuals living in Kenya, Nigeria, Rwanda, and even Uganda. Many skilled technology people who work for foreign companies choose to collect their payment as it is a much easier way to receive compensation and evade enormous government taxes. While this may devalue the currency of many African countries, it is a call to the government to solve the distribution of wealth actively. It offers transparency as people can now request what the government is using their available funds to do.
Today, If a Nigerian visits Zimbabwe with his Naira card, upon getting to the Southern African country, he may find that the money he has maybe devalued (if he does not have existing knowledge of the exchange rate). However, if he uses a stable coin like USDT, it would be easier to make payment without worrying too much about devaluation. This concept is best described by Timi Ajiboye, Co-founder of Buycoins.
Timi Ajiboye, Founder BuyCoins | Fintech 2.0 | TC Townhall
In this talk hosted by TechCabal, he described how easy it is to buy and sell Cryptocurrency and how it revolutionized the African Landscape. Many African nations who may have experience hyperinflation with their currency can evade this through payment and transactions with Cryptocurrency.
There are many advantages that Cryptocurrency provides local businesses in Africa. For instance, it eliminates strict bank taxes and policies. Till today, I still can't understand some of the charges my local bank withdraw from my account just because I use their service. Also, when trying to send money or make payment, the wait time for the receiver is still long and not practical. With Cryptocurrency, it is done instantaneously, and you don't have to worry about unrelated charges. Another advantage of using Cryptocurrency is that it positions African businesses for the global market. The local African can now quickly sell their goods to foreign markets. The payment does not have to be a headache anymore. Gone are the days when we only pay, but now we can receive foreign payments as well.
I believe that the most significant advantage that Cryptocurrency has on the African Continent has been Diaspora Remittance. A lot of African diasporas send remittance bach home in other to save or invest. With Cryptocurrency, the process has been made more accessible because it is evident in the decline of bank remittance by 27% to $17.2bn, down from $23.5bn last year in Nigeria. While this may affect the economy, it only shows that people are shifting towards Cryptocurrency because of its value. In all, Cryptocurrency is truly revolutionizing how African operate and do business. It would be totally wrong not to recognize it continued impact.
Reference Sources:
https://www.dw.com/en/africas-quiet-cryptocurrency-revolution/a-55199637
https://insights.thebaobabnetwork.com/2021-02-cryptocurrency-africa-market-map/
https://www.africanvibes.com/revolution-of-cryptocurrency-in-africa/
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