Africa replaces dollar with Bitcoin to reduce currency risk

3 24
Avatar for PaulPhoenix
4 years ago

For under-served financial markets around the world, bypassing traditional banking systems and turning to fintech can mean multiple economic benefits.

This is the message that was hosted by Elizabeth Rossiello, founder of the financial technology company AZA Group based in Nairobi, speaking at the Global Tech Forum organized by Fortune in Guangzhou, China.

AZA, which focuses on providing foreign exchange solutions, was the first company to use digital currencies to reduce the costs of payment and money transfer in sub-Saharan Africa.

Rossiello founded AZA six years ago in Nairobi, having worked first in an evaluation house where he noticed a problem of exchange-rate liquidity that originated from "dollarization" in many small banks in East Africa.

This means that the banks borrowed from international banks in US dollars or euros, and then lend in the local currency, which means that even when they "did what they were told to do" the supervisory authorities, "if the Ugandan shilling fell against the euro, they had no luck."

Rossiello began trading foreign exchange, initially through its American account and then through Bitcoin, "literally from the living room of my home, with my children crawling on the carpet." Bitcoin was associated with brokers around the world.

AZA expanded to Nigeria in 2015, then went to the UK and Spain, and now has $100 m in transactions a month and a presence in 15 countries in Africa.

For example, cryptocurrency emerged as a solution for its Nigerian customers with companies importing from China – they wanted a Nigerian – Renmimbi parity, which many banks first linked to the US dollar.

"We used cryptocurrencies at the beginning because the barriers to entry were minimal" and AZA did not have the traditional infrastructure, says Rossiello. Now, AZA is a "hybrid company" which sometimes uses cryptocurrencies for trading but also has the necessary infrastructure.

Rossiello wants to see individual local players on cryptocurrency markets throughout Africa.

As it highlights, markets like Hong Kong, London, Zurich, and New York offer "a variety of financial services providers". Moreover, she is convinced of the value of overcoming traditional financial systems.

"I love the idea of circumventing established systems and believe in the transparency and traceability of many of these blockchains."

1
$ 0.50
$ 0.50 from @Telesfor
Avatar for PaulPhoenix
4 years ago

Comments

Do you think Bitcoin Cash will have a big acceptance in Africa?

$ 0.00
4 years ago

According to the article, it seems that it starting to

$ 0.00
4 years ago

It is not obvious that the solutions from AZA support cryptocurrencies. I can see that "hybrid" methods - mobile money, cash, and bank payouts - are mentioned:

$ 0.00
4 years ago