Cryptocurrency is rapidly gaining popularity in Africa, where a new report claims that young people are disillusioned with the conventional financial system and are ready to turn to bitcoin (BTC) and altcoins to strengthen their financial future.
The report was co-produced with Arcane Research and the cryptocurrency trading platform Luno, which wants to expand its reach on the continent.
The report lists some of what it calls catalysts and is said to now drive bitcoin and altcoin adoption in Africa, including the following:
- Capital control: Governments often impose foreign exchange restrictions to protect their currencies against loss of value
- Political instability and inflation: Growing Uncertainty and Lack of Trust in State-Managed Systems Drives People Away from Conventional Financing, As People Lose Confidence in Conventional Fiats
- Mobile financing: Existing mobile money transfer solutions are becoming increasingly popular. Kenyan telecom provider SafaricomIs M-Pesa remittance platform processes about 11 billion transactions per year (and already has the support of Visa). As such, mobile finance is already becoming second nature to many Africans
- Mobile coverage: While this is still far behind the global average, smartphone ownership is on the rise, with 67% of all phone connections expected to be smart devices by 2025
- Demographics: Since younger people are believed to be more likely to have crypto, it may be worth noting that the average age of the continent is 18, with 97% of the Sub-Saharan region being under 65
However, it’s not all rainbows and ice for crypto in Africa, according to the authors of the report, that note some of the so-called “ major obstacles ” to crypto progress. These include the following:
- Internet coverage: Less than 40% of the continent has “some form of” coverage, and some countries have an Internet penetration rate of less than 10% – a fact that prompted M-Pesa and other providers to adopt SMS remittance solutions to strive
- Electricity cover: In Sub-Saharan Africa, 57% of the population has no access to electricity – meaning that even SMS-powered crypto solutions would be of little help
- Competition from mobile money providers: M-Pesa and competitors already have significant market positions and can be difficult to avoid
- Regulatory resistance: 60% of African countries have no cryptocurrency legislation and have yet to clarify their position, while many North African countries, such as Algeria, are “hostile” to crypto. Some Muslim countries have enacted a ban on crypto, claiming that the use of bitcoin and the rest can mean violations of Sharia law
The Naspers-shared exchange has stated it is discussing expansion in Kenya and Ghana to expand its African footprint, with South African media outlet Tech Central recently quote Luno’s general manager Marius Reitz says:
“These are markets that we are very interested in and Ghana and Kenya are high on our list.”
The company has also released a trailer for a video project on the spread of bitcoin and crypto-powered finance in South Africa and beyond.
Meanwhile, peer-to-peer (P2P) Bitcoin marketplace, Paxful, said earlier this year that the world has a lot to learn from Africa about the future of the crypto economy and that 2020 will be a milestone for the African crypto and blockchain industry. In February, the company received over three million wallets, 45% of which came from Africa. The African trading volume on the Paxful platform grew by more than 57% in 2019, it added.
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